Loyalty Management: From Loyalty Programs to Omnichannel Customer Experiences

A central proposition frames the rationale and content of the book currently in your hands: securing customer loyalty is a priority for businesses. In today’s world, marketing is largely based on the goal of earning long-term loyal customers, and long-standing loyalty tools – transformed by the information revolution into data-rich, interactive touchpoints – have become the enablers of loyalty-oriented and customer-centred omnichannel strategies that are shaping the consumer world. This book discusses the changes in society and markets that have made the goal of loyalty so central and examines how this has been reflected in the evolution of marketing paradigms and business practices throughout the world. In both the academic and business worlds, loyalty management has grown in stature. What makes and how to make customers loyal has been debated in lecture halls, discussed at conferences, designed in boardrooms and played out on shop floors. The rise of digital has added a new online dynamic and along with it, inevitable challenges and opportunities. Over more than a century, a variety of loyalty tools and practices have arisen and diffused across industries and countries. The paraphernalia of loyalty management has taken manifold forms from tickets, tokens and stamps to plastic cards, vouchers and coupons to digital wallets, wish lists and personalized journeys. And it’s not only aimed at customers – ensuring the loyalty of channel partners and strengthening business-to-business (B2B) relationships is just as essential in today’s interconnected business environment. The journey of loyalty management traces a path that leads from Green Stamps to the Tesco Clubcard to Amazon Prime and the Starbucks wallet. Managing both customer and partner loyalty has shifted from running programmes to managing relationships to curating experiences. Over the past three decades loyalty management has undergone three phases. From 1980 to the end of the twentieth century, it meant running a loyalty programme. Since 2000, companies have shifted their focus towards harnessing the ‘invisible’ advantages of such programmes: the insight they offer into the world of their customers, the opportunity this gives them to develop and manage positive relationships with those customers, and the value created by being able to use scheme data to inform decision-making and shape targeted marketing efforts to retain, upsell, cross-sell or reactivate their customer base. Today, in 2019, we are entering a new phase. Loyalty management is increasingly now being identified with the design and management of a quality customer experience across the various touchpoints that connect the customer and the brand and through which the customer journey evolves. Overall, loyalty management is, and has always been, a continuous effort to create and expand a space of free circulation for the customer, in which she is identified as an individual with unique characteristics derived from data collected at various touchpoints, and to provide superior value based on individual preferences and needs in doing so. The advances made in recent years in technology have only accelerated and expanded this trend. Tools and methods derived from data science and artificial intelligence have improved the ways in which customers can be identified and tracked across an ever-increasing variety of touchpoints and have given brands the means to reach new heights of sophistication in the personalizing of interactions, offers, conversations and environments. The information revolution made it possible for companies to collect, analyse and use vast amounts of individual customer data upon which more accurate marketing decisions could be made, thus helping to bring about the shift in emphasis towards customer relationship management (CRM) techniques. Customer-centric measures of success, such as share of wallet, retention rates and customer lifetime value, soon entered the boardroom and are today valued very highly by business leaders and investors, as the chapter by dunnhumby on customer-based decision-making illustrates. The rise of ubiquitous digital technology was profound. Not only is print media like coupons, flyers, cards and direct mail increasingly delivered to your mobile phone screen, traditional one-size-fits-all price cuts and special offers are now personalized to individuals and sequenced to nudge the customer towards brand and store loyalty. New business models have emerged centred on price or loyalty promotion: daily deals platforms, promotion aggregators, mobile rewards platforms, curated subscription models, loyalty currency exchanges and wallets, to mention but a few. The environments in which we consume products, services and experiences have become intelligent, mixed realities, simultaneously operating offline and online, where identified customers can move freely. New digital services such as click and collect, persistent shopping baskets, wish lists and in-store virtual catalogues interweave touchpoints and bridge channels, providing the customer with a unified and seamless experience with the end goal of retaining them, making them loyal. We now live in an omnichannel environment. The customer experience management (CEM) and omnichannel management frameworks that have emerged in this environment aim to help managers eliminate barriers across channels so that customers might have a seamless experience in which they are recognized and served based on their individual preferences, needs and loyalties. Central to this is understanding and managing how they perceive their interaction with all the different touchpoints they encounter in offline and online channels. The two frameworks share a common goal: achieving customer loyalty. Companies are now wrestling with how to organize resources to provide such loyalty-building omnichannel experiences. This book provides some empirical responses to this challenge and demonstrates that the means actually already exist within most companies. Companies that already have loyalty programmes and CRM models, and thus the people and skills required to execute them, already have in place the building blocks of omnichannel CEM. They may also already believe in the principles and philosophy that drives it. In any case, an overhaul is not generally necessary – existing loyalty programmes and CRM systems are optimal starting points. The aims of this book are twofold. First, to assist the reader in navigating the changes that have shaped marketing thought and practice on loyalty management. Second, to offer guidance on the skills and capabilities that companies will require if they want to be successful at delivering omnichannel customer experiences that drive loyalty. We believe there is something here for everyone, whether you are a marketer, business leader or student, or simply someone curious about how loyalty works in a consumer setting. We draw on twenty years of scientific research, consultancy and education to try to bring a fresh take on concepts seen by some as buzzwords and by others as irrelevant outside of a marketing department. We believe they are neither. Rather, loyalty programme, CRM, CEM and omnichannel are steps in the evolutionary process of any successful, value-creating organization. They are lived by every customer and business partner. And each provides the foundation for the next. Nothing is lost, but everything is transformed: to take the first steps towards omnichannel transformation, companies need to look no further than their ‘old’ loyalty scheme. It starts from there.