Alternative to Cards

Milicent McDonald
Member

Posted 11-Oct-2006 09:49 AM
What are some alternatives to loyalty cards? We are trying to develop a loyalty program but don't want to burden our customers with having to carry another card. Adding to our issue is that we are a specialty retailer for a line of products with an average purchase cycle of 18—24 months. Any advise you could give me would be greatly appreciated.

Michael Lowenstein, CRMGuru Panelist
Advisory Board
Member
Picture of Michael Lowenstein, CRMGuru Panelist

Posted 11-Oct-2006 01:15 PM
Generating optimal loyalty behavior isn't really at all about cards, points, or gifts/prizes. It's about customer-perceived value (benefits and solutions), both functional and relationship. So, if there are things that you can identify (information, services, problem-solving, etc) which build value, and eliminate/reduce other suppliers from the customer's consideration set, increase level of favorability toward your organization, and enhance the level of voluntary, positive neural communication (WOM) on your company's behalf, and you can also leverage all customer profile data to increase value perception, you will have achieved the desired level of loyalty behavior.

Look at Ritz-Carlton, as just one example. Although they have a loyalty program, it is a minor player in the delivery of high-end value and creation of optimal guest behavior. Many other examples could be cited: Southwest Airlines, Harley-Davidson, Tesco, Harrah's, etc., etc.

Michael

Vladimir Dimitroff
Member

Posted 11-Oct-2006 01:39 PM
You don't have to issue plastic cards, this is a 'loyalty program' model often misunderstood and applied without much thought.

In mass market / fast-moving goods retail the shoppers are anonymous: store personnel cannot remember and identify them. The card is, therefore, an identity tool (which may or may not carry additional information, like accumulated usage / earned rewards).

For categories of less frequent purchase there is usually an opportunity to capture the customer identity at the start of the relationship (using as a tool for this the warranty form, or a user registration process, or a courtesy questionnaire). Once the identity is stored, repeat customers can identify themselves by name, account number or any attribute captured like address etc.

One example of a porduct with average 18-month replacement cycle is mobile phones: customers don't need a card because the phone is the card: uniquely identifiable, personal and carried everywhere more regularly than even a wallet with cards.

What is important for businesses with your length of cycle is not the identification token, but the continuing contact with the customer during this period. If you want to retain customers, increase chances of repeat purchase or build loyalty (which is a lot more than that), you must interact, sustain a dialogue with them. An interaction doesn't have to be a purchase transaction (although in many cases it may invovle the purchase of consumables, accessories or associated goods)—but it can be just communication over any of multiple channels available (phone, e-mail, SMS, mail and in some cases even face-to-face meetings may be justified).

Some well tested tools and techniques that work for this on-going customer interaction are:

- Newsletters and periodic publications (electronic or print) on topics of interest, loosely associated with the product. My ski-boots supplier sends me news of competitive events, upcoming ski resorts and snow conditions, gear design innovations etc. Others send even unrelated (but interesting) information, e.g. about a music festival they are sponsoring or a charity they support.

- Periodic satisfaction calls, finding out about product usage and helping with any porblems, offering advice on making the most of the product etc.

- Membership-based communities (user / owner clubs), a very powerful loyalty builder! These perform multiple functions: 1. Rewarding regular users with small but tangible extras and 'freebies', positioned as a privilege for club members and with a value reflecting the customer purchase history; 2. Ensuring an open communication channel and regular interactions (often incorporating a newsletter or club magazine, see above); 3. Even more than the one-way communication with newsletters, a CLub offers a platform for dialogue, two way exchange with your customers where you learn valuable insight about their needs and experiences witht he rpoduct, helping you to improve targeting of existing products and development of new ones; 4. A further step is the many-to-many communication between members (virtual, e.g. in online forums, or physical—in live club events)—this adds great value to all members at a lower cost to you than,e.g. redeemable points. Community interaction also provides (if smartly moderated) the ultimate insight you can use to improve your business. This is also the model where, encouraged by these exchanges, more of your customers will become advocates (an ultimate measure of loyalty) contributing to your marketing and sales efforts by 'spreading the word'.

These examples are by far not exhaustive, within this space it is not practical to list all best practices—but I hope you get the point: remaining in on-going contact and interacting with your customers is a top priority, particularly where purchases are infrequent.

Just my 2c worth of opinion—best of luck in building those relationships and growing your customers!

Vladimir Dimitroff
PRISM Consulting (UK)
vdimitroff@prism-gb.com

Howard Schneider
Member

Posted 12-Oct-2006 05:03 PM
There are many alternatives to card-based reward programs, as other colleagues have pointed out in their posts. In our practice, we often work with retailers to develop unique ways to build loyal customer behavior. Like your business, some of our clients have long purchase cycles, or high-ticket, infrequent transactions (even, for example, automobiles!).

If you visit our website at www.metzner-schneider.com, in the ARTICLES section, you'll find several pieces which could be helpful in guiding you through the retail loyalty alternatives. In particular, articles entitled, "Retail Loyalty 101," and "Getting Real About Retail Programs" may be of interest to you.

Best of luck in your loyalty efforts! Please feel free to email me directly at howard@metzner-schneider.com if you would like to chat about this topic some more.

Best regards,
Howard Schneider