CLMP (Certified Loyalty Marketing Professional (tm)) | CMO | Marketing, Customer Experience, Customer Loyalty Projects | Central Asia & worldwide
At the CSI retail technology conference (TOO "PRO Systems"), I had the pleasure of attending the session on loyalty programs. We discussed the use of bonus programs and typical bonus promotions. There were also questions for the audience, like: "Which promotion would you choose to solve a specific task for a particular retail chain?" We reflected on this. Here are a few of my thoughts: 1. Every tool can be both a cure and a poison. Even deep discounts for a wide audience and a broad range of products can be justified if we understand why and in what situations we apply them. For example, we might support a store opening, develop a retail chain, and try to push out a non-chain competitor from a high-potential location, or maintain traffic at a location during times of limited access (like roadworks or building repairs). 2. A loyalty program should not be isolated from trade marketing; it should become a tool for communication and segmentation, increasing the effectiveness of product promotions. 3. Relying only on bonuses is not ideal. A variety of mechanics keeps customers interested and helps tailor offers to different audiences. For example, stay-at-home moms with young children may appreciate a 10% discount, while their single peers might be more interested in a presentation of unique or unusual product features. 4. Deep discounts work but are expensive. Use them to manage customer churn, but limit them to a narrow range of products that are closest to the customer's basket. 5. Segmentation is the key to loyalty. Avoid rewarding customers for actions they would take anyway, as this can lower your margin. Focus on segments whose behavior you want to change. 6. Granting bonus points does not equal costs or margin loss. Costs and margin losses occur when customers use their points (redemption). If you send a communication about 1,000 bonus points to 1,000 customers, your costs won't be 1,000,000; they will depend on the conversion funnel: email opens, message reads, actions (purchases), and the percentage of bonus points used. Additional tools to manage risks include limiting the time bonus points are valid or restricting the portion of a receipt that can be paid with points. However, don't overdo it with restrictions, as it can reduce customer loyalty. 7. Empathy is essential. Ethical and thoughtful communication is necessary. If a customer hasn’t made a purchase at your pet store for six months, it doesn't necessarily mean they’ve switched to a competitor. Their pet might have passed away. In such a case, a careless promotional message could trigger a strong negative emotional reaction and even create reputational risks in the public space. This is just a small part of my takeaways. I’ve realized once again how much I love loyalty programs!
