Loyalty Programs Don’t Treat
Heavy Buyers as Special
By Michael Schiff
There has been a surge in the number and type of loyalty programs over the past few years. This is due in part to new technology that has increased the number of offerings on the market: mobile messaging is growing; Entry Point Marketing offers front-of-store targeted offers; My Coke Rewards brought proof-of-purchase into the digital age. Meanwhile, the proliferation of direct mail shows no signs of abating.
It has become hard for manufacturers and retailers alike to ignore the torrent of data that is available – be it POS, customer segmentation studies, panel data, or internal databases. They are all saying that the current customer base is vital to the health of an organization. The weakening economy and the complex competitive landscape has magnified the “churn” rate – a problem only exacerbated by the increased difficulty in attracting new users to a brand. This, combined with new technologies, is why there has been renewed focus on the core or “heavy” buyer.
Unfortunately, many of these programs are not driving incremental volume. Even worse, many are simply subsidizing a sale that would have occurred naturally. They are not treating heavy buyers as special.
When these programs fail to produce positive returns or drive incremental volume, managers are often quick to blame the vehicle. They lament that the program was too costly to pay out, or it failed to engage with the correct customer, or it was not aligned with the customers’ purchase cycle. And so on.
In other instances, they blame the consumer. “All they are interested in are coupons,” they figure. Some believe that their core customer target is too broad to reach in a cost effective manner.
One area that rarely receives the blame is the messaging or creative. More often than not, the creative used to communicate with one’s core buyers is a slight repurposing of a brand’s national campaign. Sometimes it isn’t even repurposed at all. It is merely copied wholesale and sent to these heavy buyers.
The rationale for this is simple and obvious. A lot of time, effort, and money go into developing the national campaign. It is tested, placed before consumers, modified, and tested again. Most of this creative is aimed at incenting trial – getting non-users to try the product; at best, it may be focused on getting lighter users to use more. To do that, much of the communication has to focus on the brand’s key equities.
The problem is that most heavy buyers have already bought into a brand’s national campaign – usually before it launches. If a core consumer of a popular branded pain reliever uses 300 or more tablets a year (almost one per day), I would hope that they have already bought into the brand’s general advertising that the medicine stops pain safely and effectively. If the core consumer of a frozen dinner brand buys 40 or more year, they probably already believe that the brand tastes good, and feeds their family quickly and cheaply.
Yet this is typical of the creative most often sent to a brand’s strongest users. In other words, those consumers who buy the brand a lot receive a “boilerplate” message, usually along with a coupon. But it really doesn’t matter how efficiently we can locate these consumers if we fail to deliver any special communication that is relevant to them and their lifestyle.
Brand marketers miss a golden opportunity when fail to use information from focus groups, consumer segmentation and other research in a targeted message or story sent to heavy buyers. The goal should not be to simply connect with heavy buyers, but to connect with them on a stronger level and build up the brand’s emotional relevance. What insight can a brand give them about their policies, heritage, people etc.; peek behind the curtain to build a stronger emotional connection. Can the message pass the “squint test”? In other words, are we communicating in such a way that if one squinted at the brand name, one would not be able to apply this message to any other brand in the category?
We also do not have to hit our consumers over the head with the message. We can choose tactics, venues, and creative that align with our core users’ mentality. ZonePerfect, an energy bar, had research suggesting their core users are above-average supporters/users of arts and entertainment. The company made sure to align their heavy buyer communication with these areas. ZonePerfect can be found in forums such as SXSW and the Cannes film festival where they host musicians, as well as pass out free samples and coupons. Their website is very focused on the arts and they align themselves with VH1’s Save the Music.
The goal is to build up brand loyalty among heavy buyers and prevent them from being enticed by competitive offers. Successful communication does that by building up the FUD Factor (Fear, Uncertainty, and Doubt) that consumers feel when it comes to competitive brands.
Here’s the bottom line: When using all of the new technologies that connect with all consumers, marketers should treat their heavy buyers as a separate and special group.
Michael Schiff is managing director of Partners in Loyalty Marketing, a Chicago-based consultancy (www.partnersilm.com).