Over time, customers can lose interest in retail loyalty programs. Likewise, retailers may start to take customers for granted. Here are five tips for re-kindling the value of that healthy relationship.

The good news for retailers is that, while changes in technology, consumer behavior, and market forces will continue to offer challenges to their business models, the fundamental drivers of customer loyalty remain unchanged. This means that loyalty programs will continue to fuel profitable customer relationships. To rekindle the value of your retail loyalty program, we offer these five rules as fuel for the fire.
 
> Rule #1: Focus your data efforts. The rise of big data — large data sets collected from an exploding number of digital, social, and mobile channels — offers the potential for big rewards. A May 2011 study by the McKinsey Global Institute estimates that retailers who harness these types of data well can increase operating margins by 60 percent. But the sheer volume of data, and the challenge of connecting it to develop a complete view of the customer, can overwhelm marketers.
 
One of the most valuable benefits a retail program offers is its ability to gather core transactional data, particularly that of customers with high current or potential value. If you need to focus your data efforts, start here: Transactional data provides useful boundaries for dynamic customer segmentation efforts that result in more precisely targeted and relevant offers. Loyalty analytics can improve operational decision making on everything from price to inventory, as well as define rewards and recognition that increase customer engagement.
 
> Rule #2: Develop loyalty personas. For years, marketers have built customer “personas” — characters that represent different customer segments — to drive life stage and lifestyle segmentation efforts. Insight from loyalty program data can improve and add clarity to these efforts. Are your best customers single? Are they new moms? Are they “foodies?” Are they price sensitive? Basic transactional data such as recency, frequency, basket size, and even SKU-level detail can focus your persona efforts far more effectively than survey, social, or other data sets not based on actual shopping behavior.
 
Personas help put a face to your best customer segments in ways that make sense and can be applied by the entire organization: The C-suite can incorporate insights to inform strategic planning decisions, while front-line associates can capture service interactions that flesh out personas even further.
 
> Rule #3: Connect the “data dots” across channels. Retail marketers understand that no single channel drives loyalty. Customers conduct product research online before visiting your store; “like” your Facebook page before heading to your website; or visit your store to research a hot product before finding a lower price online. In this environment, a silo-driven channel mindset no longer works.
 
By combining insights from transactional analysis with data points from the entire purchase cycle, you can infuse customer relationships with a seamless, cross-channel experience. The “license plate” of a program membership ID helps connect these data dots. How many members visit your store after doing research online? What types of members tend to compare prices? How often do exclusive experience offers result in a sale? Connecting these data dots drives increased engagement and loyalty.
 
> Rule #4: Battle short-term discounting with loyalty data. Discounting — through “daily deal” sites, mass couponing, and “Everyday Low Price” models — is still the lingua franca for most retailers. Price wars will never go away, because customers love finding good deals. But loyalty marketers understand how to deploy discounts surgically, rather than offering the same discounts to everyone.
 
Marketers can leverage behavioral insights about their best customers when deploying discounting strategies. Effective tactics include using dynamic customer segmentation, low base rewards funding rates enriched by targeted bonuses, and coupons customized based on customer value and propensity to buy.
 
> Rule #5: Re-imagine recognition and rewards. Moribund loyalty programs rely on “trinkets and trash” — old-school toaster-type rewards that are about as exciting as a tax audit. Today, mobile platforms, social media, and techniques such as gamification provide many new ways to recognize and reward loyal customers. A recent study by Shop.org reveals that more than half of US consumers follow at least one brand on social media, while the Interactive Advertising Bureau claims that 73 percent of retail consumers have used their mobile devices while shopping.
 
So try everything you can. Mention new loyalty program members on your Twitter feed. Offer a unique location-based mobile offer to members only. Create a game for members based on Foursquare check-ins. By testing new combinations of rewards and recognitions against your transactional database, you’ll learn to focus on what works.
 
Whatever you do, don’t simply design a basic loyalty program and add new members to the rolls without a clear idea of how to further the relationship with them once you have them. Getting that first date is easy — it’s much harder to turn that date into a real relationship. The bigger challenge, and the greater reward, lies in leveraging loyalty data beyond the transaction to build relationships before, during, and after the purchase.
 
How can you keep the relationship throwing off sparks? Harness the power of loyalty program data. Leverage that data across channels. Tie every new platform or device back to the program database. Through relentless focus on using data to build relationships, retailers can keep the romance alive.


This article is an excerpt of a full-length report. To read Aimia’s retail brief on sustaining retail loyalty program relationships, click here.

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