[CX Tribe] 16 November 2021 – Better Loyalty Program Targeting

[CX Tribe] 16 November 2021 – Better Loyalty Program Targeting

Picture of Adam Ramshaw
Adam Ramshaw
Adam Ramshaw has been helping companies to improve their Net Promoter® and Customer Feedback systems for more than 15 years. He is on a mission to stamp out ineffective processes and bad surveys.

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I try not to make any decisions that I’m not excited about.

Jake Nickell, founder and CEO of Threadless

I’m pretty excited about these CX ideas – does that count?

[Not Research]
The 8 Biggest Consumer And Customer Experience Trends In 2022

Every year about this time (4th quarter) we start to see a raft of “trends for next year” posts. I think they’re pretty much a waste of time.

Your customers aren’t reading them. 

If you’re listening to your customers you already know what they want and are actively working on getting it for them. Reading a post by a “futurist” disconnected to your business is not likely to assist.

In my opinion, your time is better spent reading customer comments than futurist blog posts.

[Actual Research]
Leveraging Loyalty Programs Using Competitor Based Targeting

by Brett Hollenbeck and Wayne Taylor

This is an extensive empirical study (10,000 retail customers) on how to target the customers who will generate the maximum ROI for your Loyalty Program. 

The statistics in this research are quite imposing, above my pay grade, but as it’s been published in a peer reviewed journal, I’m comfortable accepting their findings.

Here are the high points:

  1. For a large group of customers, signing up for the loyalty program had no noticeable impact on their behaviour. 😥
  2. Two groups did increase spending by ~50%: 😀
    1. Consolidators: buying more – probably due to switching from a competitor.
    2. Upgraders: buying premium versions of the same products they had previously bought
  3. The difference between the groups:
    1. Was not predicted by how much/often they currently spent
    2. Was predicted by the location of competitors – not just distance but also the route customers had to take, i.e. did they pass a competitor on the way to you.
  4. You can predict who will fall into each group with a simple machine learning model

The business takeaways from these points are substantial:

  1. Don’t use RFM analysis to target loyalty program enrolments, a.k.a. high spending customers are not necessarily your best loyalty program members.
  2. Do target customers based on your competitor profile. In this case the key variable was location but your situation might be different. 
  3. Use simple machine learning models for execution: with current tools they are not too difficult to implement.

[Best Practices]
The Key to a Great Customer Experience is Collaboration

On-point article by CX industry stalwart Annette Franz

In my work on CX I talk about collaboration and cross-functional teams a lot. So much so that it’s sometimes difficult to determine if collaboration drives CX or CX drives collaboration. I suspect it’s both.

The most successful implementations occur when the idea of great CX is driven into the core of culture and then focused with the right governance structures. Annette captures both in her article.