Customer Insight Group Loyalty Blog

[Cincinnati.com, September 20, 2009]

A recent Convergys U.S. Customer Scorecard Research study shows that 80 percent of Americans are loyal to at least one company, but just 31 percent of those say they’d stay loyal after a single bad experience.

Recognizing this, companies like Remke Markets and Macy’s have renewed their emphasis on customer service in today’s recession.

“Consumers look at the ads for the week to decide where they are going to go these days,” says Connie Flynn, Remke’s director of human resources. “Once you get them in, that’s when customer service is so important.”

The Northern Kentucky grocery store operator will launch new training for its Positively Outrageous Service program this month. It’s a series of video presentations for managers and associates to re-emphasize Remke’s passion for the customer.

Read the full story.

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Sears and Kmart create a blended frequent shopper and gift card program, the Christmas Club card. The Christmas Club is a great example of how retailers can creatively respond to consumers resistance to rely on credit cards to finance purchases. In addition, it provides a branded “savings” account the enables a retailer to lock in share of holiday spend for the upcoming holiday season.

The Christmas Club card promotion begins August 16, 2009 and runs through November 14, 2009. Cards can be activated anytime during this period, but rewards will only apply to those who consumers who activate a card by October 31, 2009. Consumers receive a reward based on the value of the card on November 14, 2009 - and only if they’ve activated your card by October 31, 2009. A 3% reward (up to $100 per card) will be added to the consumer’s card based on the balance on their Christmas Club card on November 14, 2009. The reward will be added to the consumer’s card by November 25, 2009.

As reported in DMNews, August 17, 2009, “The company introduced the cards in response to customer feedback, said Susan Ehrlich, president of financial services, at Sears Holdings, in a statement. “We heard that our customers were concerned about how they were going to pay for their holiday shopping this year and we wanted to provide a way to ease that concern,” she said. “The Christmas Club card provides a unique way for Sears and Kmart customers to start planning for their holiday shopping ahead of the hustle and bustle of the season and earn a reward for planning and saving ahead.”

In a recent survey commissioned by Sears and Kmart, 58% of American consumers said they are more concerned about how they are going to pay for their holiday shopping this year compared to last year. In addition, 56% said they plan to save money for the winter holidays this year, with 32% saying they have already started saving for the holidays and another 38% saying they plan to start saving soon.

The survey also indicated consumers are planning to change their holiday shopping habits, with 72% saying they plan to do things differently this holiday season. This include 57% who said they will be spending less on gifts, 53% who will be shopping at more affordable stores and 49% who will be planning and setting a shopping budget ahead of time. And, 33% of those who plan to do things differently this year say they will be using their credit cards less this holiday season.”

I looking forward to seeing how consumers respond to this innovative holiday offering.

Learn more about the Christmas Club.

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[New York Times, July 26, 2009]

In a paper soon to be published in The Journal of Consumer Research, three researchers show that consumers reactions vary widely across cultures in response to surprise and delight rewards. On a scale of 1 to 7, Americans say they rate receiving a surprise free coffee a five. East Asians report an average pleasure of 4.4 when receiving the same gift.

When creating a loyalty program or rewards program, it is critical to understand what benefits and rewards your customers value. You want to find out what your customers want and  the types of benefits and rewards that are most appealing to them. The types of rewards used and the timing of delivery can be crucial since we want to reinforce and reward specific purchase behavior.

Read the full story.

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The current economic climate finds the retail sector battling to sustain their business under intense financial pressure. Consumers have so much choice available to them that retailers must make sure they offer customers the choice of shopping via multiple channels so they can buy goods in the preferred way. Retailers like Lands’ End, Abercrombie & Fitch and Talbots recognize that improving the online customers experience can pay dividends in the long run and could be the differentiators in standing out from the competition. For example, Talbots updated online shopping functionality and customer service this summer. Expanded features include a personalized area for customers to store preferences and a wish list, and a special sale section. Talbots will also use the site to offer targeted promotions and recommendations.

Lands’ End launched two interactive websites earlier this summer, one aimed at female swimsuit shoppers and one aimed at kids shopping for back-to-school backpacks. Both sites went further in offering expanded functionality than Talbots, providing social networking features and virtual fantasy environments.

