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Pushing loyalty from “One-Shot”
Campaigns to integrated marketing
Authors: Claudio Filocamo, Michael J. McEvoy
Problem
Loyalty programs are using “OneShot” Campaigns that are ineffective
to capturing full-value potential.
Solution
Retailers should adapt integrated
marketing strategies to create a
broader Customer Engagement plan.
In the EU, as in the rest of the world, consumers
are still enamored with loyalty programs. More
than 85 percent of all consumers belong to at least
one (1). Loyalty programs have become a means
for companies to differentiate, while building
long-term relationships with their customers. This
is particularly true for market sectors in which
consumers have abundant choices and products
have, effectively, become commoditized. In this
environment, some firms aim to maximize value
for loyal customers and rely less on attracting new
ones. As a result, a growing number of companies
are investing in loyalty solutions (Figure 1).
The stakes are for nothing less than a bank or retailer’s
customer value. So new loyalty spending and new
loyalty strategies should consider breaking the mold
and thinking through some new approaches to loyalty.
First, is to move away from “One-Shot” Campaigns,
toward a broader Customer Engagement plan.
Figure 1
Loyalty Program
Adoption in Italy
Many marketers still expend lots of energy and resources
on isolated marketing initiatives. In fact, it is not
uncommon to observe infrequent, disjointed promotions
aimed at promoting the launch of new products or
simply offering coupons and special deals. These types
of campaigns are typically infrequent or one-off efforts
and are not components of a comprehensive marketing
strategy (i.e., an “Integrated Life-Cycle Marketing Plan”,
discussed later). In addition, only simple metrics are
used to measure the success of these campaigns, such
as sales, product usage increase or coupon redemption.
By taking this approach, firms under-achieve in
terms of their loyalty initiatives, as the company is
left without a view of the impact of campaigns on
the overall relationship and deprived of the valuable
insights that would follow their proper monitoring for
effectiveness. What is missing throughout is a CRM
mind-set that is focused on maximizing the relationship
with the customer — sustained through systematic and
integrated follow up campaigns whose effectiveness is
subject to ongoing measurement in the broader context
of the overall customer relationship.
Figure 1: Loyalty Program Adoption in Italy
Has own loyalty program
Is part of
a Coalition program
Doesn’t have
any loyalty activities
48%
48%
4%
35%
are planning to
launch a loyalty
program in one year
13%
are not planning
to launch a loyalty
program
52%
have an active loyalty program
Source: IPSOS Osservatorio del marketing relazionale, IQ 2014, Italy market cross industry
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1
Figure 2
Figure 2: Customer Behavior Characteristics
Customer Behavior
Characteristics
Mobile
•2
5 min
smartphone
Social
Omni-channelled
52% of population
use social networks
• 4 min tablet
• 30 min web
surfer every
month
• 76% use more
than 1 channel
to access ADS
contents
Mobile
354 min
active mobile
broadband
subscriptions
(48% of total
population)
Social
Omni-channelled
40% of population
use social networks
on any device
• 501 min
Internet users
Value-oriented
>10 min of social
shoppers (vante
privee, groupon,
deals, etc.)
Value-oriented
>100 min of
social shoppers
• Average of 5.5
hours per day
spent on the
Internet through
laptop and mobile
Source: Osservatorio sulla fidelizzazione; Università de Parma— IQ 2014 | Social, Digital & Mobile Worldwide reports, 2014
To move away from this “One-Shot” approach,
companies will need to align with changes in customer
behavior. While acknowledging that technology in
general, and social media in particular, have reshaped
audience habits, many firms continue to engage
with customers in a very “siloed” manner — for
example, sometimes choosing to deploy a promotional
campaign through just one channel, such as post/mail.
By contrast, customers expect to be able to engage
through a variety of channels, at a time and in a
manner that best suits them, extracting value from the
relationship (Figure 2):
• Mobile channel: Across Europe (for example),
average device penetration exceeds 50 percent
of the population
• Social media: Access/subscriptions to networks (e.g.,
Facebook) is rising, involving all age groups
• Omnichannel: Customers are becoming accustomed
to accessing communication contents through different
channels, often contemporaneously
• Value-oriented: More than ever before, consumers
have more channels through which they may compare
offers and find deals.
Most firms are not yet aligned with evolving changes
in customer behavior. In terms of loyalty programs,
they continue to adopt a more “transaction-oriented”
philosophy, with limited incentives on engagement or
new ways to interact with the brand.
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The “Integrated Life-Cycle Marketing Plan”
A more optimal approach for marketers would be to
deploy an “Integrated Life-Cycle Marketing Plan” based
on a CRM approach — one that follows and measures
customer behaviors through a structured customer
lifecycle management framework. A “best practice” to
developing such a plan is to create a marketing process
that includes the following:
a
Umbrella brand: Foster brand loyalty by
connecting and integrating marketing initiatives
addressed to existing customers and by building
customer awareness and satisfaction with customer
service activities (e.g., young/family/affluent promotion
plan, 24/7 assistance and dedicated contact centers).
Customer segmentation: Segment the existing
customer base into distinct clusters based on
behaviors and design a migration path to stimulate
customer migration to higher value/more responsive
segments.
b
c
Trigger events: Identify a set of events with
existing customers, linked to different variables
such as consumer life events, propensity to buy, ageing
of relationship with the brand. As these events occur, a
“defined set” of marketing actions is triggered.
d
Communication toolkit: Early on, define a
complete “off the shelf” set of creative
2
promotions, communication materials and engagement
tools to address different clusters.
e
Omnichannel interactive media: Define the
optimal communication channels to align
communication contents with the appropriate customer
segment. While challenging, it is crucial to develop the
ability to communicate effectively with different
customer segments through their favored channels
(e.g., young/professionals through email, social media),
creating content that matches both the channel and the
target customer segment(s).
Each of these elements should be incorporated into
the “Integrated Lifecycle Marketing Plan”. By taking
this approach, card issuers, retailers and others create
a structure within which to implement a variety of
consumer’s engagement initiatives that ultimately will
strengthen customer affection for their brands.
Figure 3 shows the example of life-cycle marketing for
card issuers, taking customers through the different
Conclusion
Developing an integrated life-cycle marketing plan
benefits all stakeholders. Consumers receive more
personalized treatment, continuous beneficial
promotions and multiple reward opportunities for
their loyalty. Retailers derive new customers through
network partners and increased business with existing
ones. Bank card issuers build a stronger customer value
proposition for their products, are better positioned
to charge for their product based on value, and have
a more loyal customer base with less attrition.
Figure 3: Loyalty Across the Customer Lifecycle
Loyalty Across the
Customer Lifecycle
Affluent
Customer Value
Figure 3
stages of the account “life-cycle” while maximizing
customer value throughout. Many companies adopting
a similar approach (including telcos, utilities, card issuers
and retailers) who moved away from “One-Shot”
Campaigns to an “Integrated Life-Cycle Marketing
Plan” have experienced significant improvement in year
on year key metrics (e.g., +120 percent annual revenue
per customer), while also reducing attrition (-35 percent
vs. comparable clusters of clients).
New
Existing
4
3
Churn
2
Branding
2
Acquisition
3
Activation
4
Usage
Stimulation
5
Retention
5
With
Loyalty
1
Families
1
No Loyalty
A
B C
Young
Time
Source: MasterCard Advisors
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