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Today's electronic world offers a multitude of fresh, new options for capturing and keeping customers, from the web and e-mail to mobile phones, PDAs, and iPods. But using that technology to grow customer loyalty is a challenge, according to loyalty expert Jill Griffin who highlights a number of best practices for electronic loyalty marketing.

According to Griffin, marketers must keep in mind that each stage of the customer life cycle (suspect, prospect, first time customer, repeat customer, client, advocate) presents unique opportunities for growing a loyal customer. The key is choosing the right tool for the right job. thomse67a This article is copyright 2006 TheWiseMarketer.com).

Griffin offers the following samples of "wired reality" for each of the six stages of loyalty, and how some leading marketers are using innovative new loyalty tools to make the most of them.

1. Attracting suspects
Wired Reality: Research shows today's wired customer relies heavily on information from peers, rather than traditional media sources or from the seller, itself. This means that in order to attract quality suspects, you, as the marketer, must find ways to spread positive word-of-mouth through current customers and supporters. Three key elements drive this process: (1) simple ideas, which are (2) word-of-mouth friendly and are supported by... (3) tools to facilitate customer conversation online.

Best Practice: When Proctor & Gamble launched its Secret Sparkle body spray products in February 2005, the package goods giant also launched, three months later, the blog, SparkleBodySpray.com. By July, the body sprays, targeted to teen girls, had captured 0.8% of the $10.4-billion global antiperspirant/deodorant market. Fanning this flame of introductory success was the blog which receives 12,000 visitors per week, with each visitor spending, on average, 25 minutes each visit. What attracts this level of involvement is four teenage site authors, writing under the identities of Vanilla, Tropical, Peach and Rose (cleverly crafted to also be the names of the four body sprays) who blog about such teen hobbies as music, fashion, sports, dating and party-going. The site is peppered with interactive activities such as building a dream date using mouse clicks to select a young male's hair style, choice of eye frames, etc. And when the visitor is ready to share her creation with a friend, the "send a friend" button is close at hand, ready to oblige.

2. Converting Prospects
Wired Reality: A key challenge facing any company is how to cut through market minutia to find high-value prospects to nurture into customers. Lowering sales costs and increasing closing rates are paramount to winning the loyalty game. Search engine advertising can be great source for prospecting. But, to weed out high-potential prospects from mediocre suspects, it is vital that a firm's online search campaign be as spot-on as possible in addressing three areas: (1) who to target, (2) how to position products and services, and (3) how to effectively qualify prospects.

Best Practice: In an effort to generate better sales leads, in early 2006, Citrix Systems, a US based infrastructure software maker, began using real-time, post-click analyses (conducted by Ion Interactive), to maximize paid search campaign conversion. This campaign was designed to attract buyers to Citrix's new HIPPA-friendly (Health Insurance Portability Act) software product. The campaign's purpose was to generate high quality leads for follow-up by the Citrix Systems sales force. Based on post-click marketing segmentation analysis, Citrix immediately learned that more than 70% of search engine respondents were not in the target audience of hospital decision makers. But even with only 30% of the respondents in the target audience, conversion rates still soared 525%, based largely on the new campaign's use of directed click paths and audience-specific messaging. Within 10 days of launch, RTP analyses (Respondents, Traffic sources, and Paths) enabled Citrix to confirm Google as its best performing search engine and by Week Three, all other search engines were eliminated from its budget.

The sales lead campaign launched with two test paths. Immediate real-time analysis revealed that Path A was performing significantly better than Path B. Based on real time data, path C was crafted and launched with nearly double the results of the already successful A path. This segmented traffic converted at a sales lead rate of 12%, or almost 2500% better than the previous campaign launched in 2005. All in all, this campaign recalibration was impressively achieved within the first three weeks of campaign launch.

3. Performing For First Time Customers
Wired Reality: Loyalty research has long confirmed the importance of a seller's accuracy, reliability and responsiveness in transacting with first time customers. After all, first time customers are "tryers" and their perception of the value they receive from their first purchase will drive their repeat purchase decisions. Mobile phones, PDAs (such as a Blackberry), laptops, etc. can provide stakeholders easy access to customer feedback, alerting a firm that a customer problem awaits attention.

Best Practice: Automation and Control Solutions (ACS), an US$8 billion unit of Honeywell whose 40,000 employees provide environmental sensing and control expertise for corporations, employs a wired alert system tied to customer feedback. That means that new customer (as well as established customer) feedback can be closely monitored. When a customer survey score falls below ACS specified thresholds, or if the customer asks to be contacted, the system sends a detailed action alert to the Blackberry, mobile phone, laptop, or desktop PC of people responsible for that customer, including ACS field service leaders, customer care advocates, sales representatives, and regional general managers.

Second, the system automatically opens cases and, using business rules, assigns them to case managers and teams. Online case management enables team members to share information and coordinate response actions. ACS control group studies found that cancellations were 40% lower in the pilot group that received alerts and cases than in the group that did not. This wired alert system (provided by research supplier, CustomerSat) is credited with preserving several million dollars in ACS service contract revenue.

