Create An Evolved Loyalty Strategy, Not Just An Effective Program

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© 2017 Forrester Research, Inc. Opinions reflect judgment at the time and are subject to change. Forrester ® , Technographics ® , Forrester Wave, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. Unauthorized copying or distributing is a violation of copyright law. or +1 866-367-7378 Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140 USA +1 617-613-6000 | Fax: +1 617-613-5000 | FOR B2C MARKETING PROFESSIONALS Create An Evolved Loyalty Strategy, Not Just An Effective Program Executive Overview: The Customer Loyalty Playbook by Emily Collins with Mary Pilecki, Arleen Chien, Caitlin Wall, and Andrew Reese October 10, 2017 Customer Loyalty Requires More Than A Program The structured give-and-get of loyalty programs enables companies to reward, build relationships with, and better understand their best customers, but it doesn't get to the "why" of customer behavior, nor does it account for other interactions customers have with the brand. The typical approach to customer loyalty starts and stops with a program, emphasizing discounts and offers rather than building a relationship. As a result, loyalty programs fall short of creating real and lasting loyalty. Companies don't see the results they expect, largely because they lack the skills, tools, and processes to drive true loyalty — loyalty that increases spend and wallet share and results in advocacy. B2C marketers need to help their firms evolve their customer loyalty strategies because current efforts too often: › Tout the same benefits. Companies are trying to spin straw into gold by thinking customer loyalty comes purely from great discounts and offers. But a crowded marketplace makes for homogenous reward programs, and customers end up developing program loyalty rather than brand loyalty. 1 Fewer than half of loyalty marketers use experiential benefits or personalization to tailor offers and brand interactions. 2 Customers want value beyond monetary benefits — whether it is experiential rewards or a surprise-and-delight experience. › Focus too much on short-term results. Building loyalty is a long-term strategy, but organizations are focusing on transactional awards like points and discounts that drive temporary spikes in engagement and revenue. In Forrester's most recent survey of loyalty solution vendor client references, 87% said they were currently using loyalty currency, and 63% were using instant discounts, cash back, or rewards certificates as loyalty mechanisms, while only 45% were using experiential benefits as mechanisms. 3 To earn long-term loyalty, marketing pros must balance benefits that affect short-term customer behavior with engagement and recognition that focus more on customers' emotional experience. 4

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