Welcome to the Loyalty program builders podcast, where we collaborate with top loyalty experts to tackle both business and technical challenges in growing loyalty, guided by a robust customer loyalty strategy.
In this episode, we talk with Emily Ong about what a loyalty program is (and what it isn’t), the importance of listening to the customer, handling data challenges, and the role of a loyalty program inside the company structure.
Who is the customer loyalty expert?
Emily Ong is a business and product loyalty leader with over two decades of experience in customer-facing challenges. She is Singapore's third Certified Loyalty Marketing Professional, boasting expertise in loyalty program design and management across global, APAC, and nationwide Singaporean markets.
Before joining Razer Inc. as Head of Loyalty of Global Markets, she worked with ERP project development, media event direction, advertising collaborations, sales channel development, and CRM initiatives.
In addition to her loyalty marketing activities, she explores the implications of Web 3.0, particularly in areas like NFTs, and their potential impact on brand marketing strategies.
What you will learn about managing loyalty products
A program is much more than rewards, Emily explains, mentioning Nike's community efforts – the shoe company prioritizes engagement over point collection, which is the traditional point-driven loyalty scheme used by names like Starbucks or McDonald's.
Emily also defends that loyalty programs should operate like a business within a business, not just seen as marketing expenses.
Where to start as a program manager? She cites simple tools like stamp cards foster return visits, especially for smaller businesses. Also, she points out the importance of clear data visualization (preferably prepared by data professionals).
You can listen to the full episode on Spotify, Apple Music, Google Podcasts, and here:
Key takeaways
On managing a loyalty program:
- “Loyalty” doesn't necessarily need to be a large-scale, organized program. What matters is that it reflects your business's mission and vision, focusing on the customer.
- However, when structured, loyalty programs benefit from their own profit and loss statements, functioning like a business within a business.
- Building lasting relationships means understanding needs beyond rewards. One good example is from Nike's, whose online community focuses on engagement rather than point collection.
On good starting points:
- Simple stamp cards, physical or digital, prompt return visits, especially for small businesses.
- Effective communication in CRM is vital. Every interaction counts, driving conversions and ongoing relationships.
On handling data:
- Creating a unified customer view and sharing it with other teams is critical.
- Experienced data professionals ensure accessible analytics for informed decisions.
- Still, it’s crucial to stay attuned to current needs and market conditions outside of your dashboard.
Three actions to start today and manage a loyalty program successfully
- Listen: Deeply dive into your customer’s needs and how your solution addresses them. That knowledge will shape the offer, messaging, and, finally, the loyalty program itself.
- Reflect: Take a moment to imagine your program without tangible rewards, like discounts or coupons. Does it still foster long-term relationships with customers? If the rewards are the only motivation for members, that might only cultivate short-term relationships.
- Visualize: Ensure you have a single view of the customer. Hire data professionals to help you leverage data into accessible but useful dashboards.
Loyalty program management inspiration corner
“A rewards program alone doesn't constitute a full loyalty program. It's about building long-term relationships with customers, understanding their needs, and communicating effectively.”
“I believe loyalty programs should have their own profit and loss statement (P&L). A well-structured program is like running a business within a business. Marketing should support the loyalty program, which in itself is a product.”
“Loyalty is a strategy, not just a program or a product.”
Full episode transcript
The following transcript has been edited for clarity.
Introduction
Irek: Hello Emily, great to have you on the show.
Emily: Hi, Irek.
Irek: Today we are going to talk about loyalty from the perspective of a business manager. I'm eager to hear your views on this.
Emily: Yes, I'm excited to share my experiences from my two decades in business management and the loyalty space, focusing on the end customer.
Business managers should understand solution
Irek: Brilliant. Let's start with the basic question. How should business managers think about customer loyalty?
Emily: As a business manager, understanding the solution your product offers to meet customers' needs is crucial. Before starting a business, defining your target audience and their personas is essential. You should think about how to present the right product and message to meet these needs.
Customer loyalty is about continued interactions, transaction-based or not, as long as the customer engages with your business.
Irek: Sure, that makes sense.
Emily: Loyalty is evident when a customer continues to do business with you, despite distractions and competition. If a customer returns within a reasonable period, like six months to a year, it indicates a certain level of loyalty.
Business managers must consider the cost of maintaining customer relationships and the ROI for both the business and the customer.
Loyalty is more than a formal program
Irek: Okay, thank you. Now, does loyalty need to be a formal program?
Emily: What defines a program? Initially, a loyalty program was a significant investment, almost like a company within a company, with a team of experts and data analysts.
But loyalty doesn't necessarily need to be a large-scale, organized program. It can be integrated into your business's mission and vision, focusing on customer centricity. The mechanics of encouraging return interactions can be more important than a full-scale rewards program.
Loyalty programs as revenue drivers
Irek: Interesting perspective. Often loyalty is associated with rewards. Is a loyalty program about giving rewards?
Emily: Many people would say yes, but I believe it's not always the case. A rewards program alone doesn't constitute a full loyalty program. It's about building long-term relationships with customers, understanding their needs, and communicating effectively.
