Loyalty marketing is nothing new. In fact, with roots dating as far back as the late 1800’s and the Sperry & Hutchinson trading stamp company, one might argue the discipline is practically ancient. Formed by Thomas Sperry and Shelley Hutchinson, S&H was the first independent trading company to sell stamps and booklets to merchants, who in turned distributed the stamps and booklets as an incentive and rewards program to shoppers that made prompt payments in cash. Loyal shoppers would then diligently paste the stamps into their booklets, eagerly awaiting the accumulation of enough stamps to earn a reward. Sound familiar?
By the 1960’s the S&H rewards catalog had become the largest publication in the United States, and the Sperry & Hutchinson trading company was distributing three times as many stamps as the U.S. Postal Service. The program’s success helped ignite widespread brand adoption of consumer loyalty programs, which gained an initial foothold in the travel and credit card industries before eventually becoming a staple of nearly any industry that manufactured or sold products and services aimed at the global consumer.
In today’s digital era, we can see loyalty marketing practices everywhere. Checking in via Foursquare at a local café, for instance, often unlocks an offer or a discount associated with American Express. Purchasing a new book online may trigger an opt-in to a merchant’s book club, earning a customer points that can be redeemed for additional goods and services in the future. Even non-monetary consumer interactions with a brand online, such as posting a comment or contributing a product review, are often being rewarded with virtual badges or recognized with a place on a brand’s points’ leaderboard.
Each of these modern loyalty practices demonstrates both the incredible opportunity and the undeniable complexity of the digital marketing landscape. On the opportunity side of the equation, brands now have countless platforms, including Facebook, Google +, Twitter, Foursquare, a brand’s web presences, mobile, email and the online and offline points of sale, on which to identify, engage and reward consumers. These platforms are not only expanding a brand’s potential reach, they are redefining traditional measurements of customer value, which loyalty marketing has historically limited to the volume of monetary transactions that can be created by points and rewards frameworks over time.
For example, brands now have the opportunity to calculate a consumer’s value by his or her total influence across all digital channels, both in terms of soft metrics, such as engagement, or harder metrics, such the total purchase influence of an individual across all channels. Although customer “Joe” may have purchased $500 in a brand’s goods over the course of a year, his collective brand interactions, content contributions and social sharing may have created another $7,500 in transactions by way of his own social networks’ influence and reach. This kind of granular insight into individual customers’ behavior, reach and total influence across multiple digital channels is truly the holy grail of loyalty marketing in the digital era.
Achieving this holy grail is where the complexity comes into play. Brands have recognized that target audiences are spending more time in more places and have committed significant marketing dollars to reaching those customers. Unfortunately, most brands do not have the capability to track an individual customer across their digital, social and even offline properties. More specifically, brands often cannot tell that the Joe who made a purchase online last month is the same Joe who checked-in in via Foursquare at a brick & mortar store yesterday. Instead, brands are too often viewing customers through the lens of a singular digital or social channel, unable to understand the entirety of that customer’s interaction with their brand.
Adding to the problem, brands have embraced metrics such as engagement, likes, shares, follower counts and check-ins to measure loyalty. Unfortunately, these single-channel metrics are too often aligned with achieving a goal for the goal’s sake and are completely void of insight into how a customer that ‘liked’ a brand on Facebook is interacting with a brand on Twitter, sharing brand messages on Google + or spending money with a brand offline. Without this insight, how can a brand truly measure customer loyalty?
Fortunately, there are a number of steps a brand can take today to align loyalty programs with the modern digital landscape. First, brands must step back from the technology vendor-driven philosophy that interaction is everything. Engaging customers is important, but more important is understanding how to create meaningful, long-term relationships. Consumers are people with relationships, brand experience, expertise and passion. They are more than the amalgamation of the dollars they spend with a brand or the number of interactions on a brand’s Facebook page.
Second, brands must begin to take a holistic view their social and digital properties and their online and offline points of sale. To understand a consumer’s true relationship with a brand, marketers must see the full picture. These platforms and points of sale all represent the brand to a customer. Marketers must have the same aggregated view looking back in order to truly build a meaningful relationship.
Finally, marketers and technology vendors alike must begin to understand that loyalty cannot be measured by the engagement metrics commonly used today. These metrics lack insight into the broader digital picture and fall far short of defining a consumer’s relationship with a brand. It is imperative take a step back and demand a greater understanding of what these actions mean and how each channel and platform fill in the puzzle of today’s fractured and fragmented digital self.