Welcome to the Loyalty Program Builders podcast, where we collaborate with top loyalty professionals to tackle business and technical challenges while implementing and running a successful loyalty program.
In the recent episode, we took a deep dive into the world of loyalty program implementation challenges. The main focus of the discussion revolved around the eight common challenges businesses face and effective strategies to overcome them. Irek hosted Amanda Cromhout – a recognized figure in the loyalty program industry, to shed light on this topic. Together, they dissected real-world experiences, challenges, and solutions to deliver a treasure trove of actionable insights.
What will you learn about loyalty program implementation challenges?
From their in-depth conversation, here are the key takeaways about the eight most common challenges in implementing loyalty programs and how to address them:
- Partnership pitfalls: The importance of forging strong partnerships as they represent a long-term commitment.
- Customer experience channels: Ensuring consistent communication and experience across various channels, be it apps, websites, or even platforms like WhatsApp.
- Communication styles: Differentiating between traditional marketing communication and loyalty program communication. The latter should focus on trust-building rather than outright sales pitches.
- Technology hurdles: Choosing the right technology provider that aligns with your business objectives and caters to frontline channels.
- Design and brand reflection: Ensuring the design of the loyalty program, be it an app or a website, genuinely reflects the brand's identity.
- Customer segment variability: Tailoring the loyalty program to cater to diverse customer segments, from smartphone users to traditional feature phone users.
- Crisis management: Preparing for unforeseen challenges, such as third-party vendors going bankrupt and having a contingency plan.
- Channel significance: Prioritizing channels that play a pivotal role in customer experience and ensuring they align with the brand's objectives.
Three actions to head start your loyalty program implementation
Taking cues from Amanda's vast experience, here are three pieces of advice essential for a smooth loyalty program implementation:
- Simplicity is key: While the world of loyalty may seem complex, always aim to simplify your approach. A clear and straightforward strategy is often more effective than an overly intricate one.
- Focus on trust: Above all else, loyalty programs should focus on building trust. Clear communication that articulates the program's benefits can go a long way in achieving this.
- Involve staff, but be alert: Engaging all personnel is key to the program’s success. But be mindful, as discount schemes can be tricky and there are fraud risks.
Loyalty program inspiration corner
Amanda's extensive experience in addressing implementation challenges shines brightly in these quotes:
"When selecting technology providers, one has to consider if they can cater to frontline channels like app and web development."
"Loyalty communications should focus on building trust. They should clearly explain the program's benefits and instill confidence in the customer."
“For change management to be effective, company leadership must prioritize customer KPIs alongside traditional sales and cost metrics. Monthly reviews that incorporate customer KPIs can yield more fruitful results.”
Who is the customer loyalty expert?
Amanda Cromhout is a beacon in the realm of customer loyalty. As the Founder and CEO of Truth, a boutique consulting business, she specializes in customer-centric strategies and loyalty programs. Not just content with being a loyalty thought leader, she also dons the hat of a Loyalty Awards Judge. Her professional journey is studded with significant milestones. Having spent over 11 years with British Airways in sales and marketing roles, Amanda's expertise is firmly rooted in real-world experience.
Her journey as an experienced Airline and Retail executive contributed to her current avatar as a leading global loyalty consultant. Beyond her professional accolades, Amanda's commitment to the field is further demonstrated by her role as the founder of The Blind Loyalty Trust. This initiative showcases her dedication to spreading loyalty education and ideas.
With her upcoming book, "Blind Loyalty," Amanda aims to distill her vast knowledge into digestible insights, underlining her principle of making complex loyalty concepts simple.
Full episode transcript
The following transcript has been edited for clarity.
Irek: Hi Amanda, great to have you on the podcast.
Amanda: Thank you for having me, Irek. It's truly a privilege to be here.
Irek: Today, we're delving into the common challenges faced when implementing a loyalty program in larger organizations. Given your experience, what are your thoughts on the first challenge we've identified: understanding the program's purpose?
Amanda: Starting with this topic is crucial. If an organization isn't clear on the purpose of their loyalty journey, they're bound to face difficulties. Organizations may initiate loyalty programs for various reasons, from increasing revenue and profit to data acquisition. Yet, if they focus solely on revenue, they might encounter challenges.
Loyalty programs offer benefits like acquiring permission-based data, retaining customers, enhancing brand image, and fostering customer-centricity across the board. However, embarking on this path requires commitment, especially in terms of budget and leadership.
It's evident which organizations prioritize loyalty when you observe their annual reports. If loyalty isn't among their top concerns, they likely aren't investing enough effort into it. Essentially, understanding the reason for the program is paramount.
Getting started depends on the organization type
Irek: That's insightful. So, would you recommend starting with a couple of goals or leveraging the loyalty program for broader organizational alignment?
