The Rewards of Design-led Technology Investment for CRM and Loyalty
CRM and all its derivatives have driven significant technology investments for30 years now, from Y2K to “big data” to the customer experience craze of today. As boards and CEOs demand organic growth, loyalty and relationship marketing are increasingly embraced as core strategies against such objectives. These strategies are finally on the brink of realizing their potential, with better technology than ever to support them. Even with these favorable currents, or perhaps in spite of them, a majority of customer loyalty and relationship marketing programs are still considered irrelevant. Colloquy’s most recent census suggests that nearly 60 percent of members are inactive. At the same time, the total number of programs continues to grow, making customer engagement even more challenging for brands.
Complicating matters further, these strategies originate in marketing and yet the CIO is tasked with leading the team that will enable them. The challenge is significant because every day there are new, less expensive, easier to implement tools as well as “proven”, robust technology to choose from. The proliferation of options across the technology spectrum promising to solve all marketing problems increases the CIO’s fundamental risk: that even thoughtful (but not fully informed) technology selection leaves the challenge being on a technology course that doesn’t deliver the functionality needed to create marketing that performs relative to growth and engagement objectives.
Where do things go south? The root of this underperformance is often a direct function of companies implementing “cookie-cutter” programs, generally tied to two failures: misaligned leadership and technology leading strategy whereby companies invest in a technology platform before the brand-specific strategies and programs are developed. These failures are, of course, connected. Leadership is commonly too focused on ‘just do it’ (apologies to Nike) and/or other priorities that deprive the CRM and loyalty effort of resources (including time) to thoughtfully develop strategy.
It is also easy to conclude that much of the CRM and loyalty strategy and program design is simply wrong. There are still too many loyalty propositions based on the old ’frequent flyer’ points-based model that originated in the early 1980s.Not coincidentally, most technology is still designed to support these types of programs. Thus, begins a vicious circle, where the technology systems most easily deployed are purposefully built to run the same formulaic points-based programs, as opposed to innovative and differentiated program structures.
Technology investments are often the largest cost – capital or operating - associated with developing, implementing and managing customer marketing strategies. They extend well beyond database and marketing automation, into mobile applications, website enhancements, campaign and contact management solutions and of course, loyalty engines.
Unfortunately, as marketing drives more technology investment decisions, key factors are often under-weighted indecision-making or even worse, ignored. Marketers looking for partners often want things ’easy’ and ’turnkey’, leading to the allure of ‘bright shiny objects’ that are often positioned in just those terms. This is true for large enterprise vendors as well as more vertical CRM and loyalty platforms.
“Defining strategy and program design before selecting technology ensures that the programs and customer experience work for the customer and the company as much as the technology infrastructure”
A better path for moving forward
Leadership in Customer Marketing – the home of CRM and loyalty programs – starts with creating the loyalty and CRM strategy first. It requires recognizing what makes a company unique and reinforces those characteristics, including the brand, but also operationally, financially and through its‘product’. This approach leads to a different outcome than simply doing what everyone else is doing. Bringing the unique characteristics of a company and its brand to life in a program is of course increasingly reliant on the technology systems across the enterprise for customers, suppliers, and especially, the employees.
Defining strategy and program design before selecting technology ensures that the programs and customer experience work for the customer and the company as much as the technology infrastructure. The technology solution can then reflect that strategy, better serving customers and employees, with less change management, less disruption and more ability to impact company revenue. From a technology perspective, these solutions are better able to leverage existing assets and capabilities, resulting in faster speed-to-market. Regardless of whether any or all of these technology platforms are in place at the onset, loyalty strategy and program design must be reflected in the company’s current and future technology roadmap, reflected in the business case in collaboration with the CIO.
As you consider that a better path forward starts with strategy, here are six fundamental guidelines to consider:
• Understand what loyalty and relationship marketing really mean for your business. At Dialogue we define this as paying attention to customers and acting accordingly. This means tracking customers and serving them based on what makes them – and customers like them – unique. Unique in terms of value, how they interact and engage what they buy and how they behave beyond purchase transactions.
• Establish a common view of what customer loyalty means to the organization, in terms of customers, the brand, the business and the systems that drive them. Key Questions: What’s the right balance between good for the customer and good for the business? What is reasonable to expect from systems and technology? What does success in customer loyalty mean for the organization?
• Assess the current and expected future states, especially in the context of technology requirements and capabilities. Key Questions: What can be done now to impact customers and employees? Where are gaps that demand additional capabilities? What can wait until we prove the strategy is right? What are the logical and realistic milestones to set?
• Establish a sound business case for incremental technology investments. Key Questions: What are we willing to invest? Not just financially but just as important (especially for IT), resources. What will it take to make this a top priority? What can and should we handle internally and what should we outsource? Project management, development, integration or all (or none)of the above?
• Be aware that there are a number of great tools out there, from both pure technology firms and from broad line loyalty and CRM providers. While they might all offer strategy and program design, recognize that many of these firms provide strategy and design to fit their tool(s) rather than what’s best for you, the client. It is analogous to architects that are also in the brick manufacturing business: most of their designs will feature bricks.
• Share your loyalty findings and answers to these questions with potential partners. Transparency helps and brings out the best in partners. Most importantly, it will minimize contingencies when, as it inevitably happens, there are ‘surprises’. Your partners will surprise you less and be better equipped to make you successful. There has never been a better time to get support, if not a mandate, to develop and implement strategies to drive and sustain customer loyalty. In tandem, it is prime time to support investments in a new customer marketing ecosystem (CRM and loyalty technology). The key to success is following a disciplined approach and recognizing that success is not always achieved by the easiest path.
Check out: Top Loyalty Management Solution Companies