Mistakes happen. But if you can avoid them, wouldn’t you? You bet! Here’s your chance to learn from other marketers’ errors, with a look at three missteps you can bypass on the way to strengthening your customer marketing results.
Misstep 1: Doing What You’ve Always Done
What may have worked once in your customer loyalty marketing efforts may not work every time. Goals change. Customers evolve. Consumer expectations are higher than ever, while marketing budgets are tighter than ever. Doing the same thing, just because it’s what you’ve always done, may not work over the long term. But how do you make a strong business case for breaking the mold and offering something new? To quote a certain shoe company, just do it!
Why not research?
Unfortunately, you can’t always rely on survey results to project customer engagement or usage, because well-meaning respondents can overstate their intent by 20% to 30%. Plus, while hard benefits, such as discounts, always come out on top in research, soft benefits can trump them in real life.
That’s why you need to get your ideas out into the real world for a true test. You’ll get actual results, which can bolster your confidence in usage rates and provide insight into the true impact on incremental sales, visits and margin. That can help you build a solid case for a full rollout.
Here’s how to get started:
Select a representative sample from the member tier you’re targeting, and then test the proposed change like any other promotion, with distinct beginning and end dates. You might also create a group of stores for the pilot, if the changes you’re considering depend on the in-store experience.
Run the test via a loyalty program app. Push the new feature or benefit to a targeted group, offer it to all mobile users as a short-term promotion or use location-based marketing to target specific geographic areas.
Misstep 2: Forgetting About Metrics
Without specific, measurable objectives, how do you prove the worth of your direct and loyalty initiatives — and justify your marketing budget? In today’s economy, you have to fight for every marketing dollar in your budget. Proving the impact of your loyalty and direct marketing initiatives is more important than ever. And to do that, you’ll need to key in on metrics and measurable objectives that dig a little deeper than just a lift in response rates.
Start by determining what you want to accomplish with your initiatives, and then base your metrics around those goals. Go beyond basic, broad categories and try to get as specific as possible.
For instance, try tracking the following:
- Customer/member migration. Who is going up and who is going down in terms of spending, frequency, etc.?
- Participation. How often do members interact with your business or loyalty program — and which types of interactions are most and least popular?
- Attrition. Can you spot the customers/members in danger of leaving?
- Social engagement.Are your social efforts moving the dial? Are you counting likes, posts, shares, social-only offer redemptions, etc.?
Next, consider how you might fine-tune your objectives based on specific customer segments. For example:
- Instead of tracking general retention, measure retention of your best customers.
- Instead of measuring overall accrual and breakage, pinpoint the difference in rates between program members and non-members.
- Instead of tracking general cross-sell, you can track, say, the number of customers who have begun to cross-shop due to specific bonus activity, or the number of checking-only customers who added an investment account.
As you zero in on specific metrics, it’s a good idea to establish benchmarks to measure against, analysis and reporting methods to track results, and a plan to continually review and adjust your initiatives in response to those findings.
Misstep 3: Using Old Data
Your customer said she has kids ages five to 10 years old. But that was five years ago. Has your data kept up with your customer’s changing life? If not, your related communications and offers won’t be relevant. And that means they’re far less likely to be effective. Staying current with your customers year after year is critical to your loyalty marketing initiatives. How you do it depends on how you’re collecting your customer data.
- If you’re gathering details directly from your customers, then establish strategies that encourage customers to keep their information up-to-date. For instance, if you ask loyalty program members to fill out online profiles, then create an annual trigger email encouraging them to make updates. Consider testing incentives, such as an anniversary offer, when they complete the task.
- If you’re collecting transactional data, see if your system allows you to set time stamps when data comes in. Then create a program that raises a flag when data “ages out” — for instance, when it’s five years old. You can then work to update the information or, at least, proceed with caution when using it to make marketing decisions.
- If you’re leveraging third-party data or having an analyst mine data for you, then you need to automate timely refreshes to your database. That way, you’ll be able to see if, for example, Customer A spends 60% of her dollars with you on children’s products this year, like she did last year.
If you’re like many retailers, you use a combination of data collection methods. That means you’ll need to leverage a variety of strategies to make sure your customer information stays current, relevant and, most importantly, useful for your loyalty efforts.
Testing new ideas, tracking metrics, and keeping your data clean and current are three essential elements to customer relationship marketing success. Make them an ongoing part of your strategy to reap the rewards for years to come.
What missteps have you experienced — or avoided? What are your favorite success secrets for loyalty marketing. Share your thoughts below!
Sandra Gudat is President and CEO of Customer Communications Group, Inc. (CCG), a full-service retail marketing agency specializing in customer relationship marketing (CRM) and loyalty marketing for the retail industry. Since 1977, CCG has executed dozens of innovative and effective CRM and loyalty initiatives for retailers across North America, including: A&P, Eddie Bauer, Kohl’s, Nordstrom, Payless Shoe Source, PETCO, Pier 1 Imports, Talbots and ULTA Beauty. Gudat leverages her diverse background in consulting, data analysis, advertising, retail and business management to help catapult CCG clients to the next level in customer marketing.