In addition, specialty youth apparel retailer Abercrombie & Fitch launched a microsite dedicated to its new EPIC interactive store format in July. The site does not offer actual e-commerce functionality, but serves as a promotional vehicle with sound and imagery and also offers themed desktop screen savers and postcards, as well as online applications to appear in Abercrombie & Fitch advertising.

Read the full story.

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Consumers have so many choices in the world and generally edit their possibilities and maintain their own manageable menu of brands they trust. These brands are said to be in the “inner circle”. The inner circle is like your favorites or bookmark list on your computer. In our age of information and global competition, companies are looking to loyalty programs to put themselves in the customer’s inner circle.

In the study, Carlson Relationship Builder 2007, it was noted that that customers with high levels of relationship strength aided a company’s bottom line. When relationship strength is high, the customer is 49 percent more likely to remain a customer than when it is low, and 55 percent more likely to shop within the next year. In addition, a customer in a strong relationship is 1.82 times as likely to recommend a company to friends and family.

So how can you strengthen the customer’s connection with the brand and putt you in the customers inner circle of favorite brands? Find out in this new complimentary white paper by Customer Insight Group, Inc.

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Customer Insight Group is dedicated to helping organizations realize the greatest value from their customer base. We provide resources that deliver relevant information on the latest thought leadership regarding loyalty marketing. We want to share with you 30 exciting ideas for loyalty marketing rewards - compelling enough to gain exposure to capture your customers’ attention and participation in successful loyalty marketing programs.

#1 How is your earning rates for loyalty program rewards? Analyze earning rates by segments to understand engagement of target segments.

#2 Have you analyzed your reward program redemption rates. Who redeems? What do they buy? What’s the average sale at redemption?

#3 For your loyalty rewards program, which customer earn the rewards and are not redeeming. Do you have a plan to engage them?

#4 Hard benefits, like rewards, are just one part of the value proposition. What are your soft benefits that build the emotional connection?

#5 Enhance your loyalty program value proposition by tailoring soft benefits to resonate with key growth and retention customer segments.

#6 Tiering your loyalty program gives your customers a reason to give you a greater share of wallet and creates upward migration in spend.

#7 Loyalty benefits should be a mix of hard and soft benefits. Hard benefits reinforce value and soft benefits build emotional connection.

#8 Create an Internal Communications plan for your loyalty program to educate everyone on the value to the organization and to the customer.

#9 Internal communication plan should educate, motivate and engage employees in supporting the loyalty program and company goals.

#10 Internal communication plan for your loyalty program need to include a dashboard of results at the program, customer and employee level.

#11 When creating the internal dashboard, interview key stakeholders to identify customer metrics stakeholders can use to optimize results.

#12 Loyalty program metrics need to include a dashboard of customer, campaign, program across channels, and employee performance.

#13 For a new loyalty program, do qualitative and quantitative research to validate that the value proposition resonates with customers.

#14 Conjoint customer research can be used to create the optimal mix of hard and soft benefits for your loyalty program.

#15 Customers will carry your loyalty card if your customers see value in the program and if they are engaged in your brand.

#16 Include social networks in your customer communications plan. Loyal customers are your best advocates.

#17 Give your loyal customers a better value than you do a prospect. There is nothing worse than being an avid customer and not appreciated.

#18 In B2B employee turnover can significantly impact your customer relationship. Do you have a strategy in place to address this issue?

#19 Always give the customer more than they were expecting. Customers like to be pleasantly surprised and when they are, they shop again.

#20 Follow up on a sale. Acknowledge the customer and they will likely shop with you again. Customers want to be appreciated.

#21 The best way to build a successful loyalty program is to create a solid financial model that can measure projected ROI before launch.

#22 Design your loyalty program based on your objectives: do you want to boost customer retention (the attrition benefit)?

#23 Design your loyalty program based on the objectives: do you want to increase in the amount customers spend (the lift benefit).

#24: Design your loyalty program based on the objectives: increase the velocity and volume of new customers (the acquisition benefit).

