November 16, 2010

From joint employee/customer engagement programs, to mobile initiatives, to social gaming, Mark Johnson, CEO of Cincinnati-based Loyalty 360—The Loyalty Marketer’s Association, shares insights into how companies can maximize their customer engagement initiatives.

“In today’s crowded marketplace, creating loyal, engaged customers is more important—and more challenging—than ever,” says Johnson. “That is why we are going to see a number of key trends unfold over the next year.”

Johnson predicts the following 11 key trends will dominate the loyalty marketing industry in 2011:

1. Marketers will increasingly understand that loyalty is not a program—it is a journey and a strategic business goal. While points programs have been around for years, from a strategic marketing perspective building true loyalty based on a total customer experience is still relatively new and a burgeoning area for most brands. Loyalty initiatives will focus on engagement and building long-term relationships.

2. Loyalty will focus more on emotions rather than on rational, incentive-based initiatives. Behavioral economists tell us that economic decision-making is 70 percent emotional and 30 percent rational, which is why incentive-based loyalty programs that tend to be rational do not work well. It’s the emotional side of the decision-making process that creates connected, passionate, and engaged customers.
3. Companies will increasingly look at how customer engagement and employee engagement work together to drive bottom-line results. A 2009 Gallup poll quantified the impact of customer and employee engagement. It found that those in the upper half on customer engagement and the lower half on employee engagement, or vice versa, get a 70 percent boost in bottom-line results; those in the upper half on both customer and employee engagement get a 240 percent boost.
4. The voice of customer programs is an important strategy for brands, and we expect to see greater focus on it in 2011. A recent IBM study of more than 1,500 CEOs from across 60 countries and 33 industries discovered that “getting closer to the customer” is a top business strategy and area of focus for these CEOs over the next five years. In addition, 88 percent of the CEOs surveyed said this was a key area of focus, followed by 76 percent saying that “insight and intelligence” is also a key area.
5. Relevancy will be a key driving force of customer loyalty and engagement. Today’s customers want loyalty programs to be “about me”—individual, relevant, meaningful, etc. Personally relevant deals are the second most frequently chosen reason for spending more with a company, mentioned by 48 percent of people, according to new research by Ipsos Mori and The Logic Group. Data collection and usage is extremely important in building relevancy. Brands need to strategically use the information they collect to show customers they’re listening and give them what they’re asking for.
6. Marketers will take a more strategic look at in-the-moment marketing, reviewing how best to use all customer touch points, including mobile. ABI Research reports that businesses are poised to spend $1.8 billion on location-based advertising in 2015 as part of their overall mobile marketing budgets. However, with Congress looking to regulate net neutrality and cell-phone marketing, marketers are going to have to take a more strategic, generational look at how they can most effectively use moment marketing, including mobile. This is certainly not a one-size-fits-all communication channel. The most successful loyalty initiatives will be those that are relevant in terms of both messaging and communication.

7. The goal of customer loyalty initiatives will be to engage customers. Marketers now realize that although spend and number of transactions are important, customer engagement is the holy grail for loyalty initiatives, because with engagement comes loyalty, advocacy, trust, passion—the soft side of the customer relationship that directly impacts the bottom line.
8. Cause-related marketing/corporate social responsibility programs that are aligned with strategic corporate goals will effectively drive loyalty—especially with Millennials. According to a recent survey by Cone, interest in cause-related marketing grew among the general population between 2008 and 2010, with social and environmental causes had a significantly greater influence on the purchase decisions of Millennials than any other generation. If marketers are looking for 18- to 34-year-olds’ receptiveness to branding, social and green issues are a good place to start—85 percent of respondents said they would switch brands because of such marketing, while 73 percent said it would get them to try a new brand.

9. The restaurant industry will be investing more in loyalty initiatives. Restaurant rewards have long been popular as customer loyalty tools, and just-released research conducted by the National Restaurant Association in partnership with Loyalty 360 and rDialogue found that 84 percent of respondents plan to invest even more in these initiatives because of their proven ability to drive business growth.

10. The future of debit rewards is going to change. The demise of the debit card loyalty program has been greatly exaggerated, and the entire loyalty model is going to be dynamic and changing rapidly over the next few years. Expect to see growth in partnership programs and a greater focus on the coalition model. The key to making any of these programs successful is creating a currency that works.

11. Marketers will integrate social gaming into their loyalty initiatives. Social gaming has become a widespread activity across practically all demographics, with—a popular blog that tracks news and trends related to the social media site—reporting that there are now 200 million people playing games on Facebook every month, and 24 of those games have more than 10 million users per month. Traditional incentive-based marketing does not drive the level of consumer participation that can be achieved via gaming—and it’s this sought-after participation that builds lasting relationships, engagement, brand affinity, and brand loyalty.