Most people celebrate the New Year. I denounce it. I refuse to accept it. I will ignore it until I am forced to reconcile with the truth of it all.
While it may be a time of both reflection and resolution for most, to me it is a searing reminder of the work ahead, the hill to climb, the endless pursuit of greatness.
I speak of course of the annual reset of my beloved loyalty programs. The bane of my existence. Yet again, what seems like an annual obstacle, I now have large hills to climb: tens of nights to sleep, tens of thousands of miles to fly, tens of thousands of dollars to spend.
In a pandemic. Woe is me. Cachetophobia, the fear of losing status, is a real problem.
In fairness, I do understand that Loyalty is a sticky wicket. And it has changed dramatically since the 16th Century of copper coin exchanges. Originally a customer re-purchasing program, collecting stamps for the redemption of future purchases, it has evolved into a much more complex customer satisfaction program, where most customers are collecting points or miles, assigned special privileges based on accumulation levels, redeemable for products above and beyond the services self-provided and implemented as a business model in its own rite.
In fact, combined with Account programs, where you apply digital currency into a retailer's “wallet” prior to purchase, and you have foundational impacts on the profitability of the product and service business as a whole.
Given its relatively recent level of importance to large multi-national businesses, especially in the consumer or B2C sectors, the marketing teams have become the breadwinner, not sales. While new customers need to be sold, and existing customers upsold, the retention of your most loyal (and highest paying) customers becomes the focal point of executives and boards alike.
So why do I bring this up? Outcomes. The consequence of actions. How one is measured. How one wins. The waypoint results.
How does one achieve a result when you have so many problems trying to achieve it? The problem of understanding the impact of program change is difficult. The problem of satisfying customers in these programs is laborious.
The strategy to grow these programs is not obvious. These are the traditional loyalty outcomes, but, I guess, also for any product or service delivered to the consumer market: Change, Satisfaction, and Growth.
From an IT perspective, the current approach to resolution is within the Data and Analytics (D&A) team, of course. The capability to source data internally and externally about customers, products, transactions, outlets, etc.
The capability to engineer that data and prepare it for an orchestrated means to qualify/quantify information, apply mathematical and statistical algorithms (Data Science) to discover facts.
What is most likely true, but not always, is that these facts make intuitive sense (at least from the business experts' perspective) but have the added value of being backed up by data and algorithmic proof. D&A helps convert “what I think is true” to “what I can prove is true.”
But facts, delivered as Business Insights, are only the start of producing outcomes, not outcomes of themselves. It takes a giant leap.
In a simpler product example, the fact that "high-income customers who bought product ABC, never bought product XYZ" does tell you important things. You have scientifically double-clicked on WHO, and WHEN, and WHAT. But unfortunately, it does not actually tell you WHY nor does it tell you WHAT TO DO to impact positive change. With just this fact, what are my options to impact change? 1) tell them the exact same story you have told before? just more frequency or by a different means? 2) try and sell them XYZ again, they must not have heard the first time? 3) just one more event? just one more sales pitch?
You just do not know.
Same with loyalty. the fact that “only 10% of the middle tier elites ever achieve a higher status” is interesting to know. But does it tell you WHY it is not 11%, 15%, 20%? or WHY 90% are not staying just 15 more nights or buying five more grande caramel macchiatos?
And what do I do with that simple interesting fact? Tell the mid-tier elites again how amazing it is to achieve the next status tier? How they would be so much better off with the additional benefits? Maybe I just need to send them a text instead of an email? or maybe...they are just not that into you. You just do not know.
How can I go from Insight to Outcome? While it is a giant leap from Insights to Outcomes, there are suspension bridges, support beams, and helping hands to get you over:
- Overwhelm yourself with facts. Create many facts, from multiple perspectives, with multiple dimensions, over multiple periods. Not all facts need to be intuitive, yet appreciate that not all facts are relevant. Find undiscovered data. Using existing data in different ways. Go beyond structured databases to any digitized source: imaged documents, store videos, static images, voice messages, and contact centrerecordings.
- Apply institutional knowledge to the facts beyond a single department. Apply historical knowledge of the business, of the customers, and of the model itself. How you once made money versus how you currently make money. How you used to spend money versus how you currently spend money. Evaluate your key assets, your suppliers, your customer segments, and your value proposition. Detail how your business has changed over time, and how your previous decisions have impacted your customers.
- Overlay your institutional knowledge with industry effect. What is your role in the industry as a whole? Part of the supply chain? A producer/consumer is a 2-sided network? Are you a major player controlling a heavy transaction set or a niche player with a unique attraction to certain types of customers?
- Understand your customer's behavior, via understanding human nature. Create profiles using sociology, psychology, and anthropology expertise. What are the humanistic determinations of making decisions, of receiving and retaining information, of remaining loyal, of making decisions, etc. Get in the mind of your most important customer segments.
- Coordinated testing of changes. Apply the standard scientific method to test multiple theories. Use blind studies, apply champion/challengers’ methods, create micro-impacts both positive and negative to appreciate which strategies are more likely to create desired longer-term outcomes. Fail fast.
I am not going to kid you. These recommendations are not for the faint of heart. They will require significant effort likely beyond your current capability and you will likely need to engage in a different set of partnerships, an ecosystem of talent, technology, and information. But just because it is difficult does not mean it is impossible.
But I see no better way, other than being a really good guesser, on what changes you need to make to your products services, and loyalty programs to create growth considering the expense of change.
If you really want me to stay a super-elite, ambassador, gold card member of the "latte of the month" club, and not go straight to your competitor that is offering an immediate status match, you better know me more than I know myself.
Paul Lewis is a Global CTO and Board Adviser and can be reached at firstname.lastname@example.org, https://www.linkedin.com/in/paullewiscto/ and on Twitter at @PaulLewisCTO. His web site is https://www.paullewiscto.com/