The word “audit” usually scares people. In the context of a customer retention and loyalty programs, however, an audit helps you understand where the biggest return on investment (ROI) potential is.

An audit (usually qualified as a “loyalty audit,” an “program audit,” etc.) is a non biased look at your company’s loyalty program, email marketing, customer relationship management strategies, or any other part of your business that needs improvement. You know the better you design and plan a project, the easier that project will be to execute. That same logic holds true here.

Instead of jumping into a project because it’s been on the back burner or is relentlessly internally championed, you must set priorities based on their anticipated lift to the business. Many companies spend millions of dollars based on the whims of executive management or new database technology that was thought to be “cool,” though the actual value the new database provided was questionable without knowing how you plan to leverage it.

In a nutshell, an audit should inventory what’s good and bad with your current marketing efforts and loyalty program. Depending on the expertise involved, an audit should list problems with current initiatives and suggest solutions.

The difference between doing upfront strategy in an audit and doing it during the project’s development is huge. The audit not only suggests a high-level solution, it also prioritizes the problems based on how important the solution will be to the bottom line. The audit should be both a problem identifier and a mini strategy paper. Whereas a normal development list is based on individual problems, an audit has the advantage of being able to identify symptoms of an overarching problem, then prioritizing the problem as a whole, not just its underlying symptoms. Not sure how to start? Download a free white paper that includes actionable steps you can take to audit the performance of your loyalty marketing strategies .

Plan Before You Build; Audit Before You Prioritize

As you prioritize your projects this year, take a closer look before you start development. More than likely, many of the tactical projects are really symptoms of larger customer retention or loyalty problems. Hopefully, you aren’t too close to your business to see them. Whether you do it internally or externally, an audit of your current loyalty and customer relationship marketing program is essential to understanding (and solving) the real problems affecting your bottom line.

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Today’s consumer is a multichannel shopper and consequently demands the same conveniences the web offers when shopping in-store. With the latest trend coined “Retailing 2.0,” traditional brick and mortar stores are changing the way they do business to better meet the needs of shoppers while also remaining competitive with Internet retailers such as Zappos.com and Amazon.com.

So does this look like? When Kohls and J.C. Penny shoppers can’t find what they are looking for at their local store, they are given the opportunity to buy online by using in-store kiosks. Even Macy’s, almost a perfect example of a classic ” department store,” has responded to drastic increases in online sales over the last few years by replacing its standard cash registers with Internet friendly registers that allow employees to place online orders for customers in-store.

Though offering great conveniences for customers, the trend is also in line with current economic concerns. Processing online orders costs much less than leasing retail space and staffing an army of sales clerks. For these reasons and others, it comes as no surprise that many retailers are building up their e-commerce strategies.

Gap, Inc. is expanding its e-commerce store to Canada and Europe this fall, while Ann Taylor Stores Corp. is expanding online selection, implementing a quicker and more convenient checkout process, and adding personalization capabilities on-site.

As explained by Forrester Research, retailers must improve their multichannel strategy in order to satisfy changing consumer demands. A study recently released by the firm predicts that by 2014, U.S. online retail will reach nearly $249 billion.

Read the full article here.

In a time of both  lingering recession and more choices for consumers’ precious dollars than ever before, retailers are being forced to think differently about how to achieve brand loyalty. According to a new study by comScore, the percentage of brand loyal shoppers has steadily declined across all categories over the past two years.

Less than 50% of shoppers in 2010 reported purchasing the brand they had once been most loyal to.

The following strategies present some of the latest loyalty trends that both retailers and customers can appreciate and benefit from.

1. Personalized Discounts: Historically, loyalty programs have been clearly defined to offer the same deals and discounts to all members, but loyalty marketers understand that today’s consumer demands personalization. Many coupons are one-time use, personalized based on past purchase history, and may even contain a customer’s name to make the offer more customized.
2. Social Media: Brands are meeting their customers online, engaging in the conversations and offering exclusive rewards. “Liking” a brand on Facebook and following one on Twitter now garners consumers more deals and discounts as a reward for proving brand loyalty through social networks.
3. Loyalty via Mobile: With the explosion of the mobile application market, retailers haven’t taken loyalty mobile. Location based social networks including Foursquare, Gowalla, Whrrl, and LooptStar reward customers who “check in” at various locations. For example, Gap customers who check in on LooptStar receive a 25% off coupon after two visits. Starbucks has a mobile application version of its in store loyalty program and offers a free drink after 15 paid visits.
4. Health-care Rewards: This spring, Rite Aid launched its Wellness+ Rewards program, a unique loyalty program in its category. Members earn 25 points for every prescription filled and one point for each dollar spent in store to redeem free health screenings and 20% discounts. Then, just recently, CVS announced its ExtraCare Advantage for Diabetes extension offering double rewards on purchases related to diabetes.

