Jan 18, 2016 | Customer Retention Strategies That Work

Where “Customer Loyalty” Stands Today

Dan Slavin - Sales at Thanx by  Dan Slavin - Sales at Thanx

"Customer loyalty” suffers from an identity crisis. Let's take a moment to straighten everything out. 

customer loyalty has evolved — here's what will happen next

Whether it’s a restaurant buying better meat to improve quality, or a car wash purchasing top-of-the-line equipment to improve satisfaction — every business decision is motivated by making customers more loyal. However,
  • If you polled 100 business owners and asked, “Do you care about loyalty?”, only 95%+ would agree, “Yes.” We should see 100% consensus.
  • If you asked these same business owners, “Do you care about retention marketing?”, maybe 60% would agree “Yes.” Should be 100% consensus.
  • If you further narrowed the question to, “Do you care about loyalty programs?”, you might see 30% in agreement. And yes, consensus here should also be 100%.
There's only one conclusion we can draw from the above — “customer loyalty” suffers from an identity crisis.

The identity crisis for customer loyalty in a nutshell

The fact that there are actually business owners who hear the word “loyalty” and start to recoil makes zero sense. “Customer loyalty” HAS to be every restaurant and retailer’s primary focus. Improving customer loyalty increases spending, visit frequency, customer satisfaction, and word-of-mouth referrals — the lifeblood of brick-and-mortar success. So why the recoil?

What’s happened is that “customer loyalty” has become intertwined with (shall we say) “zero accountability” marketing. The common tools designed to improve loyalty — punch cards, stamp cards, plastic cards, check-ins, Facebook, Twitter — do not deliver definitive results, actionable insights, and a calculable figure for marketing R.O.I.

To rescue “customer loyalty” from its identity crisis, we need to re-establish the way we talk about and interpret the term. Consider these two perspectives:

1) Building customer loyalty is a strategy that just translates to “grow revenue.” That’s a good thing. This is indisputable.

2) A loyalty program is a tactic designed to build customer loyalty. Loyalty programs that succeed are good, whereas those that don’t are bad. But just because a loyalty program works/doesn’t shouldn't imply that the strategy is right/wrong. The strategy of finding ways to build customer loyalty is always right. 

The evolution of loyalty programs

By defining “customer loyalty” according to these two perspectives, we can begin to understand why businesses may not have “building customer loyalty” as their primary focus. They’ve been plagued for too long by bad “loyalty programs.”

Loyalty programs’ poor reputation starts with punch cards, which basically imply, “Here, take this. When you come back, you can get credit for your visits to my store.” Essentially, the exact same tactic as a person blindly handing out business cards at a networking event — praying someone will give him/her a call. Just like a business card, a punch card gives the merchant absolutely no way of initiating customer communication — in or outside the “walls” of the business. Punch cards leave business owners blindly hoping that anonymous punch card holders will come back — Did the customers leave? Will they come back? Where are they? Are these customers here because of the punch cards? — countless questions remain unanswered. Not an effective strategy, and a disaster for loyalty programs' overall reputation. 

Next, in comes the plastic loyalty card — an attempt to fix punch cards’ limitations. The plastic loyalty card gives business owners a way to attach an email address to the plastic card, opening the door for two-way communication. Plus, separately scanning a plastic loyalty card gives businesses the ability to acquire some transaction data. But again, the loyalty program reputation suffers a beating. The plastic card data collected is not clean or organized, so businesses have to expend significant time to create reports with only a hope of making sense of the data collected. Worse, plastic cards introduce several points of friction, e.g. customers have to remember their card every time, and businesses have to outlay resources to integrate plastic card systems with their point of sale.

Then comes the social media craze — check-ins, likes, and followers. Check-ins don't work, as mainstream consumers have no desire to take an even more onerous extra step, and businesses have no idea if checked-in consumers actually spend any money. Facebook and Twitter return very few answers — though both free to use, they are impossible to track. Calculations of how much money to spend on getting more Likes or more Followers returns only non-sensical conclusions.

All three well meant, but in the end all three bad “loyalty programs.”

Building customer loyalty — and succeeding

Now comes Thanx (and it’s about time). Thanx is a loyalty program that finally runs the way a loyalty program should — by actually building customer loyalty.

We start by removing the punch/plastic card that clutters consumers’ wallets. Instead, we transform consumers’ credit cards — their preferred method of payment — into loyalty cards. Zero extra hoops to jump through, clear answers about how much value consumers represent for the business owner, and no point-of-sale integrations needed.

For business owners, the experience of building customer loyalty is even better. The data is cleanly organized and automatic reports save merchants hours and hours of time. The retention tools make it easy to communicate with customers based on the data collected, and we optimize every single campaign according to new data added. Thanks to Thanx, the loyalty program has just transformed into an entirely new species.

The modern "loyalty program" 

Those businesses that assume that the the strategy of building customer loyalty doesn’t work because of inconclusive results from pre-evolution loyalty programs unfortunately will miss out the millions and millions of dollars raked in by companies that have not made this mistake — Starbucks, Dunkin' Donuts, and Whole Foods to name a few.

Put it this way — a loyalty program is NOT a business card that you hand out. It’s NOT an extra physical thing customers have to remember to bring with them. It’s NOT a third-party website that prevents you from owning your customer data. A loyalty program IS something that removes friction, engages customers based on transaction data, and delivers clear results and actionable insights.

So, it’s time to get rid of all traditional “loyalty programs”, and all the baggage that comes with them. Let’s start driving true customer loyalty to brands by retaining the business of modern consumers — those with seemingly  unlimited options.

Never forget — the strategy of building customer loyalty is and always will be important and valued. Now, finally, there's also an easy tactic to build customer loyalty easily and effortlessly — a “loyalty program” that does what it’s supposed to. 


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