Loyalty Program Members Can Help Ease Companies' Recession Sting

Loyalty program members are a marketer's best customers. So wouldn't it make sense to take action today to ensure they shop with you now — and stick around to shop with you during the inevitable upturn?

In every way that matters, the select segment of customers that have chosen to enroll and engage in your loyalty program can help take the sting out of the economic crunch. Leveraged correctly, these folks can be your best asset for creating a competitive advantage when financial equilibrium returns.

Here are some tips to guide you:

• Knowledge is power

  It's a mistake to blindly market in a downturn without insights gleaned from your loyalty program database. For example, if you were to take a snapshot of your customers' current spending patterns (when consumers' belts are unnaturally tight), you might vastly underestimate their potential annual value when a semblance of normalcy returns.

  Your loyalty program database can reveal insights to help you retain sales volume without ravaging profit margins. Who are your customers? Which ones have been most reliable? Which ones have always been price sensitive? Among your historically profitable customers, what have they bought? What hard tradeoffs are they making now?

• Resource reallocation saves budgets

  Right now, every company is trimming expenses. Your loyalty program should be the last line item to see the scalpel. Why? Because loyalty marketing is by its very nature measurable marketing. Instead of gutting your loyalty allotment, shift funds from less defensible mass-marketing efforts to better understand what return you're getting from your ever-dwindling budget.

  Delta Air Lines is doing just that. Jeff Robertson, the company's vice president for loyalty programs, recently commented on how Delta views its SkyMiles program: “During [a recession], the last thing you should do is cut the loyalty program. If you have the best program in your industry, you can be pretty tough to beat. And in our industry, our goal is to be the best.”

• Fine-tune your communications

  There's a wealth of information to be found in a typical loyalty program database. As such, it offers fertile ground for advanced analytical modeling that can put your marketing messages in synch with customers' shifting buying patterns and needs.

  In some cases the most powerful message you can send to your most valuable customers is simply a reminder of the benefits and rewards they already enjoy in the loyalty program. Thank-you messages and emphasis on members-only benefits let you stay in touch without bombarding customers with “buy now” sales messages when they may not be in a position to purchase.

• Encourage partnerships

  Engage more partners in your loyalty program to help share expenses and build program value. Multisponsor coalition loyalty programs like Canada's Air Miles are the gold standard, but Citi's ThankYou Network partnerships with Expedia and Amazon.com also point to the value of engaging non-competitive strategic partners, vendors and suppliers with your program. Your customers are the true beneficiaries.

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KELLY HLAVINKA (Kelly.hlavinka@colloquy.com) is a partner at Colloquy, a loyalty consultancy in Milford, OH.