Often we hear the beginning of CRM was somewhere related to Loyalty management . Loyalty today is beaten to death term in the world of Retail . Every retailer offers some or other form of Loyalty and most common form is the Loyalty card . However in the past decade with so much of progress in technology and availability of data mining tools , companies have spent billions of dollars in understanding customer buying patters and purchase behaviors but i have rarely seen someone really making any sense to customers . The most common form of loyalty is the reward coupons which do have some impact on the purchasing pattern. however , to quote the multiple Analyst reports on how repeated discounts not just kill the Brand equity it just makes the Brand susceptible to pricing and raises customer expectations on price and not brand promise .
How many times have you really seen the companies tying up customer redressals with their marketing campaign . How many times have you seen customer sales data driving marketing messaging.. Honestly the biggest debate i have heard so far have been around the budget constraints around B2C CRM and the biggest question for them is why should we be so bothered about marginal segments. My questions to them is why do you think customers are Unique..
We hope the companies move away from spending billions of dollars on data mining and start acting to make meaning and bring value to customer in true sens
Chakradhar:
Loyalty programs are, by and large, tactical programs that should be aligned with a company’s CRM strategy, which in turn, should be linked with that company’s customer mission and vision.
Most retailers’ loyalty programs “buy the customer” by offering points via coupons in return for a desired behaviour, i.e., spend more money with us (usually based on the condition of a minimum spend threshold) and earn more rewards points.
What most companies fail to realize is that loyalty programs, in their current state, don’t engender customers to be loyal.
I don’t want to debate the issue of loyalty programs as opinions abound from across the globe; however, suffice to say, from my perspective as a consumer and as a CRM strategist and practitioner, I don’t think they work in the true sense of building loyalty.
I wasn’t clear on your connection between loyalty programs and data mining, but will provide my perspective below.
Data mining, or advanced statistical analytics, allows companies to understand customer behaviour through descriptive models (segmentation) and to predict the best likelihood of a desired behaviour, i.e., cross-sell, up-sell, attrition models, etc. The mistake that most companies make, to your point of not making sense to customers, is they rely too heavily on analytics, which only explains what happened, without any consideration for why it happened. Knowing the “why” helps to uncover qualitative insights that allows a company to create and deliver meaningful and relevant value.
As a CRM best practise, companies should also seek customer feedback through custom research to understand the attitudinal drivers behind why customers behave the way they do. The combination of behavioural segmentation, predictive models and attitudinal research results in a more holistic profile of the customer and/or segments, from which to create and deliver meaningful and relavant value to its customers.
I liked the comments you have made and agree with you that CRM should go beyond just loyalty and buying customers to fulfillment of customers needs in longer term