Increasing revenue and profitability is every company’s goal and is very directly tied to the effectiveness and efficiency of the customer loyalty initiatives we implement. But it goes without saying that change is a challenge with many new projects. The bigger the change, the greater the resistance and the lower the chance for aligning the organization appropriately for success.
This is our guide for navigating the organizational roadblocks in the best and fastest way possible. These eight steps are our must-haves from years of experience implementing customer loyalty management (CLM) initiatives.
{loadposition TSHBAIAA022014} Step One: Organize And Commit Stakeholders — Any CLM initiative will have several key stakeholders. They include marketing, of course, but also the technology and finance organizations. Getting all three to agree to be involved and committed, along with others who should be invested in the outcome, is a great launching point. Stakeholders will be the ones to define the objectives and metrics at the very beginning.
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Step Two: Establish Value Drivers — Without measurements that indicate success, including very quantifiable metrics and value drivers, a CLM initiative will struggle to prove its value to the organization. Measurements could include the ability to turn customers into fans, create intelligent contextual engagement, establish an omnichannel platform, and an ability to continually test, learn and evolve the program. Value drivers ensure that key benefits aren’t being overlooked and underserved.
Step Three: Ideate And Validate — The need to bring creativity into the mix allows the organization to stretch its imagination with new initiatives. What great ideas can you dream up to execute — both big ideas to capture and engage new customers and smaller ones that let you test the strength of your ideas and the systems to deliver them? Creative ideation and validation doesn’t happen by accident and there needs to be a step that ensures it’s given sufficient time.
Step Four: Baseline Existing Performance — A successful program moves well beyond the organization’s starting point. Having a performance baseline is very important for setting goals and knowing when a CLM initiative is successful. Mine your data to answer questions about your customers related to overall spend, frequency, recency, average basket size, what they buy and for whom, gross margin, attrition, conversion rate and overall loyalty.
Step Five: Build Consensus On Improvement — There needs to be an expectation of how good your program will be, based on the creative work done in step three. This is the “return” in ROI. How does increased improvement on each of the key metrics impact the business? Knowing the economic impact makes it easier to determine how you will prioritize your optimization efforts. Ask if-then questions. If we do x, then how many more transactions will customers make? If y happens, how much more likely are they to advocate to friends? If a customer advocates to a friend, how likely is that friend to make a purchase, and for what amount?
Step Six: Assess Total Program Cost — Avoiding cynicism or the perception of waste is key to implementing well. Knowing the total program cost will serve both of those needs, whether they are startup or ongoing costs, fixed or variable. Examples include technology, rewards, people, marketing collateral, and advertising. This is the “investment” in ROI.
Step Seven: Calculate ROI — If you’ve worked to get steps five and six done well, the ROI becomes a highly defensible calculation that can be comfortably pitched to executives. ROI calculations don’t need to be highly complex, but they need to withstand scrutiny.
Step Eight: Understand Sensitivity And Manage Risk — Getting a CLM project underway is very much an exercise in understanding organizational sensitivity and risk. By providing a range of expected outcomes and achievable minimums, initiatives are given the right environment to be perceived accurately and supported in the longer term. Additionally, having a good grasp of sensitivity and risk allows for appropriate escalations in the right moments. This step is key to the ongoing success of the effort and can’t be ignored.
These steps, in the order provided or tailored to an organization’s needs, provide a framework that any organization, regardless of size, can use to be successful with its customer loyalty initiatives. The stakes are high and most organizations are reluctant to move forward unless there’s a good plan in place that covers the many variables.
To learn more, read the white paper or watch the webinar from TIBCO Loyalty Lab, “Championing Your Investment in Loyalty Marketing.”