Amanda: Both strategies can work. If the program is highly strategic, it needs comprehensive planning and execution. Larger corporations have numerous components to consider, especially if they're investing in technology. They should be clear about their long-term goals, not just immediate tests and trials. However, some organizations prefer starting small, using a few ideas as a proof of concept before scaling.
The approach varies based on the organization's complexity, system environment, and the strategic importance of the loyalty program.
Irek: To simplify, the initial step is to identify the program's purpose and its underlying motivation?
Amanda: Exactly. At our company, Truth, when we facilitate workshops to guide companies toward customer loyalty, we always begin with the "why". Until this question is addressed, we don't move forward. While some organizations are eager to jump into innovation and design, understanding the "why" is foundational. Moreover, this strategic discussion shouldn't be limited to the marketing department. A cross-functional approach ensures a holistic understanding.
Irek: Moving forward, another challenge we've identified concerns the time required for planning and implementation. How can companies realistically gauge the duration for loyalty program development?
Amanda: This is a challenging question. Every organization has its unique constraints and prerequisites. Ideally, if there are no roadblocks and the systems are straightforward, a three-month window might suffice. But such scenarios are rare. Some projects span 18 months or more.
Until you understand an organization's intricacies, it's hard to give a precise estimate. The journey typically involves eight stages, from strategizing and program design to final launch and monitoring. Each phase is critical, ensuring the program's effectiveness and success.
Common obstacles in implementing loyalty programs
Irek: Thank you for sharing. I also wanted to discuss the frequent challenges you've come across. What should one be cautious about to avoid being overly optimistic?
Amanda: The most pressing element is undeniably the systems. Following that, for larger organizations, it's often the training schedules, particularly staff training schedules. I believe the importance of systems is self-evident, and we'll delve deeper into that topic soon.
Consider the retail sector, especially as we near the festive season when many temporary staff are hired to handle increased sales volume. These employees undergo training to familiarize themselves with the brand and the customer experience expectations, regardless of whether there's a new loyalty program in place. Training plans and schedules are usually set well in advance and can be challenging to modify. From our experiences, the systems play a pivotal role in determining the launch date.
Concurrently, staff training can significantly influence this, as training can't commence until User Acceptance Testing (UAT) is finalized on a system platform. Planning for these factors is crucial. The most common obstacles, in my opinion, revolve around systems development and staff training.
Irek: Understood, thank you. Let's move on to discuss the matrix.
The matrix and commercial aspects of loyalty programs
Amanda: Recall when I mentioned the eight steps? The fifth step concerns the financial aspects. Some businesses question how they'll profit from the program, while others aim to break even, considering the program's benefits will be measured elsewhere.
There are two sides to this: the costs associated with running and constructing the program, and the financial advantages of implementation. While it's straightforward to determine the costs (like marketing, systems, training, etc.), quantifying the commercial upside is more complex. This involves estimating potential growth in customer interactions, retail basket size, product holdings, or increased visits in the leisure sector, to name a few examples.
To convince clients about the feasibility of these projections, we often present case studies and documented results, ensuring no confidential information is disclosed. Metrics like incrementality of sales, retention levels, and activity rates are essential, and the challenge lies in proving their authenticity.
Irek: Do you see a potential role for AI-powered tools in creating a business case for these loyalty programs, given the diverse variables involved?
Amanda: The necessity isn't strictly for AI. Any analytical or data-intensive process can be beneficial. Complex businesses require specialized expertise for data analysis, where AI may be employed.
However, no singular tool can provide all the answers. Scenario planning, financial discussions, and deep insights into business operations are pivotal. Working closely with the company is essential. As external consultants, we strive to build trust, ensuring we're granted access to crucial data. The aim is to determine the potential profit in comparison to the easily quantifiable costs.
The importance of staff buy-in in loyalty programs
Irek: Thank you for that comprehensive answer. Now, let's transition to the topic of staff buy-in.
Amanda: Staff buy-in is a cornerstone for the success of any loyalty program. In our audits of existing programs, staff buy-in ranks highly in our evaluation criteria. Whether it's frontline, call center, or senior staff, if they're not invested, the program's progress is stunted. Brands that emphasize the importance of staff involvement during the launch and subsequent stages of a loyalty program often fare better than those that don't.
It's not merely about making employees feel included; it's about ensuring customers have reliable human points of contact. Depending on the company, the intensity of this involvement might vary. Regardless, support from all levels of the organization is crucial.
Irek: Certainly. Can you offer any strategies to ensure employees support and value the program from its inception?
Amanda: Simple measures can make a difference. For instance, allowing staff to join the program, though this comes with caveats. Layering loyalty benefits atop existing staff discounts might prove costly. However, there's a need for creativity in such scenarios. A key concern, though, is fraud. Regrettably, a significant portion of loyalty fraud originates from within the organization. Preventive measures are essential.
Other strategies include incentivizing staff based on their active involvement or implementing an effective internal communications plan. It's vital that staff understand the program's objectives and are involved in its journey from the outset.
