As part of Colloquy's 25th anniversary issue, I was asked to reflect on my experiences of customer loyalty. Here's the transcript of our conversation.
What was a critical turning point in loyalty marketing, to you?
Two have happened during my career so far.
The first was the publication of The Loyalty Effect by Frederick Reichheld in 1996. This really crystalized how loyalty could be a business strategy, rather than simply a marketing tactic. It inspired the approach that transformed Tesco in the 90s into a retail powerhouse, with its Clubcard loyalty program.
At the risk of sounding like a Reichheld groupie (I've never met him), the second was the development of the Net Promoter Score in 2003. While this has had its critics for being overly simplistic, it moved the focus of loyalty beyond spend and frequency to fostering advocacy - which has only become more important in our evermore connected world.
What do you think consumers miss/don't see regarding the loyalty relationship?
Once a customer shares their data with you, they assume you know everything about them, and that you have both the intention and the capability to personalize their experience. And that's perfectly reasonable. Why should they be expected to appreciate the challenges involved?
But you can never perfectly know everything about them, or personalize everything you do. So it's essential for the marketer to develop a proper two-way relationship with the customer to both manage their expectations and maximize the value for them from their data.
If you could do one thing over again, what would it be?
Keeping this to the world of loyalty, I would spend a lot more time early in my career understanding the emotional drivers of behavior. While Clubcard and Dunnhumby gave me an appreciation of the power of big data to create growth (before the term big data was ever coined), I came to realize that this needs to be connected to underlying emotions to drive lasting behavioral change.
Build a loyalty starter kit. What three tools are essential?
There are so many tools available now to businesses of all sizes, but what you need depends on what you want to achieve. Rather than tools, my starter kit contains three essential questions:
1) What is the attitude of the business to loyalty? Is it a way of doing business, or just a tactic?
2) What role does the brand play in customers’ lives, and what would help strengthen the relationship?
3) What are our loyalty objectives?
Only when the answers are clear should you start thinking about the tools needed.
What advice would you give a young loyalty marketer?
Just remember that despite all the labels - consumers, customers, employees, advocates, etc. – it’s just about people, and building relationships with them.