4. Anchoring Repeat Customers
Wired Reality: Repeat customers expect to be known and their preferences remembered. In my loyalty coaching sessions, I refer to this as the "Show me you know me" customer payoff. Truly empowering the front line with this capability is an often arduous, on-going challenge at many companies. Now, more than ever, wired capabilities enable large corporations to equip front line employees with real-time, actionable information to create a wow customer experiences.

Best Practice: Continental Airline's first big step in achieving the "Show me you know me" outcome for its customers began in the late 90's. That's when the company embarked on its four year journey to consolidate 45 customer databases into an enterprise-wide customer data depository that would provide nearly every Continental employee wired access to customer information. But what particular customer information could most help a specific front line employee achieve the "you know me" outcome for a customer? To continually provide fresh answers to that question, ambassadors from the airline's CRM department instigate regular think tank sessions with representatives from every vertical in the company including flight directors, managers, ticket agents, flight attendants, baggage handlers, etc.

The result? Scores of fresh, new ideas to delight customers are constantly generated by Continental's wired front line. (The CRM department then takes the most promising ideas and works through the implementation hurdles to make the ideas actionable.) For example, the Continental President's Club manager can now be notified when a high value customer who has experienced a lapse in Continental service (major flight delay, etc.) in the last 30 days has swiped into his Club. This allows the club manager to personally approach the customer and offer a face-to-face apology.

5. Maximizing Clients
Wired Reality: I have long defined a client as a buyer who feels a real commitment to buy from you and proves it by buying every product or service of yours he can reasonably use. If a customer is buying something from a competitor that they could be buying from you, consider that buyer your repeat customer, not your client. So how can you consistently earn maximum share of wallet and turn a repeat customer into a client? One way is to continually educate your client about your full breadth of products and services. Some savvy online merchants have devised creative ways to reward clients for their willingness to try new products and services.

Best Practice: eBay did this with its Camp eBay promotion. It awarded merit badges based on various activities users performed on the site. The badges aren't based on simple purchases. They're based on how purchases are made and what's purchased. Merit-badge-worthy behaviours included using the "Buy It Now" button (instead of bidding on an item), shopping in several different product categories, and posting feedback. By rewarding users based on behavioural changes, the promotion encouraged more profitable multi-category behaviour and extended the brand into product categories some regular customers didn't associate with eBay.

Wired Reality: Generally speaking, the more channels (internet, store, catalogue, etc.) your customer uses to buy from you, the better. Why? Because a multi-channel customer typically spends more, over time, than a single channel customer. The internet is proving an especially effective vehicle for helping customers achieve multi-channel efficiency and value.

Best Practice: US classic-apparel retailer, Talbots, recognised that online shopping for clothes can be huge time saver for time-starved professional women. But the challenge is matching the customer to the sizes and shapes of the online selections. In February 2005, Talbots launched Style Search on its site, a feature that puts the inventories from its 1,000+ stores at the online shopper's fingertips. Using Talbots.com, a customer can reserve items at a nearby store and then drop by the retail store to try them on. Talbots has seen enthusiastic use of Style Search and its in-store reservation system since launching the feature.

6. Leveraging Advocates
Wired Reality: There's an important difference between a client and an advocate. Simply put, advocates do more than simply buy from you. Advocates are engaged customers who demonstrate their vendor allegiance through such activities as spreading positive word-of- mouth, recruiting new prospects and helping their vendors improve. So, how can a firm build stronger advocacy in the wired world? One way is to create a secure environment in which customers can be listened to and engaged over a finite period of time. Online technologies provide just that opportunity.

Best Practice: Brokerage giant Charles Schwab uses by-invitation-only, online communities built and hosted by Massachusetts-based Communispace. Reports Jack Hawn, Vice President of Schwab Retail Brokerage, "We can get an idea and within a week, we can get back to the originator and say, 'We took your ideas out to 400 clients and here's what they said'". Continues Hawn, "[Our customers] know their ideas and suggestions are being listened to, and that what they are saying is being considered by Schwab management up to and including the chairman."

The power of that understanding became apparent when the chairman, Charles Schwab, became involved in a set of online customer interactions on his own. Mr. Schwab wanted up-to-the-minute information about his clients investing strategies and views of the market in preparation for an upcoming press tour. Working with Mr. Schwab, the site design/facilitation team prepared a questionnaire and wrote a letter addressed to the community. Reports Hawn, "He had the highest response to date. Clients were literally writing essays to him about what they liked and what needed improvement."

But Schwab has found its online community's truest value is most often seen in the more serendipitous discoveries that surface from the community's everyday activities. For example, Schwab was surprised to learn that frequently active traders really used Schwab Equity ratings. (The firm had previously thought that relatively few people actually used them.) According to Hawn, "Based on that unexpected finding, we were able to put together a strategy that used that information. It was a marketing programme we would not have done under other circumstances."