Incentives in a loyalty program can be tangible, like discounts, or intangible, like exclusive experiences. Loyalty programs are more than just a cost item; they're revenue drivers.
Nike use case: online community as a loyalty platform
Irek: Do you have any examples of brands that excel in offering more than just rewards in their loyalty programs?
Emily: Nike is a notable example. They have built an online community that effectively serves as a loyalty program, without relying on traditional points or rewards systems. Their approach is different from brands like Starbucks or McDonald's, which focus on collecting points for rewards.
Nike's community engagement fosters strong customer advocacy, making them a standout example in loyalty programs.
Good starting points: stamp cards and planning communication
Irek: That's fascinating, especially how a community can function like a loyalty program. What are some initial loyalty initiatives businesses can start with?
Emily: A simple starting point is a stamp card, either physical or digital, which can be easily implemented even in small businesses. This encourages customers to return.
Another important aspect is planning communication strategies as part of CRM. Every customer interaction is crucial, and effective communication can lead to conversions and ongoing customer relationships.
Loyalty programs as a business inside a business
Irek: It sounds like active engagement is key. Would you classify loyalty as a marketing expense?
Emily: Traditionally, loyalty programs are often considered a marketing expense, with costs attributed to promotions and discounts. However, I believe loyalty programs should have their own profit and loss statement (P&L). A well-structured program is like running a business within a business. Marketing should support the loyalty program, which in itself is a product.
This is a new perspective I'm exploring, shifting from viewing loyalty as just a marketing tool to recognizing it as a key business driver.
Irek: That's an interesting shift in perspective. How does the management of loyalty programs change depending on their position within a company's structure?
Emily: The management approach varies significantly. If a company adheres to traditional structures, loyalty programs are often limited to being a marketing tool.
However, recognizing loyalty programs as separate entities with their own budgets and strategies can lead to more innovative approaches and potentially greater success.
Personal experience: loyalty as a separate entity is more effective
Irek: Could you share your insights on the most effective way to manage a loyalty program, especially considering your suggestion that it doesn't necessarily have to be a part of marketing?
Emily: In my experience, treating a loyalty program as a separate entity within the business is more effective. When all departments are aligned and understand the program's importance, budget allocation becomes simpler and more strategic.
If the program is just a marketing line item, it often suffers from budget cuts, leading to a decrease in value and attractiveness of the rewards, causing the program to decay over time.
Irek: That's very insightful. How do you manage these programs differently depending on their placement within a company?
Emily: It varies from company to company, and one solution doesn't fit all. But when a loyalty program is integrated across the company, everyone contributes to its budget, leading to better communication and alignment. However, when it's confined to marketing, any budget cuts affect the program significantly.
It's crucial to adapt the approach based on the specific needs and structure of each company.
The importance and challenges of customer data in loyalty programs
Irek: Data plays a significant role in loyalty programs. How should businesses approach customer data?
Emily: Customer data is crucial for starting and running a loyalty program. The challenge is in understanding and correlating the data, especially when dealing with multiple platforms and touchpoints.
Businesses often face complexities in creating a unified view of the customer, which is vital for delivering consistent experiences.
This imbalance can harm the customer relationship, not because the customer isn't loyal, but because the business fails to handle their data effectively.
The cornerstone of handling data: a single view of the customer
Irek: So, how can businesses handle customer data more effectively?
Emily: Start building a single view of the customer. This can be complex, especially for businesses with legacy systems, but it's essential. The landscape of data is continuously evolving with new social media, messaging apps, and payment methods.
Hire experienced data professionals to manage and analyze this data. Ensure that dashboards and analytics are accessible and understandable to those who need them.
Data is historical and should support decisions, but it's also important to remain focused on current customer needs and market conditions.
Summary for business managers
Irek: It's interesting how data tells the story of the past. Can we summarize key areas business managers should focus on regarding loyalty?
Emily: Thinking about loyalty starts with understanding the customer first. It's more about structuring your thinking around the customer's needs rather than immediately creating a loyalty program. Loyalty is a strategy, not just a program or a product.
Setting priorities start with defining strategy and goals
Irek: When we move from strategy to execution, particularly regarding rewards and data, how should priorities be set?
Emily: It's challenging to grade priorities as they are all important. The key is to define your strategy and goals before starting. Understanding the customer is crucial. Business owners should interact directly with customers to truly understand their needs and how they wish to interact with your business.
Irek: So, focusing on customer understanding and data is essential. What should businesses focus on in these areas?
Emily: Businesses should focus on talking to customers and understanding their needs. This involves collecting data firsthand or through a team. It's about a two-way interaction between the business and the customer.
Understanding and integrating data is also vital to create a single view of the customer.
Conclusion
Irek: Your insights have opened up many interesting avenues, especially regarding the role of loyalty in organizations and the integration of data. Any final thoughts you'd like to share?
Emily: I'm always open to discussing these topics with anyone interested, especially regarding the conversation about marketing versus product expense. Feel free to connect with me on LinkedIn for further discussions.
Irek: Thank you, Emily, for your valuable insights, and we hope to have you again soon.
Emily: Thanks for arranging this. It's been a pleasure.
