Customer loyalty is often seen as an after-sales service or rewards programme that tries to get customers to come back.
In fact, customer loyalty encompasses much more, depending on how ready you are to think outside the box.
1. Customer loyalty doesn't have to come after sales
A conventional customer loyalty programme is introduced to the customer after they have purchased your product or service.
But loyalty can engage customers in the customer journey towards purchase.
Before a customer pays for a product or service, if there is a good customer loyalty programme in place, it will inform their purchasing decision.
An example is when people decide whether or not to buy tickets from a specific airline based on its miles programme. In this case, whether the customer can get additional value through the miles accumulation programme becomes part of the airline's value proposition.
2. Customer loyalty programmes are communication platforms
A common missing piece in the discussion of how to generate ROI from customer loyalty programmes is the role of customer loyalty programme as platforms for communicating brand messages.
Customer loyalty programmes allow companies to reward various customer segments on a differential basis.
For example, a brand might divide customers into segments based on how much their transactions are worth.
You can give the top segment of customers a bonus such as triple the amount of points offered to regular customers if you know that they are engaged in the programme and that the reward will make them feel like a valued customer.
These additional benefits on top of a base offering can transform a customer loyalty program into an additional marketing platform.
3. Customer loyalty is a valuable data collection point
The future of loyalty marketing will be about permission-based interactions with clients.
Marketing is becoming an increasingly noisy world where plenty of companies are collecting customer data and using that data to contact customers directly with offers, promotions and other marketing materials.
With so much noise, consumers' tolerance to marketing messages is dropping, which means that the more data you collect, the harder it is to collect data that will actually help you market your products.
The core idea of customer loyalty is to promise customers something in the future, with ongoing rewards and benefits that help build a relationship with them.
Customers are far more likely to share their data with you as part of a value exchange, knowing that they will get something back which is tangible and available today and in the future.
This data could be on how people adapt to the loyalty programme or how they redeem points. This data can then be combined with customer behaviour data such as transactions and CRM data.
4. Data collected through customer loyalty programmes should not drive your thinking about your business
I would challenge the idea that as long as you have big data, you can mine it and insights will automatically flow from it.
Big data should only complement the questions that you are already asking about your business, such as which customer segments should get more of my marketing dollars? How should I change my loyalty programme to give me better results?
You should not rely on data for the questions, but instead align your fundamental business questions with insights from the data. Do not rely on big data to drive change in your business.
The writer is Hywel Evans, regional director of decision science APAC at Aimia.
Delegates will get the chance to hear from Evans and many more speakers at Customer Loyalty 2014. Those interested in attending the event may contact Angela Tong at firstname.lastname@example.org or Linda Kuruneru at email@example.com or call +852 2861-1882.