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3 Words for Loyalty Marketing in 2014

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Setting annual goals (a/k/a new year’s resolutions) can be a precarious venture. As people, we can easily set goals that are too vague or too lofty for us to maintain focus and stay on track towards our objectives during the year.

Forecasting market trends presents similar challenges. I’m finding the market is rewarding clarity and simplicity. If you are willing to use the attention span of the C-Suite as a guide, I might get a head-nod from you when I share that a recurring condition of executive level presentations these days  is encouragement from clients to “keep it tight”, “make it clear” and “do it in no more than 10 pages”.

The need for clarity and focus is part of the reason that I’ve elected to forecast the most important trends and areas of change in customer and loyalty marketing in 2014 using just three words:

  • Disruption
  • (In) Security
  • Context

I am going to present a complete explanation of our 3 Words for Loyalty Marketing in 2014 at the NACS Leadership conference in Miami Beach on February 10. NACS is the organization otherwise known as the National Association of Convenience Stores and we are proud to be part of this event.

For now, here’s a preview of our 3 Words for Loyalty Marketing in 2014.

Disruption
There will be continued disruption of Consumer Value Propositions (CVP) and the technology that delivers loyalty programs in 2014.

We’ve been documenting changing consumer purchase behaviors for the past several years. These changes continue to evolve and I don’t think any honest person can definitively say they completely understand and can accurately predict “exactly” how consumers make purchase decisions. We do know that it’s time to stop talking about Millennials as if they are a unique animal in the zoo. The familiarity with digital devices and comfort level sharing information with friends and acquaintances online is well documented. These behaviors are innate in probably 80-100 Million people in the US and are now adopted as learned behavior by another 100 Million people, elders to the Millennials who have adapted over time.

Consumer value propositions for all types of marketing, but especially in data-driven loyalty marketing programs, has to change to meet consumers not just where they are but where they will be in two years. Loyalty program owners also have the task to keep their programs financially accountable, so there are more changes underway that speak to needed changes to reward the right customers as opposed to all customers. Delta’s shift to a revenue based rewards system is but one example.

The technology that enables customer communication and offer delivery is changing too. In just the past month, have seen a Belly enabled iPad set up in a UPS store, an iPad POS system from Revel Systems in another local retailer and POS driven loyalty programs at several franchise operations. The emergence of low cost technologies that are “good enough” to deliver customer loyalty programs threatens traditional loyalty providers. Speed to market, lower integration costs and improved operational efficiency can’t be ignored by national merchants. The question posed for 2014 asks whether larger brands will continue to pay huge prices for enterprise loyalty systems “because they can” or whether they will increasingly experiment with alternate solutions “because they can”.

(In)Security
One of last year’s three words  for Loyalty Marketing was “Data”. At that time we wanted to communicate that plenty of data had been collected by brands, but marketers needed to do more with the asset to create business results. As marketers continue to wrestle with that unfilled promise of Loyalty Marketing, the issue of data security has been thrust into center-scope.

The most recent security breaches at Target and Nieman Marcus, the scandal involving Edward Snowden and the NSA and current scare campaign supported by Microsoft warning consumers to resist being “Scroogled” has raised the anxiety level of most consumers regarding their personal data. There are several outcomes that could play out during 2014; consumers could become more hesitant to share their data with brands and legislation could be introduced at the Congressional level to shift ownership of customer data from the brand back to the consumer.

One thing is certain. The burden will be on marketers to show “why” they are asking consumers for specific data points and “how” they are using it. Marketers will need to keep a keen eye on how they demonstrate they are listening to their customers and how they return tangible value to customers in return for the data they have “borrowed” from the customer.

Context
In our Loyalty Manifesto 2013 published last year, we introduced the idea of Contextual Loyalty. Consider the word Context as one you should put on your white board in your planning room. As you decipher the way your own customer group wants to communicate with you, receive and respond to offers, and otherwise participate with you in business, you should challenge campaign and promotional designs through the lens of Context by asking these types of questions:

  • Are we using the channels that are most relevant to our customers?
  • Do our customers want to collect points, redeem instant surprise rewards, play a game with us, or is there another model we can try?
  • What types of rewards are most appealing to our customers? Is there any room left in the promotional world for merchandise when Amazon and Walmart can beat most of the price points seen in loyalty program catalogs?
  • How close to the point of purchase can we engage our customers? Do we seek to get their attention upon check-in on Foursquare, do we send them SMS when they are within 1 miles of our store and a sale is underway, or do we stick to email campaigns that we can comfortable measure?

These are all questions that we expect to be answering during the year. You have probably been asking these questions and many more that are particularly relevant to your business and your customer base. 2014 will be a year of getting closer to the right answers for your business.

I could have framed predictions for 2014 in a “Top 10″ list or a “5 things you must do in 2014” list. But I am sticking to one of my own goals, one that has been inspired by the clients we serve. Keep it simple, direct and understandable. I hope this helps you as 2014 builds steam.


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