As more retailers develop customer loyalty programs, most are opting to outsource the different technology components. Because outsourcing can introduce complications of integrating data streams and technology, an in-house loyalty platform can reduce these risks by combining consumer insights, offer creation and redemption, and performance metrics reporting, according to research conducted by Aberdeen Group.
Titled: Customer Loyalty 2012: Enabling Technologies for Customer Engagement, Conversion, and Retention, the study shares insights on the impact of outsourcing technology and its affect on customer data, as well as the key technology components of a customer loyalty program. The study, sponsored by Tibco, illustrates how leading organizations place technology at the forefront of their loyalty initiatives, and the effect these technologies have on customer satisfaction, retention and re-activation.
Five Critical Technology Components
The five technology components most critical to customer loyalty programs, according to the report, are: social media, customer analytics, mobile loyalty, real-time rewards and location-based marketing. All five must work together as a whole, the report revealed. Social media is the most utilized loyalty component, with more than half (55%) of retailers active in this area, the survey revealed.
“From a loyalty perspective, social media is incredibly important, as the voice of the customer is louder than ever before,” the report stated. “Consumers are turning to their peers, friends and colleagues for advice on brands, products and services, and these interactions play a significant role in the buying cycle.”
Executing An Effective Loyalty Program
To execute an effective customer loyalty program, retailers must develop a foundation of performance management, business process, knowledge and organizational capabilities, according to the Aberdeen report. Additionally, retailers seeking to improve their cross-channel loyalty programs should consider the following steps:
· Implement a centralized cross-channel customer loyalty platform for easy access to all loyalty-related data;
· Ensure uniform data collection guidelines across channels for developing targeted loyalty offers based on customer information and affinities;
· Use customer analytics for micro-segmentation of loyalty members for multi-tiered loyalty campaigns;
· Incorporate mobile technology into loyalty programs to reach consumers on-the-go with targeted, personalized offers; and
· Use social media to engage customers in a two-way dialogue and allow sharing of loyalty offers.
The report underscored that Retail Leaders — the top 30% of performers — outperform their peers across a number of key strategic capabilities, including program result tracking. “Leaders are … nearly twice as likely to track loyalty program redemption rates,” stated the report. “Redemption rate monitoring lets a retailer perform a thorough analysis of loyalty campaign successes and failures, and allows the retailer to modify successful programs and compare variation across different customer segments.”
Many Retail Leaders (35%) also align loyalty program offers with seasonal merchandise, pricing and promotion plans. This capability requires collaboration between all relevant stakeholders, including marketing, merchandising and IT teams, according to the report. The end goal is to ensure loyalty offers are in line with current merchandise availability.
Click here to download the Aberdeen Customer Loyalty 2012 report.