How Does Your Loyalty Marketing Stack Up?

Retail marketers know that an effective loyalty program can earn and keep customers while boosting profits. However, they often don’t know how their program stacks up to their competitors’ programs. Many years advising top-name clients in loyalty marketing have shown us what works, what doesn’t and how to check. With a smart loyalty self-assessment, retailers can evaluate their loyalty program’s health, see where they stand and discover how to boost results.

You can start by taking the CCG Loyalty Marketing Self-Assessment. The first goal is to ask yourself the right questions to discover where you stand and get ready to decide on next steps. Which of the key categories in the loyalty marketing continuum are you in?

• "Challenged": Your program is still young, and customers are still getting acquainted with it.
• "Middle of the Pack": Your program has now reached a level of maturity, and most of the operational kinks have been worked out.
• "Best in Class": Your program has now reached maturity, and your biggest challenge is keeping it fresh.

Let’s say that your self-assessment places you in category No. 1. What put you there and what’s next?

Get Ready to Gear Up
You should expect to see big changes over the next 24 months as more customers join and a greater percentage of your transactions are represented by loyalty members. You may still be faced with a few kinks in operationalizing your program, but that’s par for the course.

Total Store Transactions That Are Loyalty Transactions
So your loyalty transactions are zero to 25 percent of your total store transactions — that's a decent start, especially if you're still within the first year of the program. However, if your program is closer to two years old, you may need to re-evaluate the program's value proposition and benefits to ensure they're relevant and enticing to your customers.

The Top 25 Percent
Many retailers report that the top 25 percent of their customers represent around 70 percent of total sales. That’s a lot of revenue tied to a comparatively small group of customers. Having a strategy in place to recognize them is a smart move.

Reach Out Harder and Smarter
You may want to consider what additional customer-facing communications — e.g., FSIs, promotional emails, social media — you can use to incorporate at least a simple description of the program. The point is that you always want to reinforce to customers that if they do X (e.g., spend $200) they will get Y (earn a $10 reward and receive invitations to members-only sales events). Whenever feasible, include customers’ account status (e.g., you have 195 points, you're only five points away from earning your next reward!).

You cannot overcommunicate your value proposition and your members’ individual status.

Be Ready to Change Gears
Let’s say that zero to 10 percent of your members earn the program's primary reward within a 12-month period. If your program is brand new, this may not be a concern. However, if your program is closer to two years old, members may consider it too restrictive and, as a result, have disengaged out of frustration.

Whether it’s time to anticipate negative return on investment, recognize best customers, adjust customer communications or re-evaluate program value propositions for customer impact, an honest self-assessment can make the difference between success and failure in the fluid, dynamic world of retail loyalty marketing.

Sandra Gudat is the president and CEO of Customer Communications Group (CCG), a full-service customer relationship marketing agency.