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Recession Pushes Loyalty to the Next Level

[Forbes, April 9, 2010]

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.