The study maintains that companies are using the programs to deliver general discounts, savings, and perks to an aggregated mass of loyalty program members, ignoring the actual insights into each individual customers’ behavior which could help provide more relevant, targeted and meaningful communications and drive to the ultimate goal: capturing both mind and wallet share.
The necessity and value of implementing a direct marketing discipline of data analytics to inform 1:1 communication and marketing opportunities in the exact type of program which begs for it (a “LOYALTY” program!) can’t be emphasized enough – or demonstrated more prominently than with these statistics.
So what are those companies doing with their loyalty programs? Here’s a snapshot of how companies are actually using the data gathered. Bottom line is that only half of the brands leveraging loyalty and rewards programs are actually using the data to improve their sales, increase consumer brand affinity and create even deeper loyalties with their customers.
In the wine industry, our version of a loyalty program is the Wine Club. Wineries use their clubs to bring customers closer to the brand and purchase on a more frequent basis. On-going and consistent revenue for the winery is a wonderful thing. Our shipments allow us to bring products into the customers home on a monthly, quarterly or annual basis – keeping us top of mind perhaps, encouraging repeat purchases off the shipment (“Love the Pinot in this shipment? Buy more now for an additional x% off!”), encouraging purchases of our products in traditional channels and - at the very top of the customer pyramid - creating loyal ambassadors who will help spread our brand across the globe.
Wineries, of course, hope to continue to build their wine club programs – adding members at a rate that exceeds the number of members who leave. Events are held for club members to encourage their continued membership; promotions are offered to encourage incremental purchases. These are all wonderful “perks” and drive a relationship with the customer for the standard 12-, 16-, 21-month wine club membership. Customers typically join wine clubs after a great experience in the tasting room, hoping to bring a little bit of that out of home experience back home with them.
The discipline of managing a wine club is pretty standard: set up your release or club shipment programs, balance the costs of the wines to ship with that defined in the program, print a newsletter with accompanying information, recipes, events, etc., and ship to everyone on the list. Fingers crossed the list grew since the last shipment went out the door.
No wonder members leave the club over time. That bit of experience they brought home with them may slowly wear off, until they’re left with just wine coming in on a regular basis. If the wines are unique to the club members, or limited edition, or released to club members earlier than the general public, good. More reason to stay in. If there is a little something extra in the box, or recipes in the newsletter, nice. But these tactics are product and brand focused, and not individual consumer-focused; delivering to the member relevant offers, products, engagement opportunities.
How can you – wine club manager – promote a deeper engagement with the individual customer? How can you use your customer and order data to better identify who those customers are, and how they are interacting with your products to further that relationship and extend its (potentially limited) timeframe? How can you avoid the same kind of defection that’s noted in the CMO Council survey?
First, you need a good database and the ability to get data and insight out of it. Second, you need to segment your customers into behavioral buckets and then use that information to market to them!
Some sample segmentations, using traditional RFM tactics:
- Members who bought 3+ bottles of our Carneros Pinot Noir in the last 6 months
- Members who purchased more than 6 times in the last 9 months
- Members who spent over $250 in the last 12 months.
- Members who purchased from our tasting room AND our website in the last 3 months.
- Members who purchased from our tasting room more than 3x in the last 6 months.
- Members who purchased wine at winery events in the last 12 months.
If you’re in the business of creating a loyalty program and encouraging long term relationships with those members, it’s critical you find, manage and LEVERAGE a customer database to its fullest. Any loyalty or direct marketing program is only as good as the insight you glean from your data, and use of that insight to create long term relationships with your customers.