Loyalty Programs And Building Loyalty

Mukesh Gupta

One of the biggest challenges that brands face today is to find and cultivate loyal customers. Most brands have some sort of program to reward loyalty from their customers. But most of the loyalty programs that I am a part of totally miss the point of loyalty itself.

In general, the expectations of enterprise customers and consumers have increased significantly. They expect brands to not only deliver great products and services, but also acknowledge them as individuals, and engage, excite, and/or woo them to become loyal customers. Add to this the fact that we are today living in a world in which it’s easier than ever for consumers to switch products and services that don’t match or exceed their expectations.

In this scenario, it is critical that brands have a good loyalty program that works for both the brand and its customers.

How to make your loyalty program more effective

1. Loyalty programs should be for loyal customers

Currently I am part of at least 25 different loyalty programs, each with a different retailer or a business. Does that mean that I am a loyal customer to these businesses. Definitely not. Just like millions of others who enroll in a loyalty program, I was also auto-enrolled by the billing clerk while getting my purchase billed. I understand that businesses need to collect information about consumers and track their purchases and affinity towards their business to make many decisions.

However, getting everyone to participate in the loyalty program indicates to me that the business does not value the loyalty, but just the business. By doing this, the business also sets an expectation that you will get discounts by being part of the program, and that there may be levels in the program that entitle you, as a loyal customer, to even more benefits. What this tells me, as a consumer, is that if I want better discounts from the business, I should enroll in the program—nothing more and nothing less.

In my opinion, instead of enrolling every customer into a loyalty program, businesses should be very selective about who gets invited, and about what benefits are offered to keep these elite consumers coming back. As Eddie Yoon explains, loyalty programs should be defined for superconsumers.

This class of consumers can not only help your brand grow, but it can also play a significant part in your product growth strategy, boosting new innovations and even helping your brand become more relevant. For more information about superconsumers and how businesses can find , engage, and learn from them, read Eddie Yoon’s insightful book “SuperConsumers: A Simple, Speedy, And Sustainable Path To Superior Growth.”

2. Engage people with exceptional experiences

One of marketing’s greatest challenges is to engage people en masse. But engaging experiences have a significant impact, eliciting emotions that make your brand memorable and that make people eager to share.

The most effective emotion to elicit is positive surprise. If you can positively surprise your customers, most other emotions generally take a back seat. For example, remember the KLM surprise in which the company spontaneously gave relevant presents to customers based on their social profiles?

3. Create rituals or traditions beyond just an annual Christmas card

Humans have always been creatures of habit, and we have evolved using rituals or traditions. Think about what kinds of habits you would like to instill – in yourself, in how you engage your customers, and in your customers themselves. Habits create traditions; traditions turn into values.

Be mindful not to appear selfish in this area as it will most certainly backfire. Keep your customers’ lives and ambitions central when you are creating rituals, traditions, or habits. Cultures are built one habit, one ritual, one tradition, and one story at a time.

4. Give your customers a voice, and connect them

Nurturing a great relationship between your brand and your customers is as important as creating opportunities for your customers to discover other customers with similar interests. This is an important pillar that most brands forget when they are building the loyalty programs.

Some common mistakes to avoid

  1. Too often, loyalty programs are designed based on the technology used to manage the program, and not the other way around. It is critical to understand this and avoid this mistake when designing a new loyalty program.
  1. Do not hide behind customer sat numbers (yes, I’m talking about the NPS and other customer satisfaction measurement programs). Averages don’t tell you the full truth and can even be outright dangerous. To create meaningful experiences and traditions, go out and meet your customers. It’s all about people; in the end, they make up the numbers.
  1. Loyalty programs are for loyal customers, not the other way around. You can’t build loyalty among your customers by enrolling them in a loyalty program. Loyalty needs to be earned.

If you are creating a new loyalty program and would like to discuss your ideas, I would be happy to share my thoughts and ideas with you. You can reach out to me on Twitter: @rmukeshgupta.

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Mukesh Gupta

About Mukesh Gupta

Mukesh Gupta previously held the role of Executive Liaison for the SAP User group in India. He worked as the bridge between the User group and SAP (Development, Consulting, Sales and product management).

