Loyalty Program Challenges, Channels and Best Practices

Jun 11, 2013

Loyalty program implementation isn’t a one-size-fits-all operation. The particulars are highly dependent on the vertical to which your program belongs and what customer engagement goals your program sponsors, hopefully C-level executives, hope to achievLoyalty Programs, Marketing channels, Best practices, Customer Engagemente.

I recently discussed the above with Kobie’s Senior Director of Business Development and Product Strategy, Joe Easley, asking for his insights on a number of loyalty industry themes including the greatest program challenges, which marketing channels are most dominant, best practices in operational excellence and the evolution and changing nature of key performance indicators (KPIs).

As our conversation was lengthy, the following interview is the first of two “insider looks” leading up to what we hope will be helpful information for your brand and loyalty program.

What are the greatest challenges loyalty programs currently face?          

The best way to answer to this is to leverage Kobie’s 5 Es of loyalty.  Looking through that prism  – 1.) Enterprise, 2.) Economics, 3.) Enablement, 4.) Execution and 5.) Engagement – you see that separate challenges are tied to each one.

The greatest challenge is that of C-level executives not thoroughly understanding what the loyalty construct is about or knowing the KPIs associated with it. Tracking profit and loss (P&L) for the program is also important, but rarely done well if at all.  Regarding the enabling technology, we continue to see decisions made purely on cost and not based on long term benefit, flexibility and scalability. The conduit of loyalty program success, the employees in the field responsible for the most important customer interactions, don’t have the training and supporting processes they need to be true program ambassadors.   Lastly, driving a unique and personalized experience is critical – especially as brands try to better understand and deliver upon the need for omnichannel engagement.

Has one marketing channel proven more valuable than others?

Every channel has its benefits but there’s a cost-benefit with each channel you engage. In terms of overall appeal and what everyone is asking for, mobile is the most requested.  From apps to mobile websites, to SMS and push messaging. Every loyalty and customer rewards program we’re coming across in retail, travel and other business verticals is looking to have mobile-centric elements and many brands are looking to have mobile become their medium of record. But is mobile a loyalty or promotional channel? I think people are still ironing that out. And of course email remains a staple: it is communication-effective and profitable as costs have fallen sharply over the years.

What is the key (or keys) to loyalty program operational excellence? What best practices can you share?

The key to operational excellence is education – education of staff and program members. Consider this airline scenario: under ideal conditions, gate agents should be knowledgeable about travelers’ loyalty status and the types of treatment, such as early boarding or upgrades, that they expect accordingly. Likewise, passengers should know the type of experience they will receive based on their loyalty program tier whether it’s Gold, Platinum, Executive Platinum, etc. Operational excellence is also about how easily your brand values and loyalty program rules are conveyed to members across all these channels. The same holds true in retail. Operational excellence there might mean identifying qualified credit-worthy shoppers before they reach the checkout line and engaging them over your loyalty program’s benefits.

Final Thoughts

So now you have a loyalty program with an educated staff and a membership that’s equally up to speed. Challenges are being addressed through the 5 Es approach and mobile has become central to your brand’s method of engagement and a major component of your loyalty program’s technology infrastructure. But your job still isn’t done. How can internal brand communication be improved and how can your loyalty program be evaluated from the member’s perspective in real time? Our follow-up post will examine these checkpoints on your brand’s path toward loyalty while also addressing whether a loyalty program is right for your needs.