• Kara Holm

Making your point: loyalty programs & communication


Dear Readers:

You will be happy to know that since becoming a PC Plus member I have redeemed points valued at $250 and that my current Shoppers Optimum points balance has a value of $275.

But before we get into loyalty programs, let’s step back for a moment. Very often (too often!), we observe that businesses create a new program or invest in new systems without spending enough time considering how these programs and systems are activated and integrated into regular operations. They wonder why their businesses are not instantly transformed by new initiatives: such as new customer relationship management software or new service standards. One reason is so obvious and simple that it is often over-looked. Businesses do not always think purposefully enough about how to communicate these investments with their customers or their front employees – your most important channel of communication with your customers.

Communication is so important, yet it is very difficult to get right. One of my clients and I have developed the following mantra after learning a long-time customer did not know the business validated parking: “When you think you have communicated enough: you are only half way there.”

Because the work we do every day is so real and immediate to us, it is easy to forget that our audience – be it front-line employees or customers – is not in the know. We live and breathe our work but we should not assume any one else has the same level of familiarity. We have to find ways to make our initiatives relevant and meaningful to our customers. Business also have to make sure employees are excited about new projects and will be able to promote them to their customers knowledgeably .

Thinking specifically about loyalty programs, we also have to remember that the basics of a loyalty program need to be communicated consistently – even after the program is launched. If your program and business are successful, you will be acquiring new members every month, so you always need to communicate your basic value proposition from a customer perspective. Your messaging should consider both new customers, as well as loyal customers. Ideally, you would have different streams of communication designed for specific customer groups (this is called a segmentation strategy). Even better, you could offer personalized communication based on preferences. Loyalty programs create opportunities to understand your customers, and smart businesses use that information to engage clients by creating highly personalized offers and messaging, which I shall discuss more below.

I am always surprised by the number of business that do not make this effort. One great way to ensure new customers remain top of mind is through a new member “on boarding” process. “On boarding” is marketing speak for having a plan for welcoming new customers to your business and helping solidify their loyalty through education and experience. This process should clearly communicate and reinforce the value of your program and your business. It should teach customers how to use the program so that they choose your product or service more often. And this is where the relationship with your new customer is established (and your investment in acquisition starts yielding long term benefits.) Lots of loyalty programs and businesses do a great job with this: Good Life Fitness comes to mind. American Express also does a good job of engaging new members. Oh, and Mercedes did give me that lovely box of goodies.

Of course you also need to remind your loyal customers why they love your business. It can be easier to communicate with your active customers if you are strategic about your messaging. In my blog, The Exchange: Loyalty, Customers & Rewards (November 13, 2015) I mentioned that I was going to start buying all my groceries at Sobeys. This, in spite of the fact that SuperStore is conveniently located. It is very simple: Sobeys takes American Express and I collect AmEx travel rewards (which can be transferred point for point to Aeorplan). I also noted at the time, that the SuperStore’s PC Plus program was not something I valued.

Guess what? Five months after making this declaration, I estimate, that despite my affection for AmEx travel rewards, I only buy half of my groceries at Sobeys. One should never underestimate the power of convenience or the laziness of people like me. The real estate industry has it right: location, location, location. But it is more than the location. SuperStore does carry some products that we value, which also help keep us shopping with the President.

Anyway, a few weeks ago while picking up PC Black Box pasta and a few other “special” items, I noticed a message on my PC Plus app telling me the cash value of the points I had redeemed since signing up for the program. At the time it was $230. I was shocked because until that moment I did not believe the program was valuable. Today I have redeemed $250 and I have another $20 available. It irritated me that points are not awarded on your total purchase and that there were efforts to shift me onto different products. Now I see that the program has value if I use it strategically. As a result, I am looking at the points offers on products I use, and making sure I pick those items up at SuperStore, not Sobeys. This week, I will be buying red peppers and frozen cherries at SuperStore so the program is influencing my behaviour. SuperStore successfully communicated its value to me and now I’m paying attention to their other messages.

Recently, Starbucks underwent some significant changes to its rewards system, including the way in which the points are awarded and valued. In the past, members would get one star for every transaction through their app and you could claim a reward when you had earned 12 stars. I have a vivid memory of my daughter, Gala, paying for everyone’s drinks separately and collecting cash so she would get one star for each drink. While this worked for my daughter, it was highly inefficient at the cash and slowed things down. The new system fixes this operational issue that would have negative impacts on the customer experience, especially for those of us who hate lining up. Members now receive two stars for every dollar spent, and Gold members, like Gala, get a reward when they have collected 125 stars. The value for customers is approximately the same, but the system is so much more efficient for the operators.

Changes of this scope and scale can be difficult, but Starbucks used a number of channels to get the message out (including this handy little brochure Gala picked up, also emails, signage, and their app). What I thought was great about their communication is that the messaging suggested that the changes were in response to customer feedback. I suspect the change was made to address the inefficiency of the old system which increased the number of transactions, made lines longer and increased labour, but the Seattle coffee monolith told customers it was all about them. Based on my small focus group, it seems customers believe this and are even more loyal to the cult of Starbucks.

Today’s reminders:

  1. Communicate often and consistently through a variety of channels. Remember: “When you think you have communicated enough: you are only half way there.”

  2. Make sure your messages are relevant to customers and reinforce your value proposition. Frame your message in a way that customers can hear it – don't just talk at them, telling them what you want them to know – make sure your message highlights something they care about. Please, don’t use jargon.

  3. Employees have to be on board too. They are your first line of communication with customers, so make sure you have taken the time to sell them on new programs and utilities. Your employees won’t always be your target audience, but they know your customers best and have a vested interest in offering the people what they want.

  4. Move the signage around on your property to keep it fresh and to make sure customers notice. Make the signage interesting and include customer-centric messages.

  5. If you are collecting personal information, try to make your communications as personal and relevant as possible without being creepy. Show you customers that you are listening and using their preferences to serve them better.

Loyalty programs are a great way to engage customers as members of a community. It should be an up-front part of your strategy that’s supported in all areas of your business. The rewards are great for businesses that get this right!

#Loyalty #Retail #ValueProposition

hello [at] karaholm.com

©2019 BY KARA HOLM.