5 Laws of Success for Customer Loyalty Programs

Consultants Peppers and Rogers, other pioneers in this dynamic world of direct marketing and loyalty strategists, have encapsulated five laws for achieving real success in any customer loyalty program as reported last week by thewisemarketer.com.  We would go even beyond their focus of loyalty programs and reference their laws across all forms of 21st century marketing.

LAW 1 - Never waste an opportunity to gain insight about a customer...

We love this law because the suggestion is that the brand presents a choice of services or offers so that the choices a customer makes reveals something about them.  The whole idea is to figure out what motivates or influences a customer to make a purchase - or even more important what keeps a purchase from being made.

LAW 2 - An effective marketing program offers "modularity," enabling participants to mix and match its various aspects to their own preferences...

This can be difficult to implement without a very solid database and a complete understanding of the creative analytics that drive influencing factors.  But the idea is sound.  Our focus has been an offshoot if this law.  Our strategy is to deliver appropriate offers and messages based on our knowledge of each customer - their buying habits and their pattern shifts.

LAW 3 - Consumers want openness, and they want a service or program that works with other programs...

According to Peppers and Rogers, "The goal of a loyalty program is not to buy loyalty in the short run but to act on customer insights and deliver what each customer wants.  An even better goal would be to anticipate what each customer needs at any given time."

This is when my distinction between pure consultants and practitioners becomes evident.  They talk theory while we practice practicality.  Over the past several weeks, we have argued that no matter how much you know about a customer, you cannot accurately predict or anticipate future behavior.

Our marketing challenge rests on accepting Law 3 as an important element and then adapting its principle with the resources we have at hand.

LAW 4 - A loyalty program should be managed based on customers, not products...

We say your entire marketing program should be organized around your customers.  This is a keystone principle of our Sixth Star marketing strategy.  Last year, I quoted Bill Ford when he noted that Ford was building vehicles they could build, not build what the customers want.  Maybe that's why they posted a 27% sales decline in August.

Your programs and your organization should be organized in a way that they deliver a positive impact on customers' behaviors.  Product sales will follow.

LAW 5 - Above all else, stick to simplicity and integrity...

Is it okay to hug Ms. Rogers?  To quote the authors again, "A loyalty program with fewer rules and restrictions is more engaging to the customer than one with lots."

This is so simple and yet overlooked.  We learned a long time ago that simple is better and that when something gets in the way of simplicity, eliminate the barrier.

By Bart Foreman, Group3 Marketing www.group3marketing.com