Breaking Through the Noise: Cornerstones to Loyalty Program Success

By Mark Friedman, mfriedman@soundbite.com

Imagine a world where consumers collectively gathered $16 billion and flushed it down the drain – when every penny could have easily flown into retailers’ cash drawers?

According to a recent COLLOQUY study, we’re reached that point.  Consumers left $16 billion in unclaimed loyalty points last year, ignoring the perks, discounts and special offers they are entitled to as loyal program members. Retailers invested millions in loyalty programs that were golden money-makers just a few years ago, with almost nothing to show for it today. This trend is killing profit margins and retailers are growing agitated about the lost sales opportunities.

So what gives? First and foremost, consumers are inundated with loyalty program offers from retailers of all kinds, whether big-boxers, regional chains or supermarkets. According to Colloquy’s 2011 US Loyalty Census, the average US household is enrolled in 18 loyalty programs – a 16% increase over two years. It’s a safe bet each of these retailers are using direct mail, email, phone calls, text messaging and social media to communicate their latest deals, and convey why they’re better than the other retailer.

Consumers are overwhelmed; in many cases not even aware how they’ll benefit from each program. When they do take notice of the offers, they often lack the time to determine which ones to act on. Retailers must address the critical question of how to break through this market noise and fierce competition to get consumers’ paying attention and buying.

Here are five cornerstones to get started on the path to a more successful loyalty program:

1. Expand your reach: Retailers who adapt to rapid changes in the consumer communications landscape will experience the most responsiveness and success. Text messaging and mobile communications are highly underutilized, yet popular among consumers. Relying more on these channels, instead of traditional communications – such as fliers or pamphlets – will provide an invaluable head start over competitors.

2. Ditch the cookie-cutter approach: Yet, don’t abuse the growing communications spectrum, bombarding every consumer with every type of communication imaginable. While more consumers prefer to receive information via mobile phone calls, text messages or emails, they likely don’t want it all. One unwanted message is all it takes to turn a customer away. Be smart – use a multichannel communications approach mapped to each customer’s habits and preferences.

3. Live by customer preferences: Building loyalty starts with making customers feel valued, and you can’t achieve that without personalized communications. Take a page from newspaper reporting – employ the five W’s (who, what, when, where and why). Ask and observe how each consumer prefers to receive their loyalty program information – and most importantly, act on it. Enrollment periods, anniversaries or renewals – when customers are actually the most prone to be active – are the perfect time to collect this information.

4. Be interactive: Always remember engagement is a two-way street.  Retailers should initiate multi-channel blending, giving consumers more options to engage with businesses the way they’d like to. For instance, send a text message confirming a loyalty reward status or communicating a redemption offer, giving the customer the option to respond through several channels, text message, website or phone. This makes them feel like they are a one-of-a-kind customer, and provides you with valuable insight into their behavior.

5. Embrace change: Actions speak louder than words, especially with preferences. A customer may state how they prefer to receive information, but their actions may indicate otherwise, or that preference may change over time. To stay ahead of this shifting demand, keep asking customers their preferences on a regular basis and give them choices for how they can respond.

Mark Friedman is chief marketing and business development officer at SoundBite Communications, Inc., a provider of cloud-based, multichannel proactive customer communications, including loyalty reward programssolutions. He can be reached at mfriedman@soundbite.com.

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