It's A Small World After All: Disney Revamps Online And In-Store Retail To Boost CX

Amy Hatch

“Whenever I go on a ride, I’m always thinking of what’s wrong with the thing and how it can be improved.”
— Walt Disney

Long before customer experience became the rage, Walt Disney espoused the importance of it in everything he created. His successors are following his lead, announcing a new and improved online shopping experience and interactive, personalized experiences in redesigned stores. The multi-pronged effort aims to boost the profits of its retail consumer product division, which have fallen, as have the bottom lines of so many other brick-and-mortar retailers.

Let it go: standalone retail is over

While online retail seems like a given in the digital age, Disney has long resisted the trend of e-commerce, instead offering a only a small selection of items online. The strategy was to drive consumers to the parks or retail outlets. For a very long time this model worked, but as consumers have become more sophisticated, so have their expectations – including their ability to access whatever they’d like, whenever they’d like.

Coupled with a remodeling of its physical stores, the online makeover means myriad new products will be available to the at-home Disney fanatic. Carefully curated collections by Coach, David Lerner, and Ethan Allen furniture now grace the e-commerce catalog, and those products will also be sold in the stores, making a complete omnichannel experience for the consumer.

Reimagining the magic of the customer experience

True to Disney fashion, no detail has been overlooked. The revamping of its brick-and-mortar stores includes melding the interactive experiences of the parks with their physical locations. In-store shoppers can battle Darth Vader on a big screen and even purchase cotton candy and the iconic mouse ears from carts that are the same as those found in Disneyland and Walt Disney World.

Guests visiting Disney stores will see live streams of the multiple theme parks, fireworks displays on giant screens, and personalized experiences for children, including birthday parties and other milestone celebrations. Even the coveted apparel at The Dress Shop has become available for online purchases.

“Many analysts predict that 2017 will be the year of the customer as consumers continue to call the shots,” said Shane Finaly of SAP. “That requires retailers to follow their lead – and keep pace with customers through personalized engagement.”

All that’s left is to pipe in the (truly delightful) scent you can only breathe in while gawking at Cinderella’s Castle on the Magic Kingdom’s Main Street, USA.

By creating seamless transitions between their parks, stores, and online offerings, Disney is acknowledging the desires of a 24/7/365 economy. And, if the brand can marry the physical retail experience with its online efforts in the same way it has approached customer engagement on the ground in the parks, it cannot lose.

The era of multichannel is here to stay. Disney has been considered the standard-bearer when it comes to customer experience. Once upon a time, it was enough to offer its unique experiences only in person, but not anymore. No amount of magic can transform a bottom line that doesn’t recognize the power of digital.

For more about generating more sales in the digital era, see Primed: Prompting Customers to Buy.

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Arriving At A New Destination: Airline Industry Needs To Focus On CX

Jenn Vande Zande

It’s been a bit since I’ve written about one of my favorite topics: How airlines could soar by incorporating social and real-time responses to provide a better customer experience. I’ve had travel on the mind lately, since I’m heading to Barcelona and reminded, once again, of just how important customer engagement and customer service are in this incredibly competitive age.

Boarding has begun: Upgraded experiences required

The stakes for the battle of the consumer couldn’t be higher for businesses, as the Web has opened up the ability to purchase anything, at anytime, from anywhere. If you’re not continually providing a great experience or what the customer needs when the customer wants it, the customer will not hesitate to search out (and use) your competition. Running an optimal omnichannel experience is critical.

When it comes to air travel, the choices for consumers are more limited, but social media has served as a far greater economic force than any ad campaign possibly could. We’re no longer convinced by slick adverts and slogans; we see social media and the interaction that it garners and make our decisions from there.

With the airline follies of just this year, it’s pretty clear that most airlines still aren’t grasping the importance of social media and responses. As my co-worker Jack wrote, “The customer is still king,” and 2017 is proving it time and time again. It seems no amount of money spent on marketing can overcome the damage done to a reputation with missteps in customer service.

