The Relevance revolution

This is a guest post by Bryan Pearson. Bryan is the President and CEO of LoyaltyOne and author of the forthcoming book The Loyalty Leap: Turning Customer Information Into Customer Intimacy, which will be published in May 2012. LoyaltyOne is a global provider of loyalty strategy and programs, customer analytics and relationship marketing services. LoyaltyOne businesses include Canada's AIR MILES Reward Program – North America's premier coalition loyalty program, COLLOQUY, Precima, LoyaltyOne Consulting and Direct Antidote. LoyaltyOne is an equity partner of Direxions, a loyalty pioneer headquartered in India, and has a working partnership with the leading Latin American coalition program, Dotz. Toronto-based LoyaltyOne is an Alliance Data company.

Before we begin, here's an offer for loyal readers of Just Marketing: Just Marketing is giving away 20 free copies of The Loyalty Leap. Visit http://pearson4loyalty.com, click the pre-order button and enter the offer code JMK20. Your free book will be mailed to you in May. 

As the information and media revolutions sweep through marketing, loyalty marketers face a revolution of our own. We are at the crux of an historic moment—of financial, technological and social changes that are reshaping the industry.

The challenges are daunting, the opportunities tantalizing, the keys to success not always clear. As John Lennon sings in the song "Revolution," "We’d all love to see the plan." But while no single plan guarantees success, in my book I develop a simple formula that points us in the right direction. I call it “The 3 R’s.”

The first R is obvious: Reward. It’s the tangible thank-you that you give people for changing their behavior and allowing you to gain insights into what they value as consumers—what is known as a "hard benefit."

The second R is Recognition. In addition to issuing points or miles, you recognize your valued customers with gestures of appreciation, such as a complimentary upgrade or front-of-the-line access to special events—what is known as a "soft benefit."

But the future of loyalty centers on the third R—Relevance. As social media, mobile and other emerging channels of communication vie for the consumer’s attention, connecting with him or her has become an equally fragmented task. In this environment where people feel overwhelmed by competing information, your best bet for engagement is by showing consumers you understand who they are and what they care about. By being, in a word, relevant.The ability to sustain relevance will define the winners and losers in today’s attention deficit economy. A COLLOQUY study found that just 32% of U.S. consumers rated reward program communications as an eight or higher on a one-to-10 scale for measuring relevancy to their personal needs. It’s a shocking statistic, meaning that far too many of the mailings, emails and even Facebook messages we send to our loyalty reward program members are missing the mark.

So how can we do better? In part, by listening to the heartbeat of our customers.

Take, by example, Canada’s second-largest supermarket chain, Sobeys. As you know, the grocery business is extremely competitive, and profits are merely pennies on the dollar. Sobeys wanted to build not merely sales but long-term loyalty among its customers. And to do that, it needed to connect with its shoppers in ways that resonated with each individually.

So Sobeys turned to our company for help create direct-mail pieces for its loyalty card members, each of which was based on a members’ specific purchasing behavior. They were highly individualized – of the 1 million pieces created and mailed, 987,000 of them were unique, with a dozen customized product offers and coupons in each.

Then, to be sure they reached consumers wherever they were, we sent these offers through all channels – direct mail, email and website landing pages. Soon, the program will expand to mobile.

The results? Sobeys saw a 66-percent increase in promotional recalls, a 37 percent unique open rate for emails, and a 26 percent click-through rate.

By collecting the information people share and combining it with other data through partners and elsewhere, we can interact with customers in ways relevant to their interests and priorities. Apply what you’ve learned to create more meaningful points of contact—not just through marketing communications, but in merchandising, retail signage and website positioning. Similarly, sophisticated analytics can help you create a total brand experience that is more relevant to high-value shoppers.

But listening to the heartbeat of your customers means appreciating what they value beyond the walls of your business. For example, we’ve found that wellness, sustainability and the desire to fulfill a meaningful existence all motivate consumers today.

Looking ahead, I believe that loyalty programs can be a valuable tool to encourage consumers to make responsible choices that benefit themselves, the earth and the community. And by expanding into new areas of member relevance in such sectors such as government, health care and non-profits, loyalty can address a wider market while driving social consciousness.

Partnerships with such non-traditional industries can expose companies to memberships that were unreachable a few years ago but are accessible now, thanks to database technologies. Achieving the most important of the Three Rs— relevance—entails expansion into the public conscience, engaging customers with strategies that address their immediate challenges while resonating with their larger ambitions and concerns.

We have no choice but to move forward, but those who reach the desired goal in this passage from evolution to revolution will be guided by The 3 R’s.