Understanding the challenges in organizations
Irek: Absolutely, understanding challenges is crucial. While some solutions may seem obvious, implementing them in organizations can be daunting.
Amanda: I often simplify complex issues, like customer loyalty. It's important to note that although a solution may seem apparent, many organizations fail to implement it effectively. Sometimes, overlooking the basics can lead to costly repercussions later on.
Navigating change and customer centricity
Irek: Thank you for that perspective. Let's discuss the idea of managing change and adopting a customer-centric approach.
Amanda: Customer centricity is a term that's thrown around a lot lately, but it's vital for future-facing businesses. Several companies have recognized the importance of adopting a customer-centric mindset to stay relevant. Being customer-centric is not just about marketing or loyalty programs. It involves generating and interpreting data to understand customer behavior, which can guide business strategies, like product selection.
Retail giants like Tesco have mastered this art, leveraging frequent transaction data to gather insights more valuable than government statistics. Achieving customer-centricity requires a shift in organizational thinking, blending the science of data with the heart of retail. It's not about changing your strategy but enhancing and refining it based on customer insights.
Irek: The concept of a loyalty program acting as a feedback mechanism between businesses and their customers resonates with me.
Amanda: Loyalty programs indeed offer valuable feedback. However, for change management to be effective, company leadership must prioritize customer KPIs alongside traditional sales and cost metrics. Monthly reviews that incorporate customer KPIs can yield more fruitful results. This also encourages experimentation, allowing businesses to adjust their strategies based on real-world feedback.
The technological aspect and choosing the right partner
Irek: Our next challenge centers on technology, including both internal systems and third-party providers.
Amanda: Choosing the right technological foundation is a pivotal decision for organizations. Whether it's an in-house solution or an external vendor, it's essential to find the perfect fit. Vendors offer various solutions, but it's crucial to conduct thorough due diligence before committing. Engaging with existing clients, asking the tough questions, and understanding their capabilities can prevent future frustrations.
Beyond the primary technology, other customer touchpoints like websites, apps, and emerging channels like WhatsApp, must be integrated seamlessly. Moreover, the intricate challenge of system integration demands a flexible approach, sometimes aided by middleware.
Working with third-party vendors isn't just about the technical fit; it's a long-term partnership, and cultural alignment is equally crucial.
Irek: Indeed, establishing a long-term partnership is essential. The decision isn't just about the present but laying a foundation for future collaborations.
Crisis management in business
Amanda: There can be some horror stories in the world of business partnerships. One such story was with a brand in Mauritius named IBL. We partnered with them to launch Weave Rewards. The project was a grand success, surpassing all expectations. However, they faced a major hiccup when their third-party vendor went bankrupt 18 months in. But impressively, the company managed to save their database and point balances for their customers. They quickly built a basic system to keep the program running, while rebuilding a more robust platform in-house.
Irek: That truly showcases crisis management at its finest.
Amanda: It was an incredible experience. Cecile, the lady in charge of the project, shared her story with me, and it was nothing short of awe-inspiring.
Irek: Hearing that definitely made my heart race.
Amanda: Mine too. Reliving that experience is always intense.
The importance of customer experience channels
Irek: It highlights the importance of strong partnerships. Now, let's talk about enhancing customer experience channels.
Amanda: When selecting technology providers, one has to consider if they can cater to frontline channels like app and web development. Most organizations will at least have a website, with some considering an app solely for loyalty. These channels are pivotal in what the customer experiences. Often, the channels don't receive the attention they deserve, especially in terms of their design which should reflect the brand's identity.
Moreover, in regions like South Africa, other channels like WhatsApp and USSD codes are gaining traction. Thus, ensuring consistency across diverse channels for varied customer segments is crucial.
Irek: It's clear that the choice of channel depends on the customer base. Now, let's touch on communication styles, especially the difference between regular marketing and loyalty program communication.
The art of loyalty communication
Amanda: Loyalty communication is a pet topic of mine. Many CRM agencies still employ a traditional "above-the-line" approach, which isn't always effective. Instead of being overly promotional, loyalty communications should focus on building trust. They should clearly explain the program's benefits and instill confidence in the customer.
It's also essential to establish a "loyalty lexicon" or brand language. Ideally, communication should be segmented into different pillars like acquisition, loyalty operational communications, and more, all integrated cohesively.
Irek: Executing such complex strategies can present opportunities to deepen brand experiences.
Amanda: Absolutely. I always emphasize simplicity in the approach to loyalty. I'm currently writing a book titled "Blind Loyalty," which will provide simplified insights into the world of loyalty.
Irek: I'm eager to delve into that book, and hopefully, we can discuss its content in the future.
Amanda: I'd love that. Thank you for this wonderful conversation.
Irek: Thank you for sharing your invaluable insights.