The Loyalty Continuum:

Where Does Your Company Fit?

By Carlos Dunlap, Vice President, Solution Design,

Maritz Loyalty Marketing
The Loyalty Continuum:
Where Does Your Company Fit?
The numbers are in and the pressure is on. Your previously
coveted brand is losing strength. Sales are down. Costs are
increasing. Your customers are defecting. Grasping for a quick
fix, you turn to a new or existing loyalty program to mend what
ails the company. After all, bank cards and airlines make this
marketing solution seem easy.
Beware loyalty programs have saturated the marketplace, and
while these programs attempt to inspire true customer loyalty,
many fall short of achieving it. Moreover, effective loyalty
programs may create positive changes in customer behavior,
but many fail to create lasting changes in customer attitudes.
Companies may find they win the sprint, but eventually lose in
the marathon. An effective long-term loyalty strategy demands
a more holistic view.
Are you considering a loyalty program? Or do you already
have a points-based program that is rarely, if ever, measured
or enhanced? Jumping into a new program or maintaining
the status quo of your current program likely is not the most
appropriate or profitable solution in your companys quest
for true loyalty. Instead, this situation requires refining your
approach to customer loyalty using a Loyalty Continuum
Lifecycle model and careful evaluation based on specific
questions for each lifecycle stage.

Understanding True Loyalty

First, there needs to be an understanding of the term true
loyalty. Maritz defines truly loyal customers as those who
avidly use a brands products and services while resisting
competitive offers based on their attitudes towards a company.
To achieve true loyalty, companies must understand that loyalty
is a continuum a living, shifting state always in motion,
rather than a stagnant goal. Your customers loyalty continually
evolves along the continuum and so should your approach to
generating loyalty.

The Loyalty Continuum Lifecycle

Traditionally, points-based loyalty models focused on using
incentives to create changes in behaviors that were intended to
lead to loyalty. Using this approach, many companies may only
see two stages in the lifecycle of their loyalty programs there
is either a program in place or there isnt.
However, in a new, customer experience-based approach,
attitudinal shifts occur, leading to changes in behaviors and
then, to true loyalty, rather than the false or perceived loyalty
achieved by traditional points programs.
Using this approach, companies should work through the four
phases of the Loyalty Lifecycle:
Phase One: Considering a customer experienced-based
loyalty program
Phase Two: Designing a program
Phase Three: Evaluating a program
Phase Four: Enhancing a program
Across the lifecycle, a primary theme prevails the establishment of metrics and ongoing measurement of success through
financial return. By using advanced analytics, market research,
and voice of the customer and employee research within each
phase, you get a truly broad and holistic view of your customers
experience. Using this panoramic view, you can construct sound
loyalty objectives and strategies that are aligned with your
business goals.
Following are some of the questions you should be asking based
on your companys position in the Loyalty Lifecycle:
I. Considering a program
1. Is a customer loyalty initiative suitable for my company?
2. Can I build a financially sound business case?

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3. What are customers saying about their experience with

my brand? With our loyalty program?
4. What are employees saying about the customer
experience?
5. Will a loyalty program help achieve our business
growth objectives?
II. Designing a program
1. Which variables are most likely to impact financial returns?
2. What risks and trade-offs do I need to consider?
3. How can I work with my organization to impact the
customer experience? To get my organization strategically
aligned?
4. Which customer loyalty strategy do I deploy?
III. Evaluating the program
1. How effective is the loyalty program in achieving the
results predicted?
2. What are key loyalty trends we should consider
implementing?
3. How can I best use the programs communications
tools and what are their effects on consumer behavior?
4. How can we extend profitable member lifecycle stages?
IV. Enhancing the program
1. How can we evolve our program to be more effective?
2. How can we move from analyzing results to accurately
predicting both member behavior and financial results?
3. What are the common traits of responsive program
members?
4. What types of partner offers would be appealing?
5. How do we leverage the program for retention and
acquisition?

The Loyalty Lifecycle in the Real World

Phase One Case Study Is a Loyalty Program the
Right Approach? A large software client was losing
significant market share and instinctively decided to build a
loyalty program. Maritz recognized the company had overlooked
several key questions. Rather than simply developing
a traditional points program, the team began by determining
whether a customer loyalty initiative was suitable for the
company and if it addressed their key business requirements.
After thorough qualitative and quantitative research, RFM

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2008 Maritz Inc.

(recency, frequency, monetary value) modeling, purchase cycle

evaluation and other market evaluators, it was evident that with the
recent acquisition of competitors, the companys customers were
truly confused by the lack of brand consistency. The research
also revealed the corporation had considerable data it could
leverage to deepen the customer relationship through relevant,
strategic communication to target consumer segments.
Maritz developed a pilot solution that included a highly
segmented dialogue communication plan, targeted to bring
high-value customers into the inner circle, while also
educating all customers on the continued brand value.
Phase Four Case Study How Can An Existing Loyalty
Program Evolve Into a Differentiator? A large financial
institution and consistent leader in the world of points-based
equity programs, decided it needed a differentiator or would
risk losing profitable customers in a commoditized market. The
company enhanced its highly successful loyalty program with a
customer experience management approach. Maritz conducted
touch point analysis to identify inconsistencies and problems the
company had in fulfilling its brand promise with customers. By
fully integrating all customer touch points within the company,
including Web interaction, email communications, billing centers, call centers and reward redemption, the company was able
to measure all aspects of the customer experience, and make
improvements that impacted both financial and non-financial
business results.

Conclusion
To win true loyalty, companies must change the way they think
about and approach customer loyalty. They must see it as a
continual, company-wide pursuit, not an isolated program. They
must gather the relevant information, share it, and act upon it
to build differentiated approaches to loyalty with the necessary
financial rigor attached to make a strong business case.
It may seem daunting at first, however, great customer retention, acquisition and growth achievements are possible when
loyalty initiatives are developed and sustained with rigor, and
from a holistic point-of-view.
Maritz.com
1(877) 4 Maritz