Top Stories of the Week: Six Steps to Profitable Customer Loyalty Programs and more

Kveta Vostra Director of Communication and Training
March 4, 2016

step-to-loyalty

Hello, welcome to Friday Five, where we take a look at some of the more interesting stories in customer service for the week. Let’s jump right in:

Six Steps to Profitable Customer Loyalty Programs.

Larry Alton writes in CustomerThink of six ways to develop a “comprehensive plan that’s sustainable and profitable” for customer loyalty programs. 

In other words, how to make yours stand out over the others: “According to a 2015 study on customer loyalty, the average American household is a member of a whopping 29 different loyalty programs. However, they are only active in roughly 12 of them.” 

  • Have clear goals. Otherwise you’ll never structure an effective program. Know what results you want and how you’ll measure them (see #6 below).

  • Keep the point system simple. Far too many businesses get too cute and complex, needlessly confusing customers. Clearly outline how points are earned and redeemed.

  • Cross-functional team. It’s not just a customer service initiative, get marketing, sales, accounting, everyone involved.

  • Make the program “elite.” Upfront fees make programs more desirable, give it a sense of exclusivity.

  • Focus on communication. Regular, but not obnoxious, emails and messages are good for keeping you in your customers’ minds.

  • Measure your returns. Have a system with the right analytics for measuring the results you need measured.

Customer Service or Customer Experience?

Bruce Jones, Senior Programming Director of Disney Institute, defines “customer experience” in Harvard Business Review as “the sum of all interactions a customer has with a company,” from initial awareness through use.

It’s beyond the traditional idea of customer service, Jones says, as it’s “about the bigger picture of what happens before and after these service interactions.”

He recommends three steps for improving any company’s customer experience:

  • Create an organizational common purpose. This is a short, sweet statement of what you want the CX to be at an emotional level.

  • Get to know your customers holistically. Listening posts are a great customer-centric tool for identifying areas where the CX is being met – or not.

  • View exceptional service as an economic asset instead of an expense. Lifetime customer relationships are worth short-term cost.

Build Customer Loyalty in Retail.

Loyalty360 has an interview with Mike Ptak, VP of Loyalty, Sales for Snipp, discussing how to build customer loyalty in retail.

The entire interview is well worth reading. Some highlights:

  • “The cost of having a disjointed and inconsistent program is 10% in lost revenue. Walmart is moving swiftly to integrate omnichannel digital capabilities, and already offers a pay-with-cash facility that allows customers to order online and pay with cash at stores, so those who do not have a credit or debit card can still buy online.”

  • “62% of retailers are increasing their budgets to enhance their loyalty programs with supporting technologies. For instance, Starbucks has credited its loyalty program app, My Starbucks Rewards, as a major contributing factor in its fiscal revenue.”

  • “An emotional connection to a retailer is the most effective mode of loyalty program that can be built. Consumers want to be treated as individuals and responded to personally – regardless of channel – and receiving personalized offers and loyalty points is a great way to do that.”

Improve the CX by Managing Episodes, Not Silos.

John Ellett writes in Forbes that according to Robert Markey, head of Bain’s customer strategy and marketing practice globally, delivering a great customer experience is hard for most companies because “most customer experiences are managed through functional groups, and a little bit through product managers – functional silos.”

This results in optimizing around the subcomponents of an experience, “which destroys the experience overall.”

Markey talks about Episode Management instead, “carving up a customer’s relationship into the major episodes that they go through… thinking about all of the things that have to happen behind the scenes, all of the different functional groups and departments that have to come together to make that happen smoothly and with some sort of wow involved, at low cost.”

Avoiding Artificially High Customer Satisfaction Data.

Writing in Luxury Daily, Christophe Cais, CEO of Dubai-based Albatross Global Solutions, makes the vital point that handing out customer satisfaction surveys to customers is a flawed approach that can have dangerous consequences.

Anyone who makes a purchase will, more likely than not, have a positive experience. Surveying them, you’re not learning anything about why you’re losing purchases to other people. You’re artificially skewing to the positive.

Which is dangerous: “Inaccurate negative feedback at least motivates change. But inaccurate positive feedback can mask significant areas of consumer dissatisfaction and lead to a comfortable complacency with ineffective processes.”


That’s it for this week – have a great weekend, and we’ll see you next Friday.

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