The Top 10 Loyalty Program Essentials
By Bob Grothe

So you’ve looked at your products and services and the way you’re currently marketing them and you’ve concluded that loyalty marketing might be a way to go. You might be right. But there are things to consider about effective loyalty marketing programs before you dive in.

A loyalty marketing program that reduces customer attrition and increases lifetime customer value while producing a positive ROI is a complex undertaking that can produce optimal results only when it becomes an integral part of the customer experience, supported at every customer touch point. When you select partners to help you design and implement your loyalty marketing program, be sure to consider the following:

• Value Segmentation
  An underlying principal of loyalty marketing is “not all customers are created equal. ” Companies need to align their benefits and interactions by customer value, meaning they have to have a clear picture of the potential ROI in a given customer audience.
• Attitudinal Segmentation
  Most companies can segment on value, demographicsor behaviors, but tend to overlook segmenting based on attitudes. This level of segmentation–the thoughts, feelings and social norms that affect customer behavior as determined by way of proven research techniques--allows you to communicate withmore relevant messaging and to develop stronger offers and more effective rewards.
• Two-Way Communications
  It’s important to not only provide information to your customers on how they are doing in a program, but also to solicit feedback from them in order to make program improvements.
• Targeted Strategies
  Broad campaigns have their place. But when it comes to loyalty programs, it’s important to utilize the program-generated data to target and refine strategies to drive greater results at traditionally lower cost. Activation, growth, retention, advocacy, save/win-back, etc. need to be applied based on where the customer is in their life cycle.
• Ongoing Analysis
  You can’t set up a loyalty program and then walk away. A successful loyalty program is constantly reviewed and evaluated, which means you need to continually monitor member performance. But looking just within one program may not give you the best indication of performance. It’s important to look at how your program members are doing compared to the industry.
• Customer Biographies
  After having started with a demographic or behavioral profileof yourcustomers, you need to update individual customer biographies continually with insights gleaned from your ongoing analysis, campaign responses, program redemptions, program surveys, attitudinal modeling, feedback surveys, etc. An effective loyalty program allowsyou to do that. This rich history allows for better targeting and more effective future messaging.
• Corporate Buy-in
  Because well-run loyalty programs cross over departments, it’s imperative that all employees, from frontline employees to backroom processing and merchandising staff, understand and believe in the objective of increasing customer loyalty.
• Value for the Customer
  The value to you of loyalty programs is the data and insights they generate. But they will generate that data only if customers get involved. For that to happen you need to provide some value back to them. WIIFM (What's-In-It-For-Me) is a key element in driving customer participation, so you have to make sure that what you’re offering customers will get their attention and will truly be of value to them.
• Reasonable Line of Sight tothat Value
  The No. 1 reason a customer leaves a program is that it took too long for them to earn a reward. That ‘value’ noted above needs to get into the customer’s hand in a reasonable amount of time for them to stay with the program.
• Positive ROI
  Align payouts to profitable behaviors. What are the desired behaviors you want to drive and what is the value of that behavior to you? When you’ve answered that question, you’re ready to align the appropriate level of reward to your customers to ensure you have a positive return.

Bob Grothe is the director of Client Marketing Strategy at Maritz Loyalty Marketing.