Marketers must continuously examine their loyalty program, listen to customers and tailor rewards to meet the changing needs of consumers, across all channels. Is it time to refresh your loyalty program?

Read the full article.

Savvy consumers have long looked to coupons for additional savings, but a recent study shows that online coupons can have a significant impact on a retailer’s bottom line. According to a recent “Online Shopper Intelligence” survey conducted by Compete, one-third of online shoppers generally use coupon sites while shopping online. What does this mean for retailers? The following are some key findings.

Coupons can drive sales. 57% of shoppers who used a coupon code during checkout said that if they had not received the discount, they would not have competed the purchase.

Coupons have a high ROI. The small discount consumers receive incentivizes and encourages shoppers to spend more money.

Consumers who used a coupon on their last purchase spent an average of $216. That’s a 56.5% increase compared to the average $122 spent by consumers who did not use a coupon.

Coupons can increase good will with customers. Customer satisfaction was about 4% higher for consumers who used a coupon compared to those that did not.

Coupons can build customer loyalty. Consumers who use an online coupon are 5% more likely to buy from that retailer again.

Consumers today are shopping differently. They are taking full advantage of the tools available to research products before buying and comparison shop to make certain they are getting the best value. Overall, consumers saved about $5.98 million online in May, 2010. Still, online coupons offer much more than small discounts for consumers. Retailers who offer coupons are benefiting from higher valued purchases and increased brand loyalty.

Wondering who had the most online coupon response this past month?

According to coupon aggregator RetailMeNot, the following two companies had the most popular coupons in May, 2010.

• Hotels.com: $30 off a five-night booking
• IHOP: free entree with the purchase of two entrees and two beverages

Read the full story here.

How many Facebook fans, Twitter followers, and YouTube subscribers does your company have? If your organization is like most, these numbers continue to increase but what are you doing about it?

A new study by Vivaldi Partners and Lightspeed Research analyzed more than 60 companies to determine how these social audiences create true value for companies. The study revealed that “social currency” is crucial for fostering customer loyalty and engagement through social media.

“Social currency is the extent to which people share the brand or information about the brand as part of their everyday social lives at work or at home. The study shows that social currency significantly drives brand loyalty.” Vivaldi Partners

Three Tips for Social Currency

1. Advocates Trump Followers. Starbucks has 80% more Twitter and Facebook followers than Dunkin’ Donuts. Does this mean Starbucks has a stronger and more loyal customer fan base? Not necessarily. According to the study, “Dunkin’ Donuts fans are 35% more likely to recommend the brand,” because the company takes a more customer advocacy driven approach as opposed to Starbucks’  strategy of promoting its products’ superiority.

Dunkin’ Donuts’ two rules for social media campaigns: “make them fun and make them cheap,” says the company’s relationship marketing director.

2. Social Isn’t For Everyone. Some brands are successful strictly for their functional superiority and do not need social currency to drive brand loyalty. Gillette is an example of a company with a 96% customer satisfaction rate. Social media campaigns from Gillette may only trigger conversations from the 4% of customers who are not happy with the company’s products. Not every brand should be social.

3. Social Tools Are a Means, Not an End. Axe knows how to engage humorously with its audience, but the company’s social tactics have not translated into meaningful conversations for the brand.

Conversly, Clinique has earned a strong social currency by educating and empowering its customers behind Clinique products and welcoming anyone has a brand evangelist. Companies cannot rely solely on social games for valuable connections with their customers.

“Marketing leaders should identify whether their brand has such social currency, and invest more in building strong connections between customers and the brand.” Forrester Research

Building social currency can take many forms, but as conversations increasingly occur within the digital arena, loyalty marketers must find ways to leverage brand conversations through credible social media efforts.

Read the full report here.

Ford’s VP of global marketing, Jim Farley recently described the recession simply as a “blessing” for the automaker. With plummeting sales and loss of consumer sentiment, companies have been challenged to reexamine their business models, listen more closely to their customers, and offer greater value in order to retain customers. Marketers that have been successful in facing these challenges are now realizing the rewards, and are still offering up rewards for their customers.

