Balancing Visible and Hidden Relationship Programs

There’s an interesting dichotomy in relationship marketing that’s emerging, which contrasts the rigidity of visible marketing programs with the flexibility of so-called hidden programs such as promotions, “surprise and delights,” and invitation-only events. This dichotomy is important because companies may be judged initially by their visible programs, but ultimately they are judged by their hidden programs.

Marketers by training are mostly on one side of the fence or the other: visible (advertising agency, Website design, electronic or print advertising) or hidden (e-mail marketing, noncatalog direct marketing, telemarketing). Relationship marketers have come to rely more and more on hidden programs, making them less and less willing to make the commitment to a visible program. Successful marketers must learn to meld the two approaches, during both the budgeting and planning processes as well as during implementation, in order to stay ahead of competitors.

Visible vs. hidden
A visible program is just that–one that a company commits to publicly, whether by posting it on its Website for all to see, printing and distributing materials, or advertising through traditional media. Once the program is launched, the world can judge it on its merits and marketing. There are many examples of this, such as loyalty programs, e-mail newsletters, and custom-published magazines.

A hidden program is exposed only to individual customers or small groups, and often it doesn’t commit to anything for more than a few days or weeks. These tend to be coupons or other promotions, delivered through direct mail or e-mail, although invitation-only loyalty and recognition programs also fall into this category. Many times these hidden programs are part of a visible program or leverage the relationships established by a visible program.

Responding to stimuli
Why should you care? Because customers can’t see or get access to a hidden program until they respond to a visible program. Few customers nowadays will enter a data-sharing relationship with a company without a clear understanding of the benefits. This puts companies in a quandary. They must create an incentive or a clear value proposition to bring customers in for the first time. Only after they identify and track a customer can they determine if there is an opportunity for a deeper and more profitable relationship.

Once a customer is in the fold, the relationship marketers take over, finding ways to increase response, frequency, and overall customer value. They can stay hidden, testing ideas on small sets of customers, expanding successful tactics and eliminating poor ones. Customers flow through their life cycles, garnering increasingly valuable benefits and recognition if their values increase or receiving minimal attention if their value stagnates.

Understanding both sides
The potential for misunderstanding is obvious. Marketers trained in advertising tend to believe more in the efforts that exist for the world to see, whereas marketers trained in relationships believe in the efforts that nudge customers forward and upward, slowly and inexorably. Programs that straddle the line can be extremely difficult for a marketing organization to manage elegantly due to these opposing points of view. Budgets tend to be crisply separated between acquisition and retention, and project approvals evaluated with an emphasis on one side or the other.

One multichannel company I’ve worked with has a flourishing loyalty program, but if you check its Website or contact its call center as a typical customer, the company will deny the program’s existence. Another developed a tiered recognition program designed for invited best customers, then almost immediately rolled it out to its Website publicly and let anyone join.

In each case, the company adapted a well-thought-out program to its internal preferences, possibly reducing the eventual long-term ROI due to misalignment between the initial objectives and the eventual result.

Planning effectively
We’ve seen success when companies think through both sides of the equation from the beginning. Different models can be used to structure this analysis, but a simple customer segment approach goes a very long way toward clarifying a company’s approach.

Simply define your key customer segments, and create a 2 x 2 grid for each (click here for an example). Divide one axis into “Visible” and “Hidden” and the other into “Acquisition” and “Retention.” Categorize your existing efforts first, looking for holes, opportunities, or overinvestment in a given cell. Designing new visible and hidden programs becomes much easier when you see how these programs interact before customers, with the added advantage of evaluating them against existing programs as well.

Harmonizing visible and hidden programs leads to outsize results, which may partially account for the tremendous growth in loyalty programs during the past few years. New Web technologies and improved integration will only lead to more opportunities to blur the lines between visible, published programs and hidden, segmented programs. Marketers who want to make an investment in future opportunities would be well served to start thinking in these terms today.

Michael Greenberg is vice president of marketing for Loyalty Lab, a San Francisco-based developer of customer loyalty programs for the retail industry, and writes a monthly column for CHIEF MARKETER. He can be reached at [email protected].