Five Best Practices For Aligning Customer Loyalty With Business Strategy

Loyalty programs are at their core tactical mechanisms for altering the behaviors of specific customers. The behaviors you most want, however, might be quite different, depending on your business model and competitive situation. If you can't now identify your customers across channels or stores or business units, a loyalty program can help you do that. If you can track your customers individually, but you have little opportunity to interact with them, a loyalty program can provide more opportunities to do that. On the other hand, if you already have the mechanisms to build and manage individual, highly interactive customer relationships, then you should think very seriously about just what it is you need to get from a loyalty program. 

An online or direct-to-consumer business with a unique product or a distinctive brand may be better off relying on its real-world business model to coach customers into more profitable and engaging behaviors. Over the past two decades, loyalty programs of every type have been implemented by businesses in many different categories, and have become very familiar to consumers. Indeed, the average household in the United States is currently enrolled in 14.1 different loyalty programs, but only active in 6.2 of them, according to Colloquy's Loyalty Marketing Census 2009. 

There is enough history on the benefits, costs, and effects of loyalty programs that we have identified five best practices for aligning loyalty programs with business strategies. Any business considering whether to implement a loyalty program, and any business trying to manage its own ongoing program, should know these best practices if it wants to have a best-in-class, successful program.

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About Don Peppers and Martha Rogers, PhD

Recognized for well over a decade as leading authorities on customer-focused relationship management strategies, Don Peppers and Martha Rogers are the founding partners of Peppers & Rogers Group. Their vision, perspective and thoughtful analysis of global business practices has earned them worldwide acclaim.