With over 20 years of experience running large loyalty programs, Bryan Pearson, President of LoyaltyOne, is a good person to query about the state of the industry. So we asked him whether he felt that programs were addressing all of the levers necessary to engage customers. The answer in the majority of cases, he says, is no.
Pearson is the author of the best-selling book, The Loyalty Leap: Turning Customer Information into Customer Intimacy, as well as The Loyalty Leap for B2B. He explains that there are three essential elements involved with establishing loyalty: rewards, recognition, and relevance.
Relevance, notes Pearson, means providing customers useful information and special experiences based on their interests and preferences – in many cases demonstrated through interactions with loyalty programs, but also through customer relationship management data.
THE ‘CAPITAL L’
“A lot of the folks in this space stop short of creating the full value that’s available to them by connecting the data they get from their loyalty programs and other communications filtered through the customer’s perspective and what specifically is valued in the relationship,” he explains. Addressing this overlooked element is the basis of his concept of what constitutes the “capital L” in Loyalty.
Pearson observes that rewards offer the monetary benefit and recognition taps into the social aspect of relationships with status or differentiated experience, but he believes that connecting the customer to more relevant content and meaningful experiences has far greater value.
“Most companies aren’t understanding the full value of what’s available,” he says, adding that they’re using traditional paradigms in a world that has totally changed. “The power is now in the hands of the customer,” he notes. “Today, the customer defines the brand. The consumer, by virtue of social media and how information gets shared digitally, tells a powerful story brands can no longer control. If a company isn’t thinking about how it’s capitalizing on all the data now available to enhance and tailor experiences, it’s missing a significant competitive opportunity. The reward mechanism is not the end-game.”
THE EMPLOYEE EQUATION
Pearson also brings in the employee equation, frequently overlooked in marketing quarters. “The big opportunity,” he says, “is to get this information to the front lines. Extending this information to your employees and engaging them to use it is one of the quickest ways to improve customer satisfaction – we’re big proponents of involving all employees.”
Pearson also believes one of the main drivers for this new approach to loyalty is measurability. Even with all of the latest online advertising capabilities, he wonders how people really attribute the source of a customer to the last click. “We come out of a world in loyalty where you can see what happens customer by customer and gather extensive data over time about what people actually did that provides the best predictive component of future behavior.” Pearson says the key is to look at how people interact with your brand year in and year out on a “longitudinal” basis.
Ironically, this ability for loyalty programs to provide perhaps the most valuable consumer insights was something that was known at the outset of the industry. “This has always been the promise,” Pearson says, “but it took until the time when the cost and capabilities to analyze that data came into the reach of more companies, and when social media has forced companies to address the issue.” He adds that companies that engage customers to create content and engage regularly with their communications and activities have a compelling advantage – the more customers get engaged and create a conversation about a brand within their communities, the less a company has to spend on traditional marketing.
WINNING BOTH SIDES
Why hasn’t this approach to loyalty programs taken off faster? “We’re an acquisition driven culture,” Pearson explains. “In most cases a person who’s a prospect is far more exciting than a person who’s been buying for years. Today you have to win on both sides. Most companies know now that they ignore current customers at their peril.”
Does he believe we’re at a tipping point where companies will be compelled to implement the capital “L” of Loyalty? Pearson agrees that conditions have never been more favorable, but he also notes that much of this was foreseen as early as the mid-1990s.”We’re seeing a drive to the bottom in many industries,” he says. “Companies will have no choice but to find ways to differentiate experiences. With the availability of the tools and expertise at hand, there’s almost no excuse not to.”