Strategic differences

CRM and loyalty are best seen as sitting on different points of a brand-customer relationship spectrum. The difference is rooted in the expectations set between brand and customer for the relationship. When a brand asks someone to join their loyalty program, they are asking them to do more - and customers expect more in return.

With loyalty, a brand is always implicitly asking a customer to acknowledge that:
  1.  She is a fan of the brand and its products;
  2.  She is willing to provide the brand with personal information;
  3.  She wants more personal, exclusive, and rewarding interactions in return.
In contrast, when a brand asks a customer to sign up for CRM, they are asking for an email address... and the customer is promised nothing more in return than a stream of non-exclusive promotions.

So for brand and customer, the implied commitment for loyalty is usually stronger. One fact that proves the “ground truth” of this is that CRM programs usually target as many current and potential customers as possible, whereas loyalty programs tend to focus on reaching just the top 20-30% of the customer base. Brands do this because loyalty implies creation of differentiated, exclusive experiences for members relative to the standard brand experiences they offer to everyone.

Tactical differences

While CRM could potentially be used to describe virtually every form of 1:1 brand-customer communication that DOES NOT require a customer to opt-in to a loyalty program, conversely, loyalty can potentially include every communication that DOES require the consumer to opt-in to a loyalty program. That said the differences between CRM and loyalty are usually more evident in practice because (as noted earlier) the two disciplines have different targets, different propositions and different business goals in mind.

Of course, consumers will value such distinctions much less than marketers. Customers view all communications as brand communications; and when judging a brand, take both into account. 

Because of this reality, brands today strive hard to deliver of a consistent, quality brand voice across all customer touchpoints. One of the ways they attempt to do this is by seamlessly connecting CRM and loyalty communications streams, and by making loyalty membership one of the objectives of CRM; nevertheless, given that loyalty capabilities are so specialized (more on this below), loyalty technology is outsourced more and more often because (like CRM before it) specialization is essential to delivering the best possible capability at the lowest cost - especially given the innovations required to stay current and competitive.

Technical differences

Strategic and tactical differences inevitably result in different technical requirements:
  1.  Loyalty platforms have to be much more robust in terms of response time and uptime because a) they touch a brand’s most valuable customers on a continual basis; and b) They power the brand relationship in a much more mission-critical way than CRM tends to do. The difference between a CRM system outage and a loyalty platform outage is typically huge - while the former is usually no big deal to customers, the latter can sometimes become national news.
  2.  Loyalty platforms are designed to be integrated with every customer touchpoint and collect virtually all electronically-available forms of customer interaction data. For example, CRM systems usually have nothing to do with a brand’s point-of-sale (POS) system, but loyalty platforms are nearly always POS-integrated.
  3. Loyalty platforms not only have to collect more different forms of engagement data, they also have to make it easy to segment and act against that data in real-time to deliver loyalty experiences at par or better than that of competitors.
  4.  Similarly, a loyalty program has to power engagement for all customer-facing brand representatives - from the call center to the sales floor. Loyalty technology is essential to deliver the experience.
  5.  Loyalty platforms have to be more secure because they usually are required to hold more (and more sensitive) customer information about a brand’s most valued customers. The more personally-identifiable information (PII) and/or sensitive information is collected, the more this is true.
  6.  Loyalty platforms are required to address all manner of loyalty program-specific needs related to currency- and/or points-based programs. This difference alone accounts for much of the functionality difference between loyalty and CRM platforms.
The above specialized requirements are key reasons why loyalty platforms and CRM platforms are fundamentally built to do different things - and why they tend to do different things better. High-volume email deliverability, for example, can usually be done better using a CRM-focused solution, though loyalty platforms can offer a baseline of similar functionality. That’s why many of today’s most sophisticated brand experiences are powered with a dedicated CRM platform AND a dedicated loyalty platform: together they offer the best of both worlds to deliver of the best experience for all customers - wherever they are on the relationship spectrum.

Want help with your brand’s loyalty initiative? Please contact us at [email protected] or www.aimia.com.

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About the Author
Chris McLaren, VP Marketing, Aimia
Chris has been helping clients use new technology to overcome marketing challenges and create business value for 20 years. He ensures Aimia’s story is well-told to potential new clients, manages Aimia’s marketing practice for the Americas, and contributes to strategy, operations, and account management for Aimia’s Americas-based clients. Since joining the company, he has been fortunate to be part of a team driving dramatic increases in growth in industries for which loyalty is well-established, as well as in new verticals for which loyalty is truly an innovative concept.

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