The Changing Nature of Loyalty Marketing

We recently attended CRMC in Chicago and were struck by how the conversation has shifted on a number of fronts.  While there was a notable theme around the basic fundamentals of CRM and a not so inconspicuous lack of shiny bright objects (i.e., Facebook, Groupon, etc.) compared to recent years, more than ever there was increased discussion around the importance and usage of non-points-based loyalty programs and benefits.

This is something we’ve been writing about and working on with our clients for quite some time (see our blog post from last year, “The Revolution Will Not Be Televised”), and it’s highly refreshing to hear a few leading brands discuss loyalty and CRM initiatives built on elements of recognition, soft benefits and a better customer experience.  In essence, their focus is shifting away from the traditional points-based, frequent-flyer-model to making the customer value proposition more focused on the experience and delivering benefits differentially (i.e., not to every customer or even to every customer segment).  

The overriding theme:  loyalty and CRM continue to become more closely integrated as marketers see the link and pathway from loyalty to more enabled CRM.  We heard from global retailers like IKEA, whose IKEA Family program provides their members with relevant offers and content as well as in-store experience offers for food and family fun.  Cabela’s shared how they have changed how they do business internally, socializing customer insights from loyalty and CRM to educate executives throughout the organization, arming them with the right knowledge to improve how they operate.  Both examples provided key lessons to CRMC attendees – whether you use the rich data derived from loyalty programs for marketing or operational purposes, the benefit is in using the data. With strong CRM capabilities, you are empowered to take loyalty programs beyond rewards and into the future of soft benefits and customized experiences.

Yet despite the fact we are seeing new loyalty programs like Walgreens and Stride Rite amass enormous membership in a short period of time, we still see smaller stores like Shaw’s and Jewel-Osco, abandoning their long-time loyalty programs altogether under new ownership to focus on lower prices, clearly shifting away from personalized, targeted marketing.   

So who’s right? In our opinion, it is brands like IKEA, Cabela’s and Whole Foods who are fundamentally changing their strategic marketing approach to a customer-centric and experiential model rather than relying on traditional, mass-marketing loyalty and CRM approaches.

Walker Smith from The Futures Company emphasized that consumers are "slimming down" by living large with less; in other words, it's experiences and relationships that are valuable, not things.  While we remain hopeful we’re witnessing a permanent shift away from traditional points-based rewards programs, it is still too soon to tell whether retailers are in it for the long haul or if it just happens to currently be a perfect storm of trying to focus on the big buzzwords - Big Data, CRM, Loyalty and Targeted, Omni-Channel Marketing - all at the same time.

Note: An edited version of this article first appeared on RetailWire. You can join the discussion by clicking here.