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August 10, 2015
Loyalty Runs on Love and Money
 
In an oversaturated, over-messaged, fast-moving, highly competitive omni-channel marketplace, building a loyal customer base of people who buy regularly and advocate for their favorite brands is an imperative. Acquiring, retaining, mobilizing, motivating, and incenting loyalty over time is a question of love and money.

Brands have had an off-and-on relationship with CRM and loyalty marketing over the years. Every brand attracts loyalists. It costs 5–10 times more to find a new customer than it does to resell an existing customer. Most brands fantasize about identifying, motivating, and rewarding the 20 percent of customers who generate 80 percent of the sales.

Loyalists buy more, buy more often, and tell everyone they know about the brands they love. Building and sustaining loyalty is part stimulus-and-response, part value exchange, and part emotional experience. The quality of the relationship, rather than the number or value of transactions, is the barometer for loyalty.

Love and money are the two drivers, levers and currencies that power loyalty marketing. The concepts are simple. The execution is technically and psychologically complex.

Most people have a finite reservoir of affinities. Nobody loves everybody and everything. There are brands we care deeply about, brands we generally or occasionally prefer, and lots of brands we don’t know or don’t really care about until a moment of truth presents itself and we are forced to make a choice. The drivers of brand attachments and connections range from childhood or sensory experiences to convenience and utility to badge or status value.

Consumers like what they like on their own terms. Enthusiasms wax and wane. They want to hear from brands — but not that often. They are governed by a WiiFM (what’s in it for me) mentality, even for brands near and dear to their hearts. Long-standing loyalty can be derailed by aggressive price offers or a bad product, retail, or customer service interaction.

The trick to designing an effective loyalty program is to apportion love and money for maximum business impact. People who love your brand need to feel connected and appreciated. They need to know that their connection is acknowledged, valued, and reciprocal. They don’t need an incentive; they’re going to buy anyway. They need a sign of love to reinforce and mobilize their loyalty. They need to be cued and to be coddled.

They crave inside or exclusive information, early access to new products or services, private trunk shows, personal shoppers, private 800 numbers and mini-sites, first dibs on your best offerings, and opportunities to beta test products or give input into offerings in your pipeline. They want to be a part of what your brand is doing. And they expect you to know who they are, their favorite location, their sizes, their style preferences, and even their means of payment. Loyalists expect favorite brands to know and act on what they’ve previously bought and what they might be interested in next. Hypersensitive to the tone of your communications, they are open to suggestions and recommendations and judge your moves by the degree of relevance, convenience, and personalization they reflect.

Consumers who split their loyalty or are ambivalent about your brand need money to motivate them. Some will become loyalists. Most can be convinced to make additional incremental, one-time purchases with a relevant, valuable offer at the right time and in the right tone of voice. This becomes a test-and-learn exercise to find the right balance offer value that yields optimum revenue.

Knowing whom to mobilize to achieve incremental spending is the KPI. Apply coupons, special deals, BOGOs, rebates, and price incentives where it will do the most good soonest. Recency and frequency of interaction will yield clues to finding the best segment to incent with money offers. Most often, those most likely to act on your offer are aware and slightly engaged with your brand but split their affinity based on any number of factors.

In most cases, high propensity buyers will look a lot like a lighter version of your loyalists on a psycho-demographic basis. The smart guys build propensity and mirror models to optimize performance and zero in on those most likely to yield new or incremental revenues. Money is used as a lever to change or direct behavior.

In a plugged-in, on-the-go, ADD society where everyone is a connected critic, loyalty is a constantly shifting bogey. Yet brands can capitalize on the longing for connection, recognition, and reward by thoughtfully and scientifically allocating love and money. 

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Danny Flamberg, EVP Managing Director of Digital Strategy and CRM at Publicis based in New York, has been building brands and building businesses for more than 30 years.Prior to joining Publicis, he led a successful global consulting group called Booster Rocket, as Managing Partner. Before becoming a consultant, he was Vice President of Global Marketing at SAP, SVP and Managing Director at Digitas in New York and Europe and President of Relationship Marketing at Amiratti Puris Lintas and Lowe Worldwide.
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