Turbulence is expected: Have a team in place to deal with it

I’ve made no secret about how much I love American Airlines because of the customer experience it provided my daughter. Quite literally, I don’t ever consider its competition, and I’m not sure what it would take for me to do so. But here’s the thing: It’s not because American is without flaws in its systems or runs error-free.

While booking my flights to Barcelona and home, I ran into a couple of issues where I needed to talk to someone there. Each time, someone replied to my tweets and DMs within minutes – MINUTES – while I sat on hold waiting to talk to someone for over 90 minutes and my Facebook message went unanswered. I’m not sure if American is employing more people to handle social via Twitter, but I do know that using my favorite medium to respond, and responding quickly, continues to reinforce my dedication to the brand.

Since my last post about how the airline industry can improve via social, American has added stickers to messaging so customers can click an image to send a quick update on the status of their journey while traveling. They are adapting to the new forms of communication, rather than expecting the customer to conform to theirs.

(I need to make clear that I am in no way associated with or compensated for these posts by American; these are my personal experiences. That being said, I really love the “upgraded” sticker, American. Wink. Wink.)

Out of the holding pattern

It feels like American is doing more than saying they are trying, they are trying. They’re building up services, and, at least on Twitter, not just adding people to handle customer service, but people who are very skilled at their jobs and who know how to interact with the consumer. Even if my customer journey with American isn’t flawless, it’s consistent when I reach out, and it always makes me feel like I’m valued.

The customer experience makes all the difference in the world, because at the end of the day, we are all consumers. We all spend money somewhere, with some brand or service. If there isn’t a connection or a value assigned to those purchases, there is nothing to cement your brand with your customer. Businesses simply must go above and beyond, or risk their existence.

Want to talk CX in person? Join me and my brilliant co-workers at SAP Hybris LIVE: Global Summit. You can register here

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The Future Will Be Co-Created

Dan Wellers and Timo Elliott

 

Just 3% of companies have completed enterprise digital transformation projects.
92% of those companies have significantly improved or transformed customer engagement.
81% of business executives say platforms will reshape industries into interconnected ecosystems.
More than half of large enterprises (80% of the Global 500) will join industry platforms by 2018.

Link to Sources


Redefining Customer Experience

Many business leaders think of the customer journey or experience as the interaction an individual or business has with their firm.

But the business value of the future will exist in the much broader, end-to-end experiences of a customer—the experience of travel, for example, or healthcare management or mobility. Individual companies alone, even with their existing supplier networks, lack the capacity to transform these comprehensive experiences.


A Network Effect

Rather than go it alone, companies will develop deep collaborative relationships across industries—even with their customers—to create powerful ecosystems that multiply the breadth and depth of the products, services, and experiences they can deliver. Digital native companies like Baidu and Uber have embraced ecosystem thinking from their early days. But forward-looking legacy companies are beginning to take the approach.

Solutions could include:

  • Packaging provider Weig has integrated partners into production with customers co-inventing custom materials.
  • China’s Ping An insurance company is aggressively expanding beyond its sector with a digital platform to help customers manage their healthcare experience.
  • British roadside assistance provider RAC is delivering a predictive breakdown service for drivers by acquiring and partnering with high-tech companies.

What Color Is Your Ecosystem?

Abandoning long-held notions of business value creation in favor of an ecosystem approach requires new tactics and strategies. Companies can:

1.  Dispassionately map the end-to-end customer experience, including those pieces outside company control.

2.  Employ future planning tactics, such as scenario planning, to examine how that experience might evolve.

3.  Identify organizations in that experience ecosystem with whom you might co-innovate.

4.  Embrace technologies that foster secure collaboration and joint innovation around delivery of experiences, such as cloud computing, APIs, and micro-services.

5.  Hire, train for, and reward creativity, innovation, and customer-centricity.


Evolve or Be Commoditized

Some companies will remain in their traditional industry boxes, churning out products and services in isolation. But they will be commodity players reaping commensurate returns. Companies that want to remain competitive will seek out their new ecosystem or get left out in the cold.


Download the executive brief The Future Will be Co-Created.


Read the full article The Future Belongs to Industry-Busting Ecosystems.

Turn insight into action, make better decisions, and transform your business.  Learn how.

