The Loyalty Continuum:Where Does Your Company Fit?

By Carlos Dunlap, Vice President, Solution Design,Maritz Loyalty Marketing

The Loyalty Continuum:Where Does Your Company Fit?The numbers are in and the pressure is on. Your previously

coveted brand is losing strength. Sales are down. Costs are

increasing. Your customers are defecting. Grasping for a quick

fix, you turn to a new or existing loyalty program to mend what

ails the company. After all, bank cards and airlines make this

marketing solution seem easy.

Beware – loyalty programs have saturated the marketplace, and

while these programs attempt to inspire true customer loyalty,

many fall short of achieving it. Moreover, effective loyalty

programs may create positive changes in customer behavior,

but many fail to create lasting changes in customer attitudes.

Companies may find they win the sprint, but eventually lose in

the marathon. An effective long-term loyalty strategy demands

a more holistic view.

Are you considering a loyalty program? Or do you already

have a points-based program that is rarely, if ever, measured

or enhanced? Jumping into a new program or maintaining

the status quo of your current program likely is not the most

appropriate or profitable solution in your company’s quest

for true loyalty. Instead, this situation requires refining your

approach to customer loyalty using a Loyalty Continuum

Lifecycle model and careful evaluation based on specific

questions for each lifecycle stage.

Understanding True LoyaltyFirst, there needs to be an understanding of the term “true

loyalty.” Maritz defines truly loyal customers as those who

avidly use a brand’s products and services while resisting

competitive offers based on their attitudes towards a company.

To achieve true loyalty, companies must understand that loyalty

is a continuum – a living, shifting state always in motion,

rather than a stagnant goal. Your customers’ loyalty continually

evolves along the continuum and so should your approach to

generating loyalty.

The Loyalty Continuum LifecycleTraditionally, points-based loyalty models focused on using

incentives to create changes in behaviors that were intended to

lead to loyalty. Using this approach, many companies may only

see two stages in the lifecycle of their loyalty programs – there

is either a program in place or there isn’t.

However, in a new, customer experience-based approach,

attitudinal shifts occur, leading to changes in behaviors and

then, to true loyalty, rather than the “false” or perceived loyalty

achieved by traditional points programs.

Using this approach, companies should work through the four

phases of the Loyalty Lifecycle:

Phase One:  Considering a customer experienced-based

loyalty program

Phase Two:  Designing a program

Phase Three:  Evaluating a program

Phase Four:  Enhancing a program

Across the lifecycle, a primary theme prevails – the establish-

ment of metrics and ongoing measurement of success through

financial return. By using advanced analytics, market research,

and voice of the customer and employee research within each

phase, you get a truly broad and holistic view of your customers’

experience. Using this panoramic view, you can construct sound

loyalty objectives and strategies that are aligned with your

business goals.

Following are some of the questions you should be asking based

on your company’s position in the Loyalty Lifecycle:

I. Considering a program

 1. Is a customer loyalty initiative suitable for my company?

2. Can I build a financially sound business case?

 

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 3. What are customers saying about their experience with

my brand? With our loyalty program?

 4. What are employees saying about the customer

experience?

5. Will a loyalty program help achieve our business

growth objectives?

II. Designing a program 

1. Which variables are most likely to impact financial returns?

2. What risks and trade-offs do I need to consider?

3. How can I work with my organization to impact the

customer experience? To get my organization strategically

aligned?

4. Which customer loyalty strategy do I deploy?

III. Evaluating the program 

1. How effective is the loyalty program in achieving the

results predicted?

2. What are key loyalty trends we should consider

implementing?

3. How can I best use the program’s communications

tools and what are their effects on consumer behavior?

4. How can we extend profitable member lifecycle stages?

IV. Enhancing the program

 1. How can we evolve our program to be more effective?

2. How can we move from analyzing results to accurately

predicting both member behavior and financial results?

3. What are the common traits of responsive program

members?

4. What types of partner offers would be appealing?

 5. How do we leverage the program for retention and

acquisition?

The Loyalty Lifecycle in the Real WorldPhase One Case Study – Is a Loyalty Program the

Right Approach? A large software client was losing

significant market share and instinctively decided to build a

loyalty program. Maritz recognized the company had overlooked

several key questions. Rather than simply developing

a traditional points program, the team began by determining

whether a customer loyalty initiative was suitable for the

company and if it addressed their key business requirements.

After thorough qualitative and quantitative research, RFM

(recency, frequency, monetary value) modeling, purchase cycle

evaluation and other market evaluators, it was evident that with the

recent acquisition of competitors, the company’s customers were

truly confused by the lack of brand consistency. The research

also revealed the corporation had considerable data it could

leverage to deepen the customer relationship through relevant,

strategic communication to target consumer segments. 

Maritz developed a pilot solution that included a highly

segmented dialogue communication plan, targeted to bring

high-value customers into the “inner circle,” while also

educating all customers on the continued brand value.

Phase Four Case Study– How Can An Existing Loyalty

Program Evolve Into a Differentiator? A large financial

institution and consistent leader in the world of points-based

equity programs, decided it needed a differentiator or would

risk losing profitable customers in a commoditized market. The

company enhanced its highly successful loyalty program with a

customer experience management approach. Maritz conducted

touch point analysis to identify inconsistencies and problems the

company had in fulfilling its brand promise with customers. By

fully integrating all customer touch points within the company,

including Web interaction, email communications, billing cen-

ters, call centers and reward redemption, the company was able

to measure all aspects of the customer experience, and make

improvements that impacted both financial and non-financial

business results.

ConclusionTo win true loyalty, companies must change the way they think

about and approach customer loyalty. They must see it as a

continual, company-wide pursuit, not an isolated program. They

must gather the relevant information, share it, and act upon it

to build differentiated approaches to loyalty with the necessary

financial rigor attached to make a strong business case.

It may seem daunting at first, however, great customer reten-

tion, acquisition and growth achievements are possible when

loyalty initiatives are developed and sustained with rigor, and

from a holistic point-of-view.

Maritz.com

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