Jon Wurfl, Retail Solution Principal, SAP guest-blogs for Loyalty 360:
I am special! You are special! And so it goes in what I call our contemporary "Age of Entitlement." Everyone has been made to feel special. We see it in the daily behaviors of ourselves and others, and it shapes our expectations. It becomes noticeable in the form of our social experiences as shaped by the rewards and entitlements that we earn and consume as part of our daily lives. Whether it's the flight earned using frequent flyer miles, the exclusive shopping invitations, the free latte...whatever it is, it's the accompanying emotional attachment and psychological validation we feel we have earned that makes us unique. This is especially true in an overtly commodity-driven world. The end result can shape the consumer into an entitlement monster.
Witness the obverse experience one feels when you are downgraded in a loyalty program and are no longer platinum or gold, but a paltry silver and thus no longer welcome to the special lane, room or metallic color of card.
How do retailers apply both a carrot and a stick in shaping a loyalty management program so that consumers stay fairly engaged? And whose behaviors are the ones that are good for the business?
First off, look at the loyalty programs from a strategic perspective. Ask yourself: is loyalty just a one-off tactic in your myriad of techniques to drive YOY sales? Or is it really something that has a board level of attention in how its deployed.
Secondly, is loyalty driving deeper insights into understanding customers' behaviors that you want or don't want? Are you able to derive new target segments? Do you have a better or different perspective on a segment lifetime and are you able to shape that into new emergent targets?
What do you do when shoppers lose an entitlement? It's hard to take something away, but if you don't, the meaning of the reward and the loyalty program are diminished. That's why there are levels within a program -- so that you can keep some level of rewards and depending on your shoppers, continue to offer incentives at each level that are interesting and good business.
Lastly, Innovate. Yeah, I know the word is overused, but you can't stand still with the rewards and incentives you offer shoppers. What compels a shopper in 2011 will be different in 2013. By understanding your shoppers and keeping a relevant dialogue with them, retailers can keep their shoppers feeling that they are very special and as a result, maintain their engagement with the retail brand.