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Dan Wellers

About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

About Timo Elliott

Timo Elliott is an Innovation Evangelist for SAP and a passionate advocate of innovation, digital business, analytics, and artificial intelligence. He was the eighth employee of BusinessObjects and for the last 25 years he has worked closely with SAP customers around the world on new technology directions and their impact on real-world organizations. His articles have appeared in articles such as Harvard Business Review, Forbes, ZDNet, The Guardian, and Digitalist Magazine. He has worked in the UK, Hong Kong, New Zealand, and Silicon Valley, and currently lives in Paris, France. He has a degree in Econometrics and a patent in mobile analytics. 

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Blockchain: Much Ado About Nothing? How Very Wrong!

Juergen Roehricht

Let me start with a quote from McKinsey, that in my view hits the nail right on the head:

“No matter what the context, there’s a strong possibility that blockchain will affect your business. The very big question is when.”

Now, in the industries that I cover in my role as general manager and innovation lead for travel and transportation/cargo, engineering, construction and operations, professional services, and media, I engage with many different digital leaders on a regular basis. We are having visionary conversations about the impact of digital technologies and digital transformation on business models and business processes and the way companies address them. Many topics are at different stages of the hype cycle, but the one that definitely stands out is blockchain as a new enabling technology in the enterprise space.

Just a few weeks ago, a customer said to me: “My board is all about blockchain, but I don’t get what the excitement is about – isn’t this just about Bitcoin and a cryptocurrency?”

I can totally understand his confusion. I’ve been talking to many blockchain experts who know that it will have a big impact on many industries and the related business communities. But even they are uncertain about the where, how, and when, and about the strategy on how to deal with it. The reason is that we often look at it from a technology point of view. This is a common mistake, as the starting point should be the business problem and the business issue or process that you want to solve or create.

In my many interactions with Torsten Zube, vice president and blockchain lead at the SAP Innovation Center Network (ICN) in Potsdam, Germany, he has made it very clear that it’s mandatory to “start by identifying the real business problem and then … figure out how blockchain can add value.” This is the right approach.

What we really need to do is provide guidance for our customers to enable them to bring this into the context of their business in order to understand and define valuable use cases for blockchain. We need to use design thinking or other creative strategies to identify the relevant fields for a particular company. We must work with our customers and review their processes and business models to determine which key blockchain aspects, such as provenance and trust, are crucial elements in their industry. This way, we can identify use cases in which blockchain will benefit their business and make their company more successful.

My highly regarded colleague Ulrich Scholl, who is responsible for externalizing the latest industry innovations, especially blockchain, in our SAP Industries organization, recently said: “These kinds of use cases are often not evident, as blockchain capabilities sometimes provide minor but crucial elements when used in combination with other enabling technologies such as IoT and machine learning.” In one recent and very interesting customer case from the autonomous province of South Tyrol, Italy, blockchain was one of various cloud platform services required to make this scenario happen.

How to identify “blockchainable” processes and business topics (value drivers)

To understand the true value and impact of blockchain, we need to keep in mind that a verified transaction can involve any kind of digital asset such as cryptocurrency, contracts, and records (for instance, assets can be tangible equipment or digital media). While blockchain can be used for many different scenarios, some don’t need blockchain technology because they could be handled by a simple ledger, managed and owned by the company, or have such a large volume of data that a distributed ledger cannot support it. Blockchain would not the right solution for these scenarios.

Here are some common factors that can help identify potential blockchain use cases:

  • Multiparty collaboration: Are many different parties, and not just one, involved in the process or scenario, but one party dominates everything? For example, a company with many parties in the ecosystem that are all connected to it but not in a network or more decentralized structure.
  • Process optimization: Will blockchain massively improve a process that today is performed manually, involves multiple parties, needs to be digitized, and is very cumbersome to manage or be part of?
  • Transparency and auditability: Is it important to offer each party transparency (e.g., on the origin, delivery, geolocation, and hand-overs) and auditable steps? (e.g., How can I be sure that the wine in my bottle really is from Bordeaux?)
  • Risk and fraud minimization: Does it help (or is there a need) to minimize risk and fraud for each party, or at least for most of them in the chain? (e.g., A company might want to know if its goods have suffered any shocks in transit or whether the predefined route was not followed.)

