Wednesday, December 01, 2010

Loyalty Reward Based on Gelocalization

I have read several articles of French mastermind of customer relationship programs Henri Kaufman about the non sense of certain loyalty reward programs. Indeed, loyalty reward programs had a specific goal 2 decades ago when they have been created: Keeping customers from going to the competitor, and hence securing revenues leads. But competition became tougher, and as every businesses now owns some kind of CRM programs, loyalty is a non concrete philosophy.

One good example, explained in Henri Kaufman’s blog, is when a customer before paying is asked if he has the store’s card. It sounds as it is a fault or a shame not to own it. But when you really think about it, this concept is wrong: Loyal customers can not be the majority of your clientele. Therefore we can consider that the term “loyalty” is obsolete.

One of the main reproaches of Henri Kaufman is the fact that what is rewarded is the sales made by one customer. Hence, it would be better to incentive the repetition of purchase. This concept in my opinion has two benefits:

  • If your customer comes often to your store, it is less likely to visit the competition.
  • If it comes regularly, you have more chances to drive both up selling and cross selling, which are actually the main purposes of loyalty reward programs, and wider customer relationship management.

Some retailers are already emphasizing this strategy by setting signs and boards showing for example Foursquare’s mayors advantages. But as the technology has not yet gone mainstream, it is important to find a way to ease the “checks in”. For example, some blue tooth equipment may automatically check you in.

I believe that mobile devices usage will help loyalty reward program to leverage this new philosophy. There are several services which propose loyalty reward programs based on “mobile check-in”, like Topguest. However, no brands have yet developed their own program.

What do you think about it?