Last week in this space, I spoke to how behavioral databases are helping golf facilities and other industry players to better evaluate and identify their best customers. I outlined a popular approach called RFM analysis, by which one looks at each customer’s recency and frequency of transactions in context with total spending, scores each and evaluates and segments customers in the proper context with others. I also maintained that by integrating attitudinal marketing research into a customer’s record, marketers could gain great insight into ways to customize or further segment specific communications and offers in ways that resonate with those customers deemed most valuable through the analysis.
This week, I’d like to share further thoughts on how the most effective loyalty marketing programs use this information and other marketing mix elements to build customer loyalty. Many loyalty programs wrongfully assume that points and reward programs are synonymous with loyalty marketing. Having worked on numerous best guest programs, I’ve observed that this is just one element, albeit one that often holds minimal resonance for potential customers who have long ago burned out and been overloaded with points programs, opting to focus only on one or two, offering the most lucrative, attainable, relevant and easy to understand. I’ve seen several failed attempts at golf industry loyalty programs. Next week, I’ll share some specific reflections upon the twenty fifth anniversary of one of the industry’s first such programs. But, today let’s look at the four tent poles of solid loyalty programs. An approach we’ve developed to help clients address this is known as “2C2R”. The four elements are as follows:
1. Communication: The best loyalty marketing efforts take great care in crafting the right type and frequency of marketing communication to best customers. They recognize that one mass message is often insufficient in establishing the “one-to-one” bond that demonstrates to a best customer that they are valued and appreciated. Further, the communication acknowledges unique needs and articulates a solution, rather than simply a sales proposition. As we looked at last week, RFM analysis and the fusion of attitudinal research can help any property easily identify best customer segments and craft appropriate communications that demonstrate an understanding and appreciation of these customers based on the observed behaviors and related interests.
2. Community: Effective affinity communities bring people of shared needs together in a meaningful and honest exchange. In addition to the golf space, I’ve applied this to the cruise line industry by offering forums for future passengers to meet in advance of their sailings, for past guests to share memories together and through special events that fostered literal community building within local markets. Finding the right approach can often be as simple as conducting needs assessment and concept testing research.
3. Recognition: Best of breed loyalty efforts go out of their way to make the customer feel special. A great example was when I returned to a favorite hotel after about a three year lapse. To my surprise and delight, the agent at registration welcomed me back and asked me if I would like the same room that I stayed in during my most recent visit. The gesture cost the hotel nothing, but it demonstrated commitment to cultivating customer relationships. Recognition can be as simple as remembering birthdays or distributing, commemorative pins or apparel that loyal guests can wear as badges of honor, distinguishing themselves from others. It’s a soft sell approach that shows appreciation and doesn’t tarnish your brand through discounting, often so rampant in golf facility loyalty programs.
4. Reward: Many marketers skip immediately and exclusively to this step, associating good customer retention efforts solely with points and reward programs. While research has demonstrated the efficacy of offering aspirational “carrots at the end of sticks” to acknowledge long term loyalty, too many marketers falsely assume that customers will become as locked in on the prize as they are. In countless loyalty research that we have conducted, clients are often underwhelmed to observe how unwilling the customer is to engage in a new points program or track their behaviors for far-off rewards. The key is to reward frequently in soft and subtle ways, while making the pursuit of long term rewards as seamless and self managing as possible. We’ve heard in too many focus groups, “Please don’t give me another points card to carry around!”
Like any CRM (Customer Relationship Marketing) approach, identifying the right consumers for targeted offerings is both art and science. But even absent sophisticated databases and mining systems, a fundamental research audit of the customer base can enable you to segment customers by demographics, attitudes, past behaviors and defined need states. We’ve often deployed a research approach where we measure these perceptions and behaviors between disparate groups of customers and prospects and look for gaps that can suggest the right tactical marketing approaches to reach each group. Concept testing is another means in which specific rewards, recognition offerings and communications approaches can be evaluated. Regardless of the specifics of your own marketing efforts towards best customers, or the breadth of loyalty research that you conduct, remembering the principles of 2C2R and incorporating them into your program can be a valuable first step in differentiating your brand from competitors and breaking through the clutter of too many look-alike programs.