Ever hear the expression “All I ever needed to know I learned in kindergarten?” I’m reminded of this each fall when I witness the retention practices that happen at my children’s dance studio. No matter how enthused or how bored the children are with their dance lessons, they come to life when the holiday performance draws near. The reason for this is that they know that with another year of dance, they have the possibility of being cast for certain dance positions associated with that level. It is almost impossible to get the kids to try a different sport.

 In loyalty programs, the best retention tool is often the elite program with pre-defined and published benefits. In airline programs for instance, elite members know they will receive first class upgrades and bonus miles. I wonder if the dance school retention practices could find their way into traditional loyalty programs. Could we “dangle” the possibility of some exclusive and high-end benefits to members as they become more loyal or more tenured? Would members avoid using competitors to increase their chances of getting these benefits? Like the dance school, you have to be careful not to disappoint members that get something less than what they expected. However…if the member tries hard enough, there is always a possibility of getting what they want the next year.

Having spent the last several years building and managing loyalty programs, one would think that I wouldn’t miss the opportunity to participate in one – especially with businesses that I frequently visit. Unfortunately, this is not true. I’ve come to realize that I’m lazy and that I want the company to do all the work of keeping track of transactions for me. Even at my local coffee shop where I could easily get a free cup of coffee every 2-3 weeks, I don’t pull out my frequency card to get it stamped. I have a hard enough time getting my money out of my purse while juggling my briefcase and anything else I happen to be carrying.

 
While it isn’t easy for every business to automatically identify loyalty program members and keep track of their transactions, I’ve realized that it is critical to the success of the program. At the very least, the responsibility needs to reside with the employees to ask the customer for their member number to be sure to give them the credit they deserve.

Many loyalty programs consider a member to be active if they’ve had at least one credit-earning transaction or one redemption transaction within a 12 month time period. While this may be a good rule for determining whether the member should stay on the database and in the program, this may not be enough to consider the member “really active” or loyal.

Quite often, loyalty is defined based on transactional metrics such as number of transactions, frequency of transactions and tenure as a customer. There are other metrics that can be considered as well such as whether the member has referred others to your business, provided their email address or updated their profile. By taking into consideration a combination of transactional and behavioral metrics, the program may identify some loyal customers that it would have otherwise missed. Plus, this information can be used to model “likely loyal members” in an effort to migrate members from a state of neutrality to loyalty.

A recent article in the Wise Marketer mentioned a new loyalty card technology.  This new technology enables member specific information, such as point balances,  instant promotions, messages, parner logos and more to be written on the face of the membership card.  And this information can be updated each time the card is used, as the card is re-writable.

Is this going to change the face of loyalty?  Probably not, but it adds a new tool to the loyalty arsenal.  For one, it does introduce the potential for differentiation where competing programs are very similar.  It also opens the door for instant redemption opportunities; in the longterm, it also probably lower costs since it eliminates paper based coupons, shipping, tracking, etc.  

Time will tell if this is going to go the way of the "smart cards", or whether it offers enough of a benefit (via the instant personalization) to succeed in the loyalty space.