Written by: PAUL MALCOLM
You have an idea of creating a loyalty or engagement program, or even worse, your CEO does. What do you do now? I mean, you know a bit about loyalty, right? You are a member of an airline’s Frequent Flyer Program and made a redemption flight? Or redeemed an iSomething that turned up in time for Johnny’s birthday with all the points you earned from grocery shopping with a credit card?
“It’s points and toasters. Or is it points and tiers? Hold on a minute, how do I pay for the toasters? Where do I store them? I’m out of space in my garage. Wonder if I can do it in Excel? Do I have to deal with Bob from IT? That’s it, I have to run it in Excel or it will be a nightmare! How many rows can I put in Excel? Maybe I can get the agency to do it - they have people and good ideas, and on a retainer. How much budget do I have left? Is it going to be one of those boring ones I see all the time from my coffee shop on the corner? I’ve done an app - I’ll get my app guys to do it. That will work. What do they mean by breakage? Really? I have a day job to do!”
Don’t know where to start? Don’t panic. You are not alone.
I’m sure that one or more of those thoughts have crossed the minds of anyone during their first loyalty program. The good news is setting up a loyalty program is more about science than creativity, at least in the early stages to set up the program. Once the foundation is laid, a lot creativity can come into play; though of course there are boundaries we need to be aware of.
Work out the why
This is the single piece of information that most marketers are not prepared for, the hardest thing to extract. However, it is the one important piece that will make the biggest difference to the initiative in the planning stage. What you will stand by as the planing becomes implementation. As implementation becomes launch. And, as launch becomes a living and breathing program, that is making a huge difference to your business.
When I ask a question like ‘Why are you doing this?’ or ‘What do you want to achieve?’ the answers range:
- ‘To keep our position/leapfrog our competitors in the market’….(Match what your competitors are doing in your market / in other markets?…)
- ‘C-Level Directive’…(The C-suite get it, but maybe you’re not convinced, or know how you are going to implement it….)
- ‘IT Project’….(IT has some budget left over, they know loyalty is coming one day, and they don’t want to lose control….)
- ‘To produce more loyal customers and increase revenue’…(That’s a new one…)
There are many more, but none of these are wrong. It’s not a 1+1=2 scenario.
What makes the why so important is that your brand (be it the existing brand, or the transformation into new loyalty brand), your company, your colleagues, partners and every member of staff need to behind it. And to be behind it, they need to understand why. If it’s to increase revenue? Great. Acquire and retain customers? Good. Give the consumer a better experience? Yes. Do what company X is doing? That’s a big fat no.
You need to clearly articulate, then announce why your company is implementing the initiative with what it means for the future, and stand by it under huge scrutiny from other colleagues, departments and countries. Therefore, it needs to be articulated appropriately. Simple. Direct. Focused.
The Business Case
This is important. I mean really important. This is the stick in the ground that will determine if the program can live and breathe beyond the first year and what you will be measured on (and likely compensated on as a KPI) - so it’s best to get this right.
While you know your business and customers better than anyone else, you need to be cognisant of the many loyalty techniques and tricks of the trade. These can be used to adjust the program (professionally, ethically and legally) and tweaked later without a major impact to the program or negative impact to the consumer. There are also many rules of thumb that can be applied in terms of managing costs at a high level in a business case scenario. It could be a good time to bring some external help to understand and assess your business, and build out the business case with you.
The business cases should include the basic fundamentals of a business plan - market, budgets, opportunities, revenue projections and ultimately ROI. Treat the program like a business and create a P&L - it will (likely) have its own measurable source of income, costs of running the program and ultimately revenue contribution to the business.
In preparing this, consider your organisation. The culture will define if it is a startup pitch deck of 10 slides with detailed numbers attached, or a 50 page document with minute detail. Whatever the situation; Know your audience. Know the why. Know your numbers. Have the rest in your back pocket.
After the big tick comes the exciting part - building out your program, finding the right partners and determine the full structure and how it works. That’s where creativity comes to play.
Be strong. The rewards are there, for you, your program, and more importantly, your customers.
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