Ford Motor Co., now coined America’s most surprising consumer-electronics company by Fast Company Magazine, recently sold off all of its secondary branches so that the company could focus solely on its core brand and customers. “We shrank the company to make it grow, and to do that we transitioned our marketing, especially in the digital space,” says Farley. Ford acknowledged the hard reality the economic downturn presented: that everything just has to work. The harsh environment has forced the company to realize things were not working. Through experimenting, innovating, and turning the brand over to its consumers, Ford has successfully changed customer sentiment. While the company had been losing U.S. market share for 14 consecutive years, more and more consumers are now putting Ford on their shopping lists.

Kmart, a once bankrupt discount retailer, has recognized the recession as “an opportunity to expose ourselves to customers we perhaps otherwise wouldn’t have been able to two to three years ago,” explains Chief Marketing Officer Mark Snyder. As more and more customers sought discount retailers during the economic downturn, Kmart saw opportunities to alter customer perception. To do this they became aggressive with exclusive in-store partnerships with Country Living home collection, a line of teen apparel from Disney teen star Selena Gomez, and exclusive Top Flite golf apparel for men. They also launched Kmartdesign.com to showcase the company’s team of 250 top home decor and apparel designers. As a result of listening to their customers, Kmart has proven that the brand can provide relevance, great quality products, and great value.

For a retailer that does not compete on price alone, the recession has challenged market leader Target to continuously remain innovative in its loyalty offerings. “Target is looking for ways to make it easier for our guests to find additional savings.” The company is currently testing a new rewards program that offers REDcard members a percentage off all purchases.

Finally, Best Buy has taken successful initiatives in response to the economic crisis by assuring that its Rewards Zone loyalty program constantly keeps the Best Buy brand on consumers’ top-of-mind. The company has been a game changer in requiring a valid way to communicate with its members—mostly through email addresses. They also created additional program incentives with a second tier of high-value added program benefits.

The continued efforts behind customer centric strategies and focusing on building customer relationships has proven that loyalty marketers are not forgetting the lessons they have learned over the past year.

The inherent customization of social media creates opportunities for marketers to return to a time when successful retailers had relationships with their customers and their specific preferences. Even so, how do you break through all the noise to really engage your audience and engender customer loyalty?

Retailers must create relevance across all channels. A recent study from NCR Corp. found that,

81% of survey respondents said they’re more likely to pick retailers that enable them to interact via their preferred combination of online, mobile, self-service, and in-store channels.

This startling statistic is evident of consumers’ decreasing brand loyalty to retailers, but also the opportunities companies have in fostering a “consumer-side loyalty” through relevance and personalization. To enhance customers’ experience, companies must ensure a seamless multi-channel retail experience and then find ways to integrate their social media strategy across all channels.

According to the study, 42% of respondents want information to be consistent across multiple channels, while 44% also agreed that their retail experiences would be much quicker and enjoyable if brands offered tools for greater personalization.

Social media is here to stay and marketers that can find ways to integrate relevant experiences for their customers will be better positioned for growth and increased consumer loyalty. Where does social media fit into your existing loyalty strategy?

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As retailers continue to evolve loyalty programs to meet the changing needs of today’s consumer, channel integration is more important than ever; but data is key. A recent survey conducted by the Aberdeen Group of 100 retailers revealed the greatest challenge companies are facing today is the inability to capture customer data. Chris Cunnane, senior research associate at Aberdeen, explains the two significant problems this poses for retailers:

1. Customer insights based on prior purchase behavior or demographics are unavailable to create personalized offers.
2. If retailers are unable to ascertain channel preferences for communication delivery, marketing efforts are duplicated across multiple channels and are therefore ineffective.

Here are three key take aways  from best in class retailers cross-channel strategies that you can use today:

• Create a holistic view of the customer relationship.With a CRM database in place, you have a clear view of the customer’s value and overall relationship.  You can determine how actual customer behaviors drives economic value and develop strategies to proactively manage customer interactions across customer touch points to stimulate profitable behavior changes to achieve your business objectives.
• Create a personal connection with social media. Remember the conversation is between people–people discussing their needs, preferences and opinions about your brand and their interactions with your brand. You need to connect with customers and influencers to reinforce your value proposition and focus on what really matters to your customer — creating concise, relevant and compelling messages that build relationships based on your customers’ needs. To truly engage the customer in the brand experience, social media is best integrated with elements of the your customer loyalty program.
• Use mobile and digital marketing campaigns to extend reach of your message. The mobile and digital marketplace allows retailers to take advantage of location-based promotions, smart posters, 2D barcode promotions, or social media applications.

Customer preferences are changing and retailers who approach marketing messaging more effectively can expect to remain top-of-mind with consumers. Successful retailers have already taken advantage of multiple platform programs, but even more are making plans to do so. According to a recent study, only 24% of all retail organizations surveyed utilize a multi-channel loyalty strategy, but 58% of retailers plan to implement cross-channel strategies in the next 12 to 18 months.

