Attracting customers and cultivating loyalty, especially under today’s economic uncertainty, is forcing brand leaders to adapt to new customer dynamics. At the same time, intense competition and a degree of loyalty disillusion can bring challenges to any loyalty strategy.
If you take a deeper look into a typical loyalty program, members can often be divided into three distinct groups. The significant long tail of members with low engagement is the biggest one. It consumes a lot of loyalty managers’ attention – disproportionate to the commercial return. Call them the “island of hope”. At the other end you have your top segment with very high engagement: the best customers, very loyal and heavily rewarded for it. A brand’s elite members arguably present a different challenge as the objective is to keep the program fresh and engaging beyond miles or points.
There is however a third group that represents a potentially rich source of future elite members, often hovering around elite qualification but not consistent in their behavior. Nestled between the long tail and the top segment, these are ‘latent loyals’ with decent commercial value and some brand affinity who, given appropriate incentives and service propositions, can very well make it into the top segment. At the same time, they are equally easy to lose to a competitor. Loyalty managers focused on growth are applying a good amount of focus on this member cluster and they are using innovative loyalty strategies to shift them toward consistent, steady engagement. One tactic that is gaining steam is paid loyalty.
Paid loyalty allows customers to instantly benefit from a clear set of services and rewards – not just the future promise. If the fee is right, the overall program performance has proven to scale quickly.
The other approach is something that we at Kognitiv call “Collaborative Commerce”. This is where two non-competitive brands partner together. By using zero party data insights they can begin to offer incentives and rewards that move beyond their own brand and instead recognize the complete wants and needs of the customers they share. This concept of expanding your brand footprint through data-driven collaborations broadens loyalty’s appeal and relevance, and redirects investment spending to a place where brands remain front of mind because what they offer their best customer is of real value.
“Latent loyals” are a powerful source of program longevity and loyalty professionals who apply fresh thinking to how to best engage them will not only reverse dormant loyalty; they will expand overall customer lifetime values. That will get everyone’s attention, including the competition.
