The Evolution of Loyalty Programs for Social CRM - dummies

The Evolution of Loyalty Programs for Social CRM

By Kyle Lacy, Stephanie Diamond, Jon Ferrara

Customer loyalty programs are big business, especially for your Social CRM. These programs can be central to developing return customers. The 2011 Colloquy Loyalty Census provides good insight into these programs.

According to that report, Americans accumulate approximately $48 billion in rewards points and miles annually. However, one-third of those points are never redeemed. More people are participating in loyalty programs and getting less value from them than ever before.

With this in mind, part of understanding your customers is understanding the value they place on your loyalty program’s rewards.

To understand how to cultivate today’s social customer, look at several of the factors that changed the face of loyalty programs in the 21st century. These factors include the following:

  • Newer technologies help you engage your tech-savvy customers. Audience members want their loyalty programs to include the use of social media platforms and new technology like QR codes. A QR code is a visual symbol embedded with link information. When a customer scans it, he’s sent to the link. The link can contain advertising info, a coupon, or anything the marketer wants to show the user.

    Think about how you can reward your tech-savvy customers who use smartphones and their increasingly advanced apps. You want to make sure that you speak to your customers where they hang out. Trying to create new customer behavior (such as asking customers to join a new network to get points) will never work. Try to provide a seamless experience. Some options include the following:

    • Quick Response Code (QR code): QR codes can be a great way to engage customers. A QR code is a code that a smartphone user can scan with a reader installed on a smartphone or other mobile device. The smartphone then displays the web address associated with the code and gives users the option of opening that web address in their smartphone’s web browser.


      The code can link the customer to different interactions with your brand. For example, a code can take customers to a place on your site that has more detailed information about your latest promotion.

      In addition to linking customers to information, you can link them to games or discounts, coupons, or other special promotions.

    • Foursquare: Another possibility is to link to online networks that directly deliver reward points. One example of this type of network is Foursquare. This geolocation app uses a mobile phone’s GPS locator to display offers and information for nearby businesses.


      Foursquare is a social network that encourages your customers to visit your physical location. When they check in on Foursquare, they’re rewarded with points or badges. They can also interact with other like-minded customers by checking the online Foursquare stream. In addition, Foursquare links to Facebook, so customers can interact with friends as well.

    • PunchTab: Provides an established framework that allows your customers to participate in rewards programs. This can work well for smaller companies that can’t afford to create a program from scratch. The data you collect here can be plugged back into your CRM.


  • Customers want companies to be socially responsible. People can instantly see what’s happening around the world. Moreover, they can interact with the people to whom it’s happening.

    For example, it’s widely believed that Twitter influenced the rise of the Arab Spring in 2010 by allowing protestors to tell and show the world what was happening. For reasons like this, the social customer wants to see companies pulling their weight in society.

    According to the 2010 Consumer New Media Study by Cone Communications, 85 percent of respondents said they would switch brands, and 73 percent say they would try a new brand if a company demonstrates strong prosociety practices.

    Burt’s Bees, a beauty product maker headquartered in North Carolina, is a great example of a company that’s benefitting from its strategy to give back. Burt’s Bees employees teamed up with Habitat for Humanity to provide workers to help build ecofriendly homes.

    This is only one of the programs in which they participate. This has proven a winning strategy for them. Burt’s Bees was purchased by Clorox in 2007 for its GreenWorks line of products and their revenues continued to soar — in 2009, their revenue topped $250 million. Their generosity is widely known and appreciated by their customers, thus building loyalty.


  • CRM tools have evolved to provide valuable customer data that can impact customer loyalty. CRM tools have dramatically improved as more sophisticated computing becomes available. Previously, contact management tools didn’t provide the kind of data you really needed to impact your business. The computing capability just wasn’t available. Now even a free tool like Google Analytics can help a business owner see her customer’s online purchase profile.

    A CRM system is valuable because it integrates different types of data about the customer from a variety of business functions. Last century, a business owner might have used a PC-based program like Microsoft Outlook to do contact management. He would diligently add names to the contact manager and try to personally collect information about each customer. His system was only as good as the time he put into it.

    Once he graduated from this rudimentary software, he would’ve used something like PC-based GoldMine. GoldMine was very advanced because it integrated sales data into the contact management system. Today’s CRMs include data collected from all business functions.

  • Customer kudos and complaints can reach thousands, even millions, of people at lightning speed. The effect of the customer’s advocacy is magnified. Online customer reviews are among the tools that have changed the balance of power between manufacturers and customers. In the past, a disgruntled customer would tell their small circle of friends. Now anyone can be heard loud and clear by submitting an online review of a product.