The potential of location-based mobile applications has been enticing marketers for a couple of years now, but it seems that Foursquare may be turning this potential into a powerful reality for some.

Anyone can download Foursquare on their iPhone, Blackberry, Andriod, Palm or other mobile device to “check-in” and let friends – and marketers – know where they are. By combining GPS location information, contact data from the user’s address book or Facebook account, and fun points-based rewards for customers, loyalty marketers now have incredible relationship-building tools.

From restaurants and retail stores to salons and gyms, companies have quickly realized that a customer’s phone may be a powerful and data-rich replacement for a wallet full of loyalty cards. In March, Foursquare introduced a tool that offers businesses data about who is checking-in, the total number of check-ins, customer demographics, and the top days and times that customers are visiting. Larger, forward-thinking brands have already begun to join the location fun and games.

Starbucks currently offers a “Barista” Foursquare badge for customers who have checked-in to five different Starbucks locations. The company is planning on testing various reward strategies over the next several months, such as invitations to events, photo-sharing, and online reputation scores.

Frozen dessert franchiser Tasti D-Lite has gone even further with their Foursquare strategy by incorporating the social network into its new loyalty program. In January, the company started replacing its in store punch cards with a chain-wide loyalty program called TastiRewards. D-Lite knew their customers were already checking-in on Foursquare, and wanted to know what sort of mechanism they could put in place to facilitate the existing behaviors. By registering their rewards card online with Facebook, Twitter and Foursquare, customers are rewarded for each social network connection along with their in-store purchases. With this social network integration, Tasti D-Lite customers are automatically checked-in on Foursquare and can update their location statuses with friends on Facebook and Twitter.

Pepsi has also weaved its loyalty program into the location-based technologies. Companies are learning that the tools are especially powerful for consumer packaged goods brands who market their products heavily, but rely on drugstores, retailers, and restaurants to actually get customers to the points of sale. By using location-based data to know when customers are near a location that sells Pepsi products, the company drive them in-store by delivering specific offers right to their mobile phones.

While location based loyalty is an exciting new frontier for loyalty marketers, Foursquare remains in an experimentation phase with just around one million users. Some present issues with the technology that must be addressed are the accuracy of GPS, the value of the customer data, how it relates to customer loyalty over time, and of course the privacy concerns that inherently exist with any social network.

In the meantime, I am going to visit the iTunes App Store on my phone to see what this is all about.

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• In just two years, over 2 billion downloads of more than 100,000 iPhone apps have been completed.
• The mobile web experiences more than 450 million users worldwide.
• 40% of all U.S. adults have downloaded as least one mobile application.

A recent report published by COLLOQUY explores how smartphones are transforming the way consumers shop, buy, search, play, and connect with the world. For loyalty marketers, the impacts are significant. Smartphone technologies promise new ways for companies to strengthen the two-way relationship with customers, including loyalty program and rewards integration. Some marketers have begun mobilizing their loyalty efforts with 2D barcodes, iPhone apps, and mobile websites.

“It’s the kind of CRM companies have been looking for, because mobile makes interactions very personal, with methods that have more value for customers.”

For example, Starbucks Coffee Co. is running a loyalty program based on 2D bar-code coupons deployed via SMS. The campaign is currently running in Guadalajara and San Luis Potosi, Mexico, but based on the 60 percent mobile coupon redemption rate, it is likely to be expanded.

“The main strategies of this campaign are to reward loyal Starbucks customers and to get to know new customers and attract them to their stores,” said Rodrigo Rivero Borrell, director/CEO of Codilink Mexico, Mexico City. “On the one hand we’re helping people to get to know the brand and the product and rewarding loyal customers with prizes and discounts.

Mobile technologies are used to support loyalty programs in a number of ways:

• Loyalty membership ID: a replacement for the traditional loyalty card or keychain tag
• Points redeemer: the mobile device can serve as an ID to both earn and redeem rewards
• Instant program update channel: program information, news and rewards announcements for connected members
• High-impact communication vehicle: location-specific services, on-the-go and on-demand access
• Delivery channel for rewards and recognition benefits: apps, 2D barcodes, coupons, or members-only games, events, or content

As the report explains, “The idea is to increase customer loyalty by giving customers what they want, when they want it and how they want it—and mobile offers an enticing way to do just that.” Still, the emerging and quickly evolving mobile trends mean marketers must be more dynamic, flexible, and cautious in decision-making than ever before.