#25 Segmentation strategies and execution are critical to avoiding significant reward costs. Increase engagement with the “right” customers.

#26 Motivating incremental purchase behavior begins with matching the right reward to the right target segment at the right time.

#27 Offset rewards program costs by allowing complementing brands to sponsor offers to target growth and retention segments.

#28 With planning and attention to best practices, cause marketing can be a productive component of your overall loyalty strategy.

#29 Causes that evoke customer emotion tend to be the ones that have high mass appeal and add value to customer loyalty programs.

#30 Precision target and segment customers, both in terms of demographics/interest and in rewards offers.

Click here to learn more about Loyalty Marketing and examples of successful Loyalty Marketing Programs.

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With more than 19 years of experience in developing and enhancing customer loyalty programs, we know how important it is to use a customer-centric approach to align and deliver value that is meaningful, timely and mutually beneficial to the customer and ultimately the company as well. When developing the benefit strategy for your loyalty program we use a mix of the five types of benefits to achieve your business objectives:

• Initial Participation and Enrollment Benefits: Create instant gratification and affinity with the company. These are the core set of benefits members enjoy upon applying for program membership.
• Cumulative Benefits: The more a customer exhibits the desired purchase behavior the more he/she is recognized and rewarded. Often times, this type of benefit is associated with a points or rewards program where a customer accumulates points to earn a specified rebate or dollar off reward certificate.
• Periodic Benefits: Strategically invest markdowns by targeting discounts and special offers based on the customer’s previous purchase behavior.
• Instant Benefits: Unexpected “little surprises” that occur spontaneously from the customer’s perspective reinforce the sense of belonging and increase share of wallet.
• Emotional Benefits: Explore and reinforce the customers’ emotional connections with the brand with benefits that are unique to the company and to the brand.

In addition to varying the benefits based on your business objectives, we also tailor the benefits based on your customers’ anticipated reaction.  A recent study that is soon to be published in the Journal of Consumer Research shows that consumer reactions vary widely across cultures to special recognition and free gifts associated with loyalty programs.

Learn more about the study published in The New York Times.

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A recent research study published in The Journal Of Marketing (Are Women More Loyal Customers Than Men? Gender Differences in Loyalty to Firms and Individual Service Providers by Valentyna Melnyk, Stijn M.J. van Osselaer, & Tammo H.A. Bijmolt) debunks the conventional wisdom about women being more “loyal” customers than men. The authors conducted five studies showing that this is not always the case. Female customers are indeed more loyal than male customers to individuals, such as specific service providers (e.g., a hair dresser, a doctor, a salesperson). However, the difference is reversed for groups and group like entities, such as companies. That is, men tend to be more loyal than women to companies and organizations (e.g., a hair salon, a medical clinic, a store).

What does this mean to you? Gender affects customer loyalty—women are more loyal to individual employees or service providers, and men are more loyal to groups of people or companies. Female customer defection should be anticipated when an employee leaves a company, therefore requiring readily available measures to accommodate for this possibility.

In addition, advertising strategies should correspond to the preferences of the gender of the customer base. For example, “for companies targeting men, an advertising strategy that stresses group themes may engender more loyalty, whereas for companies targeting women, advertising themes focusing on personal relationships may be more suitable.” Alternatively, marketing might focus on methods that are symmetric for women, stressing a kind of peer relationship, and for men, stressing asymmetric involvement, like being a follower in Twitter.

Download the full report and study, Are Women More Loyal Than Men.

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Half of American consumers have defected from national brands to store brands for food, household, health and personal-care products, but most are still reluctant to switch to store brands for child- and pet-care purchases, according to research from ICOM released on July 9, 2009.

A May 2009 ICOM study  of 1,530 American consumers revealed key differences for store-brand switching by category by asking consumers whether they had switched away from national brands to store brands in the preceding six months.

The survey found that nearly 60% of consumers switched to store brands for food, while almost half switched for health and personal-care products (48% for each).

A separate ICOM survey in April firmly established the grocery store as the epicenter of the American consumer’s coupon activity. In that survey of 1,827 Americans, 86.5% of respondents who said they had used coupons in the last month identified the grocery store as the place of redemption. The grocery far outpaced its closest competitors, which included restaurants at 46.5%, department stores and mass merchants such as Wal-Mart at 41.3%, and drug stores at 34.9%.

