INSIDE
LOYALTY OUTLOOK 2018 ........05
Data and Privacy ....06
Emotional Loyalty ..06
Loyalty Strategy .....07
Key Challenges and Opportunities .......07
DRIVING ENGAGEMENT AMONG
YOUR LOYALTY BASE ...08
REINVIGORATING LOYALTY SERIES
Five Fundamentals: How Much Budget Will a New Loyalty Program Require ..11
A “Top 5” Frame of Mind: Improved Engagement for Existing Loyalty Programs .........13
B2B Loyalty in a New Business Landscape: Building Respect and Mutual Value ........15
Breaking Down Barriers in Travel Loyalty Programs and Creating Relationship Memory .......17
Winning isn’t Everything, it’s the Only Thing: The Sports Loyalty Playbook .......19
What Loyalty Looks Like:Creating a Beauty Loyalty Program That’s More Than Skin Deep ...........21
The Wealth of Opportunity for Financial Services Loyalty Programs ......23
The Times They Are A-Changin’: New Approaches to Retail Loyalty Programs ..........25Loyalty, like most aspects of business today, is evolving.
It is evolving through new and more comprehensive uses
of data and macro-level program consolidation, through
brands rethinking and re-approaching their strategies,
through the maturation and permutations of consumer
awareness, and through technological development. The
loyalty environment of 2018 is diferent from last year’s, and
will undergo more changes yet before the decade is out.
Over the past several months, we have examined how companies in diferent industries can keep pace with this evolution by
adopting (or adapting to) loyalty strategies specifc to their unique business environments.This collection of articles share the
theme of Reinvigorating Loyalty, providing a comprehensive view of what loyalty looks like today and what approaches are
needed to execute more efectively and efciently.
Also included is Merkle’s outlook on the loyalty landscape yet to come. In the years leading up to 2020, several trends and
tech developments will infuence the nature of loyalty and the way businesses approach it.Data, unsurprisingly, lies at the
center of many of these approaches and technologies, as well as its power to create holistic customer views, which in turn
enables true people-based marketing.
Loyalty is at once a constant and an ever-changing objective, a core aspect of any brand-customer relationship that’s
comprised of a shifting array of techniques to drive emotional connections. The right approach to loyalty can afect real
bottom-line benefts for businesses, and its reinvigoration should be the top priority for brands the world over.
Here’s our Loyalty Outlook for 2018.
23
LOYALTY
OUTLOOK
2018
AN INDUSTRY FORECAST FROM
Michael Hemsey,
President of Merkle’s Loyalty Services Group (LSG)
As we assess how the loyalty landscape will unfold over the next few years,
a handful of themes stand out as potential turning points, roadblocks, or
considerations that need to be reckoned carefully. In an environment where test-
and-learn will be the watchword for many companies implementing new loyalty
strategies (or optimizing existing ones), the following areas deserve extra scrutiny:
DATA AND
PRIVACY
EMOTIONAL
LOYALTY
LOYALTY
STRATEGY
KEY CHALLENGES
AND OPPORTUNITIES
sense of investment on the part of the consumer, which
encourages more brand interactions – a virtuous cycle).
Lifestyle brands like Urban Decay are particularly adept
at developing niche communities of members through
combined loyalty tiers and tailored product oferings.
Even though brands like these may start with a high level
of emotional connection, using non-transactional loyalty
initiatives can further deepen those relationships.
LOYALTY STRATEGY
As a strategic goal, creating emotional connections
is an excellent principle upon which to build a loyalty
strategy. Executing a strategy that can meet this aim is
another exercise altogether. In the coming years, brands
may be reluctant to dramatically re-engineer loyalty
strategies into which they have already made signifcant
investment. Instead, they may favor more fexible test-and-
learn approaches and place renewed commitment into
incremental strategy development and assessment.
Ultimately, though, loyalty is a way of life for the most
successful companies, and a well-executed loyalty strategy
requires organizational commitment. Getting buy-in from
the C-suite, for instance, can make the diference between
a successful loyalty implementation and one that fails to
deliver the expected benefts.This is because instituting
a loyalty program isn’t like switching a software vendor. In
the best cases, it’s a re-imagining of the nature of customer
interactions and the use of data. True loyalty infltrates
every aspect of a company’s operations; without executive
backing, resistance to these necessary changes can be
hard to overcome.
Setting a realistic timeframe and budget for loyalty
initiatives (ideally with C-suite buy-in) is key to establishing
the proper expectations. While loyalty programs deliver
direct results, they may not always refect immediately,
and ROI can seem slow to realize without appropriate
perspective. The same is true with gaining the proper
alignment of difering objectives within an organization.
Even a relatively low-risk test-and-learn strategy can
backfre if it fails to satisfy cost-beneft requirements, be
relevant and meaningful to the customer, and ft within
the overall brand strategy. Identifying and marrying these
objectives under a single loyalty proposition is paramount,
and will be one of the factors that increasingly determines
loyalty program success.
KEY CHALLENGES AND
OPPORTUNITIES
Going forward, many global brands will be investing in the
development or reassessment of their loyalty strategies,
but they will be doing so armed with unprecedented
levels of data and insights to guide them. The next era of
test-and-learn loyalty will be driven by this data-oriented
approach. With the tools to determine what works and
what doesn’t – often, thanks to advanced and intelligent
analytics, in real time – brands will be able to adjust their
loyalty strategies with the pace and fexibility they need
to get their consumer interactions right. This also allows
companies to stay aligned with their core brand positioning
on a macro level, while creating relevant engagement on a
targeted, local basis.
The focus of these strategies will often be on the customer
experience, as it should be. Brands have the resources
at their disposal to create holistic customer views that
drive truly personalized interactions, which in turn can fuel
emotional connections and brand advocacy. At the center
of these – the lens through which the customer perceives
the brand’s eforts – is the customer experience. “CX” has
been a watchword for several years, and some analysts
(including Forrester) are predicting the gains that can be
made in this area have largely been banked, and that future
improvements to CX will be marginal at best. While this
may be true from a purely technical perspective, optimizing
the customer experience will always yield positive results
in terms of brand perception, loyalty, and the quality and
depth of customer/brand relationships. Moreover, many
brands have signifcant opportunity to improve their
CX in the omni-channel environment, where customer
interactions across platforms (and in-store vs. online) still
encounter mismatches and inconsistencies.
The challenge of achieving an optimal customer experience
is in the balancing of objectives, like staying true to the
brand’s essence while delivering value and relevance
to customers. Or efecti