This post is authored by Sara Hogan of Merkle in partnership with HelloWorld, a Merkle Company.
It's a challenging time for loyalty marketers. Not only must they grapple with ever-changing consumer expectations and constantly evolving technologies - par for the course in loyalty marketing - but today's marketplace is increasingly saturated with loyalty programs, making differentiation difficult. How can a loyalty program remain relevant and deliver consistent value to members in this environment?
To find the answer, consider the main challenges facing loyalty marketers from three angles: external perspective of the consumer (particularly in relation to technology); internal financial feasibility, and executive buy-in from an operational perspective. Each of these components is crucial to loyalty program success, and how you address them will go a long way in determining how you can continue to deliver value to consumers in the coming years.
Changing technology and consumer behavior
Loyalty marketers across the world face similar challenges. In a survey of loyalty program managers, we found that irrespective of region, they grapple with the fact that consumers are shopping online (and on their mobile devices) more than in stores.
While the movement of shoppers from brick & mortar to digital is hardly news, it still registers as a challenge, as loyalty marketers need to continuously adapt their strategies to meet consumers where they are. This technological realignment has had another effect: that with more familiarity with digital channels and digital interactions with loyalty programs, consumers' expectations have begun to change at the pace of technology.
Consider that just a few years ago, the idea of managing a loyalty program through a mobile app would have seemed novel to the consumer. Now it's commonplace, and a loyalty program that doesn't offer its members that feature seems behind the times and out of touch. More distressingly, that consumer may abandon the program due to lack of convenience. Expectations shift quickly.
Our survey shows that loyalty program managers are particularly attuned to this challenge: 41% cite technology and the pace of change as a hurdle.
The solutions to these challenges are straightforward, though certainly not easy. But they all start with an understanding that the pace of technological change is unlikely to abate, and that to remain relevant and meet consumers' expectations, programs need to integrate technology into every aspect of a loyalty program. For many loyalty marketers, this will require a partner, so choosing the right technology partner is instrumental to surmounting these obstacles.
There is also commonality in terms of the difficulty loyalty managers face in determining the right rewards and pricing levels. Obviously, pricing and rewards will have an impact on consumers and the value they perceive in a program, but it also influences the viability of the loyalty program itself. Overly generous rewards may be very attractive to current and potential loyalty program members, but they can turn the program into a cost center for the business and undermine its effectiveness in the minds of key stakeholders.
These kind of bottom-line concerns impact executive buy-in, which can jeopardize loyalty programs at any phase of their implementation. 43% of loyalty marketers report having to fight the perception of the loyalty program as a cost center, while 40% identify a lack of executive buy-in and support as a drag on program value and importance.
Communication and cooperation is the best remedy for this challenge - getting all stakeholders involved starting at the planning process and continuing through implementation of a loyalty program will ensure the necessary buy-in and the support that makes a good program thrive.
Operating at Capacity
As a loyalty program is implemented, several operational challenges can crop up. In our survey, the specific challenges related to operations were difficulty in finding the right tools, technologies and platforms (33%), as well as inadequate training for front-line employees charged with implementing loyalty schemes at the point of sale (28%).
One commonality was present, however: loyalty program managers reported difficulty finding personnel with the right loyalty experience and expertise. The right partner can both alleviate the need to hire and train staffers with loyalty experience and limit (or manage) the number of vendors involved. While good loyalty programs can never be completely outsourced, loyalty should be an organizational habit, woven into the fabric of a company's operations - identifying a partner that can best meet the objectives of a given loyalty program can solve many problems.
These common challenges are persistent, but they can be overcome. Indeed, how you approach these challenges will determine how successful your programs will be over the coming years. Managing the pace of change with technology and enlisting the right loyalty technology partner can help marketers achieve an advantage over competitors. Most importantly, brands will be able to continue to deliver value to their customers, increase engagement on an ongoing basis, and positively impact their bottom lines.