Loyalty Program Challenges, Channels and Best Practices, Part Two

Jun 25, 2013

At Kobie, we often talk about the importance of C-level buy-in: in order to successfully implement and run a loyalty program, the brand promise must first be articulated at the highest levels of management and communicated throughout the entire operation right down to sales desk, call center or shop floor staff.

I had a discussion about this with Joe Easley, Kobie’s Senior Director of Business Development and Product Strategy. We also talked about an equally vital loyalty program component: measuring and acting on the feedback gained from loyalty members as well as employees helping execute the actual program. As new technologies have enabled a more fluid conversation between loyalty program components, new KPIs are emerging that must be considered.

These new KPIs include:

  • The number of members opted-in to mobile marketing
  • Monetary impact and response attribution of social media
  • Profit and loss of the loyalty program as a standalone entity
  • Employee adoption and advocacy of the program

After considering the above and a thorough review of pre-implementation planning, it may turn out that a loyalty program might not be the perfect fit for your brand. And that’s a difficult decision to reach. But isn’t it better to reach that conclusion from the outset than spend time, money and resources unnecessarily?

Joe discusses this in the second part of our interview series: 

How much value do you place on “ground-up” (versus top-down) loyalty engagement and program knowledge? Is there a need to be listening to the people on the ground or has this lost favor?

No, “ground-up communication” has not lost favor and, if anything, new technology is helping improve that two-way conversation. Brands doing it most effectively have a formal associate or employee feedback mechanism or they have a parallel employee incentive program.  Employees, in particular sales associates, are empowered and trained to execute the in-store portion of the program experience and ultimately make the current or prospective member experiences ones to be envied by the competition.  The ground-up communication approach manifests itself in many ways, in particular as employees enrolled as members in their own company’s loyalty program. Once you get associates engaged at that level, feedback becomes very granular and actionable.  

While not entirely related to a loyalty program construct, we see companies like Zappos leveraging Twitter to manage customer service complaints and issues. They also use Twitter internally to communicate issues and concerns regarding specific marketing projects, programs or issues. Employees can hashtag a particular issue, making the topic searchable and simplifying the exchange of information with corporate via a secure Twitter account. 

How should brands determine their KPIs? Has this changed due to new channels?

There have always been anchor KPIs in loyalty, for example: the number of members, the number of incremental new members, member churn and, if you can determine it, incremental sales behavior generated by those customers. Typically you do that by leveraging control groups to understand and measure incremental behavior.

New communication channels also play a role in inspiring new KPIs or giving new relevance to others. Consider retail again. Retailers increasingly identify multichannel shoppers – customers buying online and in-store. Research asserts that the multi-channel shopper, not necessarily engaged in a loyalty program, are worth 30% more to a brand than a single-channel shopper. Monitoring that metric alone will go a long way toward improving a brand’s overall financial health and level of loyalty engagement.

What should brands consider when launching a new program?

When considering a launch or redesign of a loyalty program, a company needs to make sure it reflects the culture and economic plan for the company and that it is differentiated when compared to the given vertical. In regard to the retail vertical, we see businesses that rely heavily on credit card based loyalty where they partner with a card issuer (bank) and the CFO is the ultimate owner of the program, often times disenfranchising the marketing department. In such a single-tender approach to loyalty, the CMO typically lacks the control to truly impact the program messaging and ultimately pines for a more mainstream integrated multi-tender loyalty program.  So, one of the first steps is making sure the goals of the CFO and CMO align. There are additional considerations, too:

  • Is your vision to drive one more trip?
  • Is it to have one more item added to a customer’s basket or one more appetizer on the ticket?
  • Is it to broaden customer base?
  • Is it to engage within a specific channel as a multi-channel shopper?


The most important element a loyalty program must demonstrate is how their company is different than competitors. This is critical in the creation of a loyalty program as the culture of companies working together is a mix of qualifications and personal chemistry. 

Loyalty has never been a one-size-fits-all endeavor and for large-scale programs, C-level buy-in and alignment is a must. Beyond the key challenge of those executives not thoroughly understanding what the loyalty construct is, as discussed at the beginning of our two-part Q&A, any truly successful loyalty program must begin with the loyalty forged between the company managing the program and the brand implementing it.

More than measuring standard KPIs, intrinsic, emotionally-driven loyalty is about instilling trust, reciprocity and the genuine desire for continued partnership. Once this initial relationship is secure, your brand’s loyalty program will be on solid footing.