Not that long ago some consumers felt stigmatized by coupon usage. The recession may have changed that. Fully 86.8% of respondents in the April survey said they are using the same amount or more coupons than they used a year ago. One out of three said unequivocally they’re using more coupons than a year ago.

“The good news for national brands is that there is, in fact, an opportunity to win back customers who have switched. Some marketers were worried they’ll never return. But the win-back depends on knowing who is switching and why, and responding with targeted incentives based on that strategic information,” Storey said.

In another sign of the times, survey respondents made it clear that customer loyalty rewards supporting basic household purchasing are the most appealing. That means groceries and gasoline. 70% of respondents said they’re interested in getting rewards at the grocery, 60.7% said gasoline. The next closest categories were retail stores at 41.2%, household products at 40.3% and travel at 29.3%.

Research Methodology
ICOM`s April and May surveys were sent to 70,000 households nationwide. The
1,827 survey participants in April represent a 2.61% response rate. The 1,530
survey participants in May represent a 2.19% response rate. Epsilon Targeting,
the new data division of Epsilon, combines the collective resources of Epsilon
Data Services, ICOM and Abacus to form the industry`s largest set of data
solutions.

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Businesses appreciate every sale but a sale made to a repeat customer is a virtual seal of approval. Customer loyalty keeps businesses running and is very sought after. What is it, however, that gains and maintains customer loyalty? Basically it is making and keeping the customer happy, (customer satisfaction). There are many ways you can achieve this and the more ways you incorporate into your business practices, the more likely you are to get and keep customer loyalty. Here are 20 tips to improve customer loyalty:

We’re building the list of 100 tips, this includes the first 10 tips  published on July 10, 2009 and an additional 10 tips to further refine your program strategy and execution.

#1 How is your earning rates for loyalty program rewards? Analyze earning rates by segments to understand engagement of target segments.

#2 Have you analyzed your reward program redemption rates. Who redeems? What do they buy? What’s the average sale at redemption?

#3 For your loyalty rewards program, which customer earn the rewards and are not redeeming. Do you have a plan to engage them?

#4 Hard benefits, like rewards, are just one part of the value proposition. What are your soft benefits that build the emotional connection?

#5 Enhance your loyalty program value proposition by tailoring soft benefits to resonate with key growth and retention customer segments.

#6 Tiering your loyalty program gives your customers a reason to give you a greater share of wallet and creates upward migration in spend.

#7 Loyalty benefits should be a mix of hard and soft benefits. Hard benefits reinforce value and soft benefits build emotional connection.

#8 Create an Internal Communications plan for your loyalty program to educate everyone on the value to the organization and to the customer.

#9 Internal communication plan should educate, motivate and engage employees in supporting the loyalty program and company goals.

#10 Internal communication plan for your loyalty program need to include a dashboard of results at the program, customer and employee level.

#11 When creating the internal dashboard, interview key stakeholders to identify customer metrics stakeholders can use to optimize results.

#12 Loyalty program metrics need to include a dashboard of customer, campaign, program across channels, and employee performance.

#13 For a new loyalty program, do qualitative and quantitative research to validate that the value proposition resonates with customers.

#14 Conjoint customer research can be used to create the optimal mix of hard and soft benefits for your loyalty program.

#15 Customers will carry your loyalty card if your customers see value in the program and if they are engaged in your brand.

#16 Include social networks in your customer communications plan. Loyal customers are your best advocates.

#17 Give your loyal customers a better value than you do a prospect. There is nothing worse than being an avid customer and not appreciated.

#18 In B2B employee turnover can significantly impact your customer relationship. Do you have a strategy in place to address this issue?

#19 Always give the customer more than they were expecting. Customers like to be pleasantly surprised and when they are, they shop again.

#20 Follow up on a sale. Acknowledge the customer and they will likely shop with you again. Customers want to be appreciated.

Filed under: Brand Loyalty, Customer Experience, Loyalty Marketing, Uncategorized | No Comments »