Here’s a true story: A national retailer tested a multicity loyalty program aimed at some of its most valuable customers. For hitting specific spending thresholds, buyers were rewarded with a mix of soft and hard benefits. A steady diet of personalized communications told these individuals where they stood in the program, keeping them motivated to pursue bigger and better rewards. The result? The test was a huge success, helping to retain customers and generating a 20% lift in incremental customer spending.
So you might think that once the retailer saw this, it rolled the program out to additional cities, followed by a national launch. A no-brainer, right? Not so fast. It seems the loyalty effort was a mere blip on the radar screen of the company’s chief marketing officer, who oversaw a $300 million-plus advertising budget. Once the test ended, the program was allowed to suffer a quiet and untimely death.
If this were an isolated case, it might not be worth writing about. But at major companies in a variety of vertical markets, loyalty marketing still is relegated to a sliver of the overall marketing budget
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