Report Reveals Loyalty Program Best Practices

| September 01, 2007

Loyalty programs are at a crossroads, according to a research report, Getting Loyalty Programs Back to Loyalty , published by the newly-formed research company Retail Systems Research (RSR). The report confirms that many retail and hospitality organizations must transform their loyalty programs from a pay-for-data scheme into something that captures the customer data they need, while still providing the kind of value to a customer that generates real loyalty.

"Having a loyalty program is not enough to drive success," says Nikki Baird, managing director and author of the report. "Companies that are getting the most success out of their loyalty programs today have centered their programs squarely around the objective of capturing and using customer data to create a sense of customer intimacy and differentiation."

The report identifies the internal obstacles companies face as they seek to make the most of their loyalty programs and the methods successful programs use to overcome those obstacles. Winning programs, according to the report, personalize communications and identify high value customers as they enter the establishment. What's more, successful programs are those that are tiered, offering different benefits to members depending upon their purchase volumes. The report also shows that frequency of communication is not a silver bullet, as successful programs are not any more likely to communicate more frequently with their members or create targeted offers any more often than their peers.

In all, the report offers the following recommendations:

  1. Make marketing the owner and advocate of loyalty programs and data.
  2. Create a balanced set of key performance indicators (KPIs) to measure loyalty program success. Be sure to measure the impact on the company (sales and margin) and impact on the customer (redemption/response rates).
  3. Automate as much of the analysis, insight, adjustment cycle as possible. This lets a company focus on turning analysis into insights, and insights into action.
  4. Roll loyalty data into your data security efforts.
  5. Move on from the basics quickly- get integration out of the way so that you can start implementing more sophisticated tools.
  6. Make sure loyalty program objectives keep up with changing customer expectations

To obtain a copy of the report, visit www.retailsystemsresearch.com.

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