Death of Loyalty Marketing

I feel tempted to write this blog after meeting several candidates and learning about how their loyalty marketing practices are driven. Read on:

Steve runs loyalty marketing campaigns for a very large retailer. On a Monday morning, he drives to office and gets ready for his weekly review. He realizes he has run out of campaign ideas and seeks help from David, Category Manager. David leans back and thinks to himself – ‘How if we liquidate stuck products through loyalty?’ He looks up his inventory reports and picks up products that have low turns. He asks Steve to run discounts offer on these products to their loyalty customers.

Steve follows instructions and runs campaign for a week only to realize they have meagre redemptions.

They invite Josh, Head of Data Science to review how we could increase campaign redemptions. Josh recommends that offers need to be “personalized” (really??) and advocates running A/B tests for a week. They observe a marginal lift but nothing substantial to report.

Can you pick holes in the way this Loyalty program is run? David was trying to liquidate rejected products by offering discount offers to his loyalty customer base. To those customers who gave their PII & personal preferences in return for a preferential treatment. Gosh!!  Welcome to sad state of loyalty marketing. Loyalty Marketing built on such loose foundations is designed to fail.

Many of us take inspiration from how Tesco discovered the power of building strong relationship with individual customers with their most successful Clubcard Loyalty program. They see it as a means of creating an active relationship with customers in which value is given in more ways than just price discounting.

Customer Loyalty programs are expensive but when it works, it repays the investment many times over and in many ways – as Tesco has proved.

Source: Scoring Points- How Tesco continues to win Customer Loyalty

Businesses must think harder about what they are doing to keep their customers coming back to their businesses. You certainly need to be smarter than David, don’t you?

Would love to get perspective on this subject and the issues we face with loyalty marketing.

Disclaimer: Any views or opinions represented in this article are personal and do not represent those of people, institutions or organizations that I may or may not be associated with in professional or personal capacity, unless explicitly stated.


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