loyalty programs b&t 5 feb 2010

12 BANDT.COM.AU FEBRUARY 05 2010

Loyalty programs are part of the direct marketingestablishment. Many of these are householdnames: FlyBuys, Everyday Rewards, FrequentFlyer, Velocity, Myer One, Priceline Clubcard toname just a few. But do loyalty programs actuallycreate “loyalty” in customers? To try and answerthis, it probably helps if we have a definition ofloyalty first.

And here lies the problem. In the marketingworld there does not seem to be one clear and uni-versal definition of customer loyalty.

Instead, it’s something of a loose concept. Onthe one hand it can refer to regular behaviour –repeat purchase and “share of category” spending.But on the other hand, it can also refer to emo-tional connection – often expressed as brand“advocacy” and the degree to which a brand isloved.

The truth is, loyalty is probably an unevensprinkle of both, the mix of each dependent on thenature of the individual program.

On this note, I asked Bernie Brooks, chief exec-utive officer of Myer, how he saw their loyaltycard program Myer One working. He says: “Loyaltyfor Myer is expressed through customers' repeatpurchases, irrespective of the marketing pressuregenerated by the competing brands.

“We firmly believe Myer One reinforces andpromotes increased loyalty in our customers – itencourages repeat patronage and attachment tothe Myer brand through relevant offers andrewards. Our research shows that our loyal MyerOne members are the most engaged with the Myerbrand.”

But one thing is certain – loyalty is complexand can have little to do with plastic cards, accu-mulated points and special member offers.

The big question as I see it is what would hap-pen to customer loyalty if these hugely expensiveloyalty programs ceased to exist?

Would there be massive churn from a suddenrush of unfaithfulness, would brand equity sufferdue to outbursts from brand detractors?

Or would business carry on as usual, providingof course that a company had all the other mar-keting basics right, ie good products, good serv-ice, competitive prices, effective distribution etc.

When it comes to true, deep, sustainable brandloyalty it may be that some loyalty programs arenot worth the plastic cards they’re printed on.

I know it seems like a long time ago, but only a fewweeks ago we kicked off a new decade and with itlots of people took some time to reflect. I didn’treally get to it last year, so here are a few points ofreflection from me with a distinct eye on thefuture – which should make up for the fact that Iam running a bit late.

Ten years ago planners were still obsessingover the now infamous single-minded propositionand I know that at my place of employment (BBH),we were regularly scrutinised over the clevernessof our propositions. Interestingly, we were alsospending a great deal of time back then debatingthe possibilities for planning, but not a great dealof time talking about the future of advertising.

To put it into context, Napster hadn’t been suedby Metallica, the iPod didn’t exist, YouTube wasn’tborn yet and social media consisted of sendingtext messages to multiple contacts.

What a difference ten years makes. Our entireindustry has been revolutionised by the advent ofnew technology and all we talk about is the future.

Anyway, let’s talk about what the future couldhave in store for the planning community and, on abroader scale, the communications cohort at large.As Stephen King (the godfather of planning, notthe scary story guy) wrote “…in the end, the onlyconstant thing may be the need for change.”

Firstly, I think a greater breadth of solutions isdefinitely on the cards – I have talked about theneed for interestingness previously, but it is nowboth a strategic imperative and a consumerdemand to create genuine cut through. Don’t getme wrong: book-smart planners are definitely notgoing anywhere, but their scarcer multi-dimen-sional brethren will be in even higher demand.

Secondly, the ability for more randomness willbecome a hallmark of the smartest thinkers andthe most surprising brands. While we may havevalued consistency and reliability in days gone by,our new ADHD brains don’t seem to cope withthose traits very well anymore.

Thirdly, I think we will all work a lot harder.Rigour is good enough’ culture we find ourselves incan’t possibly lead to the best work. Where weused to spend time interrogating a brand or prod-uct simply to find a compelling brand truth, perhaps now we need to spend more time pushingharder and harder to find the best solution possible.

comm

ent

A QUESTION OF LOYALTY

WHAT HAVE WE LEARNT?

TO MAKE A COMMENT EMAIL EDITORIAL@BANDT.COM.AU

Adam Joseph Readership director,Herald Sun Melbourne

Sudeep Gohil Strategic planningdirector and partner,Droga5 Sydney

BT.FEB05.PG0012.pdf Page 12 28/1/10, 3:45 PM