What IS a Loyalty program? (Part 2 of 4)
Hopelessly Devoted to you --
Loyalty is a Powerful Two-Way Street!
There are several major components to make a loyalty marketing program function properly. Let's walk through them one-by-one.
First is the CREATION and MAINTENANCE of the DATABASE.
Let's define database: Database marketing is a gathering, saving and using knowledge about your customers and prospects, for their benefit and your profit.
There are several key words here. The first set is " ... gathering, saving and using ... ". Because of the ease of the gathering and saving part these days, many have done that. Many know lots and lots of "stuff" about their customers. When they elect not to use it, the database is useless.
The next key word is "knowledge". Contrary to what computer gurus would have us all believe, we are not in the information age. I have never met anyone who wanted (or needed!) more information. We have so much in our inbaskets now we can't get through it all.
What we all need more of is "knowledge". Knowledge is something we know and can use. It is beneficial. It is not just facts and figures and words on paper. It is knowing about our customers and prospects so we can talk to them like real people.
A database should be a knowledge bank. Filled with things we know we can use. This is The Knowledge Era -- how we use this knowledge will have a major impact on our marketing success.
Okay, how do we use this knowledge?
Two ways. First, to offer benefits to our customers. The next key word is benefit. If there is little to no benefit to the customer, then why should they be our customer? Customers have to gain from your database knowledge bank, too.
And second, to determine who we need to talk to about our products and services. That is, who in the marketplace, both our current customers and prospects, are most likely to buy what we have to sell. The knowledge you maintain in your database allows you to make intelligent decisions about who and where and when to go to market.
Profit is the last word. And as important as all the rest. Why? Because unless you make a profit -- a measurable bottom line profit from your database, your knowledge bank -- why have one?
What Database Marketing Does for Marketers
This is my list of 7 things you can count on when you build a marketing database:
- Every contact becomes valuable knowledge for all future contacts. Every personal visit, every telephone call, every piece of direct mail, every fax, every trade show visit or branch/store visit ... they all provide knowledge opportunities.
- An accurate, targeted presentation to your marketplace is readily and reasonably available within your database. Yours! You talk with your customers and prospects as people, one-on-one.
- GI / GO ... garbage in / garbage out. A computer term which fits. Quality input will allow you to gain quality output. And those important measurable results. The opposite is equally true!
- If you can't measure it you can't improve it. Database direct marketing allows you to learn more, to do more, to serve more. And most importantly, to earn! more, too.
- By measuring your results and recording that record, not only will you earn more, you will save more. All the costs of doing "mass" marketing go away. Why? Because your business isn't for everyone -- it is only for the chosen. You'll spend less to reach them with your database knowledge bank.
- Database marketing makes possible analysis of profitability of individual products/services. And of those lines vs. each individual customer and prospect you have. This is a key element in sending the right message to the right people at the right time.
- Database marketing allows you to be a market driven, not a product driven -- organization. By incorporating knowledge about your customers habits and your prospects needs, your marketing by database allows you to reach your audiences with special campaigns aimed specifically ... directly ... "soley" for them!
How to Use This Database Knowledge for Loyalty Programs
The foundation of all loyalty programs is a customer database ... a knowledge bank. A database that has marketing knowledge about each of your customers / members. And records each transaction ... at least each purchase transaction.
This transaction knowledge is kept and used for all future promotions. Combined with that gained at the time of the original "member" registration, your database has become a powerful marketing too.
You put together basic facts about customers, combine that with real, live action by that customer, and use that knowledge to make decisions about when and how to market to that customer. Truly individual and personalized marketing.
Is it possible to get too personal? Sure it is ... which is why there is a privacy concern. The information you ask for at the time of "registration" for your database should be the minimum necessary to communicate effectively, in a personalized way, with your audience.
Some people do not wish to be on mailing lists. Your loyalty marketing program needs to offer a benefit -- an incentive -- that will motivated your customers to want to hear from you. So the "mailing list" is no longer an issue. Instead, it is a company / customer relationship.
Experience over a number of years has taught that the offer of a small "present" does motivate people to fill out registration forms. Obviously, the benefits of "membership" need to be clearly spelled out, simple to understand and easy to take advantage of.
Another detail of maintenance of your database is keeping it clean. Up to date. As accurate as reasonably possible. On a continuing and on-going basis. All member / customer addresses must be checked to be certain they meet standards for delivery.
And ... it is like a bath: you have to do it over and over!
7 Mistakes to Avoid When Building Your Marketing Database
Thinking you can "test" before doing.
Really, you cannot "test" a database. You can only "do" a database.
This is news to many direct marketers. Why? Because of the ancient axiom that you always test / test / test. This is true enough for product and service offers, for lists and media ... for many marketing arenas.
It is NOT so for a database ... you either do it -- or you do not. Period.
Not getting total commitment from management.
This is true of any marketing program -- probably any "new" program in any company. If the top is not behind the effort being made, there is very little likelyhood that effort will be rewarded. Or successful!
Management -- upper management -- must be into the establishment of a marketing database.
Thinking you can stop your database marketing loyalty program at any time.
Not so. Once you step in the water, your are in, you are all the way in. You do not start by sticking only a toe in -- you jump in up to your neck.
As your program grows and develops you will need to make changes. So, make a change. But don't even think about stopping.
Why? Because once your customer base gets with your program, they will be very reluctant to stop particpating.
Not making certain everyone inside your organization understands what is happening.
It is close to a disaster when you begin an exciting program, launch it successfully, drive your customers to you ... and they get left hanging.
Because your team -- your entire team! -- was not 110% informed as to what was going on. Make certain everyone ... and I really do mean everyone ... knows about your database marketing program. It will be worth the effort many times over.
Expecting immediate results.
Immediate meaning within a few months. In most cases successful database loyalty programs are 9 to 12 months out before you enjoy some profitable results.
Oh sure, long before then you will see some trends. Get some action. Recognize what is happening. Have generated some happy customers. Built some loyalty. Increased both frequency and retention.
Still, it takes longer to get measurable results than you might experience with the "normal" campaign to campaign effort. Plan on it taking a little time.
Not planning to measure your results.
It has always been a mystery to me why measurement standards are not built into marketing programs from the beginnning. All programs! Yet, sadly, often that is the case.
Understand Life Time Value is a key element in knowing what happens with loyalty programs. LTV is not a cute collection of letters ... it means something.
If you are not sure what it means for your company and product line -- then you need to find out. A database program can help. Having the up front knowledge certainly makes measuring the back-end a lot easier. So, build into your total program a way to measure ... and then do it.
Building your database, and then not using it.
Why this happens is beyond any understanding ... yet it happens. Why? Not sure. Hear all sorts of "excuses" (excuses are different than reasons, usually they are just that -- nothing more than excuses!).
Since a database is only valuable when it is used -- use it! Certainly seems basic to me. There is an investment of money, time, equipment ... and most importantly -- people. You will not gain the profits you are entitled to if you do not use the knowledge available to you.
Use your database.