Loyalty and CRM. For many brands and retailers, these two concepts are usually mentioned in the same breath. Both, when performing at their best, grant brands insights into the behaviors and motivations of their customers, and both are tools that enable personalized engagement
Loyalty programs and customer relationship marketing systems are just that – tools. Loyalty is not instantly created with the launch of a rewards program, nor are sustainable customer relationships born when CRM software is installed. Genuine customer loyalty and truly beneficial brand-customer relationships can only be developed through an organization-wide commitment to understanding customers and meeting their expectations, executing people first marketing strategies, and delivering personalized experiences on an ongoing basis.
At its core, customer loyalty is the result of consistently positive emotional experiences, high perceived value, and satisfaction with brand interactions. To attain this, brands and retailers must deploy strategies centered on creating personalized encounters that resonate with customers, both at the time of purchase and throughout the entire customer life cycle.
As with so many aspects of loyalty and marketing, these strategies depend on the effective use of customer data. Loyalty and CRM can be invaluable to achieving the twin goals of lasting loyalty and mutually beneficial brand-customer relationships, but only if they work in concert with each other to deliver the data necessary to power people-first approaches.
So, What’s the Difference?
In order to understand how loyalty and CRM can work together to generate results, it’s important to define and differentiate these related but distinct activities.
Customer relationship marketing is concerned with managing all touchpoints between a brand or retailer and its customers, with the goal of strengthening relationships, increasing customer loyalty and extending customer lifetime value (CLV). It gathers data from every point in the customer life cycle, including point of sale and customer service, and informs retention and attrition programs and database marketing. CRM is not a singular, formal program that requires explicit opt-in from the customer to accepting marketing communication. It only requires a single customer identifier, such as an email address.
Loyalty programs, on the other hand, are far more structured, while still dedicated to achieving similar goals. Customers must opt into a loyalty program, and in doing so, they implicitly acknowledge that they have some existing level of affinity for the brand or retailer. They are willing to provide more extensive personal information, and in return, they expect more personal, rewarding, and exclusive interactions. Customer touchpoints in loyalty programs include registering to join the program, receiving a welcome communication, obtaining offers for the current or next visit, receiving communications about seasonal events or personalized content, and obtaining and redeeming rewards or benefits.
A good way of thinking about the relationship of loyalty programs to CRM is that CRM represents any interactions between the brand and any customer, while loyalty programs deal with all interactions between the brand and customers who have opted into a loyalty program. While that may seem slightly reductive and tautological, it is nonetheless true, and illustrative of the key differences in structure. This definition also highlights a perspective of loyalty programs that often goes under-acknowledged: they include every communication (or interaction) with a customer that has opted into a loyalty program. By its nature, CRM is all-encompassing, but loyalty programs are often considered in a more circumscribed way, limited to rewards or earnand- spend or accrual levels … which is a mistake. Loyalty, to put it mildly, is a full-time pursuit.
Ensuring that loyalty and CRM functions work seamlessly together should be a top priority for brands and retailers in every category. Though distinct, loyalty and CRM serve the same ultimate goals. With proper technological integration, loyalty data can feed CRM engagements with valuable insights to create a personalized experience across touchpoints and throughout the customer life cycle. Used in conjunction, these tools can create the people-based approaches that truly set a brand apart from its competition, and cement the customer relationships that will help it thrive for years to come.
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