Proctor & Gamble, Continental Airlines, Schwab, eBay, and others have discovered the necessity of investing in an ever-evolving arsenal of tools and techniques that develops and nurtures customer loyalty. To stay competitive, you, too, must constantly experiment (and test!) new ways to attract and keep customers. Find your inspiration in the concept of customer stages and in the fact that loyalty is developed and earned one step at a time.

Marketers have long known the power of engaging in dialogue with customers. But those who push the boundaries of customer dialogue also understand the power of communities of consumers united in affinity for a brand, bound by geography or engaged in similar lifestyles.

The growth of these consumer network-building systems is the first seismic shift in the loyalty landscape.

In the loyalty game, facilitating the formation of customer groups bound by shared interests is a way to develop a sense of community around your brand. Communities always have evolved organically, without help from marketing, but smart marketers are tinkering with the DNA of their customer bases to push the boundaries of customer communities outward.

Within the context of the loyalty-marketing space, when we think of how best to leverage the power of consumer networks, what we're really talking about is implementing a dialogue marketing strategy. The better your ability to grow dialogue between you and your customers and among your customers themselves, the stronger your brand will become. For loyalty innovators, that means moving beyond two-way communications to enable customers to connect with each other, share insights, and exchange relevant information through facilitating platforms.

The power of data
Retail executives at the uppermost levels have come to understand the critical importance of loyalty data. Yes, they still want to see incremental behavior shifts that lead to a measurable return on investment. But they also see that, when it comes to leveraging loyalty program data, most companies have barely scratched the surface of opportunity.

It's a hoary truism: information is power. But this spotlight on the power of customer loyalty program data reveals a fundamental debate brewing about the purpose of loyalty programs: Is it enough for a program to generate incremental return on investment? Or does the real power of loyalty data reside in our ability to drive customer insight back into the core business model?

The former depends on the latter. It's true that without the data, you can't get the ROI. But to unleash the program's real potential, you'll need to embrace the second seismic shift: leveraging loyalty data to enhance your brand's core value proposition through personalization and customer experience management. Particularly in the retail space, loyalty programs will play a pivotal role in the ability to identify customers coming into the stores and harness data to change how they shop, how they experience the store, and the benefits they receive on site.

So far, the emergence of this trend is still limited to the handful of retailers who understand that the in-store experience is what drives their success. In addition to the gold standard held aloft by such forward-thinking retailers as Best Buy and Tesco in the UK, a handful of other brands including M&M Meats, a 340-store Canadian food retailer, luxury car brand Jaguar, and Shoppers Drug Mart, the Canadian health and beauty retailer, are translating data into customer experience.

Simply put, you can't manage a relationship or enhance the in-store experience without knowing who your customers are. And indeed, before loyalty program information can really be leveraged to enhance the company's core product, you need to understand what insights you can glean from the data you've already collected. Basic ROI analysis is no longer the end game. It's just the starting point.

The power of convergence
An epic confluence of events and factors outside the loyalty space will form the third seismic shift that will influence your loyalty strategy. In the global marketplace, three major areas of convergence are giving rise to a second generation of multi-merchant loyalty coalitions: corporate convergence, in which mega-corporations continue to gobble one another up, with the corresponding size of their customer bases growing more astounding every day; CRM convergence, in which the next generation of CRM technology helps these same companies organize every aspect of their businesses around customer segments; and POS technology convergence, in which the next wave of payment and identification innovations will eventually collide in their ability to enable sustainable brand-customer relationships.

Coalitions typically form through entrepreneurship: a would-be coalition operator establishes a stable of "everyday spend" partners that includes a grocer, a fuel retailer, a credit card issuer, a telecom and a host of smaller retailers. The operator then takes the value proposition to market and asks customers to enroll. Such is the genesis of the world's most successful coalition programs, including the Canadian Air Miles Reward Program, Fly Buys in New Zealand and Australia, the UK Nectar Program, Malaysia's Real Rewards, Germany's Payback, and others.

But what about the United States? The answer lies in the ability of its corporations to take advantage of these converging trends. The new model may see a proprietary loyalty program run by one of these new mega-corporations evolve into a national coalition. By leveraging new CRM technologies to move data swiftly through the enterprise, and by building new payment and identification systems that will make consumer participation a snap, a major corporation could launch a coalition without signing the usual suspects in grocery, telecom and fuel.

Several corporations are already poised to take this leap: Citi's ThankYou Network program; American Express's Membership Rewards; The Kroger 1-2-3 Card program; even one of the legacy airlines could spin off its proprietary frequent-flyer program and evolve it into a coalition- like Air Canada is doing with Aeroplan.

As consumers pull out their coalition cards several times a week while shopping at top brands, coalitions will win the battle for share of mind. And the first companies in each sector to align their brands with a top-tier loyalty coalition will enjoy a formidable first-mover advantage. The bottom line: you'll need a strategy to evaluate whether an emerging coalition is the right one for you.