During economic recessions or a pandemic crisis like COVID-19, it is obvious that many companies are struggling with their financial results and that they need to take action to prevent bankruptcy. In those cases, it is often seen that the first cuts are made in marketing departments, and with that its daily activities, campaigns and in many cases also in the loyalty programs. Programs to retain existing customers; perhaps not the smartest idea to decrease efforts there? Instead of having multi-department loyalty approaches, companies tend to keep loyalty as a pure marketing responsibility with low priority. It’s time to make a change in that thinking!
Don’t cut down, but enforce loyalty efforts
The reason for these actions in marketing and loyalty programs, is that often these programs are experienced as cost centers. Every point given away for a purchase, any reward that’s redeemed or promotion activated, is a decrease in margin or a value that is either being paid out or kept on the balance. To prevent financial downfall, these ‘costs’ are taken out and unfortunately not always replaced by other activities to retain customers. While these existing customers are extremely important for the sustainability of the company. Research shows us, that it costs 6 to 7 times more to attract new customers than to retain existing customers than 5% increase in retention can result in 25% – 95% increase in profit (Bain & Company). Thus, in times of crisis, we believe that organizations should enforce their focus in loyalty programs rather than cut down the efforts.
Activate multi-department loyalty programs
So, it is a pity, that loyalty in many organizations is seen as a pure marketing effort and responsibility and not as company-wide process. When looking at our VANEIGENS Customer Engagement Flywheel, we see that Loyalty is an essential part of Customer Engagement and not standalone, and Customer Engagement is a process that is not just driven by marketing. We therefore want to stress the importance to involve setup, implementation and execution among multiple departments: for a start service, sales and marketing. There are several organizations that already approach loyalty with this multi-department focus, but there is still a gap to cover to ensure customer centric approaches are applied to more companies.
So, what roles can the different departments play in the loyalty process?
- Service. Maybe even the most important department in the complete loyalty process of a customer. In many cases, this department has the most in-depth and qualitative contact, but is placed at the end of the chain to solve negative feelings and situations. By creating a more proactive customer service, where positive experiences are proactively enforced and rewarded, acceleration is possible.
- Sales. In our opinion, this department should be more in the driver seat behind a loyalty program. Although loyalty is for many companies difficult to measure in terms of direct ROI and more a long-term process, it does affect business and financial results. More loyal customers result in more frequent purchases and higher average order value, so why aren’t more sales departments stressing the importance of great loyalty programs?
- Marketing. Of course, marketing is an essential part of the combined loyalty approach. But instead of being the driver, it should have a more ‘supportive’ part in the approach. Based on the targeted business results, like NPS and sales results, marketing can create the bigger picture and design an effective and attractive program. With their knowledge about target audience, their preferences and profiles, marketing is able to fit the right channels and messages to the communication around the program. This includes automated journey flows, like onboarding journeys, educational journeys and other impactfully standardized and personalized customer journeys.
In that perspective, marketing is a key support for the results of the other departments. By activating the right benefits, promotions, rewards and perks within the personalized customer journeys at the right moment, service and sales objectives are achieved. Result? Happy, enthusiast customers leading to higher turnover and profits. So, don’t think in costs of a program, in terms of points or credits, but try to be innovative in your retention programs. Offer perks in terms of service-oriented benefits. Reuse your resources to retain customers and start engaging customers on the next level. A multi-department approach to your loyalty will not only bring an increased customer loyalty, but will also engage your own employees among each other!
Interested in what what VANEIGENS can do for you to align departments in a single loyalty approach, integrate data with your programs and even discuss the possibilities of Artificial Intelligence? Then reach out now and let’s have an inspiring cup of coffee!