Connecting blockchain with the Internet of Things

This is where blockchain’s value can be increased and automated. Just think about a blockchain that is not just maintained or simply added by a human, but automatically acquires different signals from sensors, such as geolocation, temperature, shock, usage hours, alerts, etc. One that knows when a payment or any kind of money transfer has been made, a delivery has been received or arrived at its destination, or a digital asset has been downloaded from the Internet. The relevant automated actions or signals are then recorded in the distributed ledger/blockchain.

Of course, given the massive amount of data that is created by those sensors, automated signals, and data streams, it is imperative that only the very few pieces of data coming from a signal that are relevant for a specific business process or transaction be stored in a blockchain. By recording non-relevant data in a blockchain, we would soon hit data size and performance issues.

Ideas to ignite thinking in specific industries

  • The digital, “blockchained” physical asset (asset lifecycle management): No matter whether you build, use, or maintain an asset, such as a machine, a piece of equipment, a turbine, or a whole aircraft, a blockchain transaction (genesis block) can be created when the asset is created. The blockchain will contain all the contracts and information for the asset as a whole and its parts. In this scenario, an entry is made in the blockchain every time an asset is: sold; maintained by the producer or owner’s maintenance team; audited by a third-party auditor; has malfunctioning parts; sends or receives information from sensors; meets specific thresholds; has spare parts built in; requires a change to the purpose or the capability of the assets due to age or usage duration; receives (or doesn’t receive) payments; etc.
  • The delivery chain, bill of lading: In today’s world, shipping freight from A to B involves lots of manual steps. For example, a carrier receives a booking from a shipper or forwarder, confirms it, and, before the document cut-off time, receives the shipping instructions describing the content and how the master bill of lading should be created. The carrier creates the original bill of lading and hands it over to the ordering party (the current owner of the cargo). Today, that original paper-based bill of lading is required for the freight (the container) to be picked up at the destination (the port of discharge). Imagine if we could do this as a blockchain transaction and by forwarding a PDF by email. There would be one transaction at the beginning, when the shipping carrier creates the bill of lading. Then there would be look-ups, e.g., by the import and release processing clerk of the shipper at the port of discharge and the new owner of the cargo at the destination. Then another transaction could document that the container had been handed over.

The future

I personally believe in the massive transformative power of blockchain, even though we are just at the very beginning. This transformation will be achieved by looking at larger networks with many participants that all have a nearly equal part in a process. Today, many blockchain ideas still have a more centralistic approach, in which one company has a more prominent role than the (many) others and often is “managing” this blockchain/distributed ledger-supported process/approach.

But think about the delivery scenario today, where goods are shipped from one door or company to another door or company, across many parties in the delivery chain: from the shipper/producer via the third-party logistics service provider and/or freight forwarder; to the companies doing the actual transport, like vessels, trucks, aircraft, trains, cars, ferries, and so on; to the final destination/receiver. And all of this happens across many countries, many borders, many handovers, customs, etc., and involves a lot of paperwork, across all constituents.

“Blockchaining” this will be truly transformational. But it will need all constituents in the process or network to participate, even if they have different interests, and to agree on basic principles and an approach.

As Torsten Zube put it, I am not a “blockchain extremist” nor a denier that believes this is just a hype, but a realist open to embracing a new technology in order to change our processes for our collective benefit.

Turn insight into action, make better decisions, and transform your business. Learn how.

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Juergen Roehricht

About Juergen Roehricht

Juergen Roehricht is General Manager of Services Industries and Innovation Lead of the Middle and Eastern Europe region for SAP. The industries he covers include travel and transportation; professional services; media; and engineering, construction and operations. Besides managing the business in those segments, Juergen is focused on supporting innovation and digital transformation strategies of SAP customers. With more than 20 years of experience in IT, he stays up to date on the leading edge of innovation, pioneering and bringing new technologies to market and providing thought leadership. He has published several articles and books, including Collaborative Business and The Multi-Channel Company.