By Naveen Kapoor
For decades, loyalty programs have formed the backbone of the brand marketing activities in airlines and hotels. With the end vision of identifying and retaining loyal customers, these programs have been successful in the past. But in today’s world, the term “loyalty program” seems to be ubiquitous with most of the airlines and hotels owning a loyalty program. With little differentiation among the various programs offered by different airlines and hotels, it seems loyalty has become more of a commodity.
Companies have invested more than $50 billion in their loyalty programs, however only 52% of program members are actively participating, while just 19% of customers say these programs affect their purchasing decisions, according to an Emart Solutions customer loyalty study.
A survey by Colloquy showed that the average American household has an average of 29 traditional loyalty programs. Points, discounts and coupons are great for rewarding the best customers, but they don’t help in forming deeper relationships with those customers.
Enhancing Customer Loyalty through Social Media
Social media can help a brand identify and interact with those loyal customers developing close and lasting relationships in the process. Incorporating social media into an existing loyalty strategy is still a relatively new practice. A study published by Marketing Land found that only 20 percent of CMOs leverage social networks for engaging with customers.
Enabling Better Engagements
Why is there a lack of participation in the loyalty program by the members? The EMart Solutions study cites the primary reason to be irrelevant or no communication from the brand.
Communication is vital to building and maintaining strong customer relationships. Each interaction with the customer provides the opportunity to reinforce the satisfaction they have experienced with previous interactions, thus solidifying their loyalty. Of the customers surveyed in the study, 94% seek some communication from brands; however, 32% of loyalty program members do not receive any communication from brands.
This is precisely why social media provides the ideal platform for developing a strong customer loyalty program. Social media serves as an active venue for conversation and represents an unparalleled opportunity for companies to support and assist customers, thus reinforcing customer loyalty. Organizations integrating social channels into traditional support process stand a much better chance to meet the growing expectations of their loyal customers.
However, the conversation aspect of social media is still at a nascent stage. Simply setting up a Facebook group or a Twitter feed and then standing back does not win any brownie points from loyal customers. They expect conversations to be two-way which means that the companies must be prepared to both converse and provide value on a long term basis. Even today, 58% of consumers who tweet about a bad customer experience do not receive a reply from the company they have an issue with.Missed opportunities like these end up costing companies revenues in the short term and damage brands in the long term.
Ensuring Personalized Experiences
According to a report, “93% of U.S. consumers say that rewards from their favourite brands are either ‘very’ or ‘somewhat’ important when they are determining which brands to buy into.”
How do we ensure that the rewards being offered to the consumers are relevant? Personalization is the key here. With social media, the member lifecycle is no longer linear. If a member speaks up on Twitter, comments on a blog post or shares an event invite with another member, an association can track and analyze that useful engagement data through Social CRM. Integrating unstructured data acquired from social platforms into the company’s structured CRM system and other back-end systems generates a holistic view of the customer with more information about the interests and desires of their loyal members. This data can be used to inform existing loyalty strategies or lead new ones.
The Dutch airline KLM excels in customer engagement by converging loyalty and social media. One of its initiatives aptly named “KLM Surprise” had the airline bestowing “random acts of kindness” on a few lucky travellers. KLM followed passengers’ airport tweets, checked their profiles and offered them personalized presents, based on their interests such as a gift card to their favourite retailer. In another campaign, passengers on a recent KLM flight were amazed to board the plane and find that their headrests were adorned with messages from their loved ones. The airline had secretly asked friends and family to write and draw pictures for the passengers in felt tip pen, and just before the flight, an attendant had placed each of these on the correct seat of the aircraft.
Following is the IGT use case that illustrates how associations can be more responsive and more personalized in those responses- through tracking comments and interactions such as likes, re-tweets and shares on social networks, blogs, forums and communities, — thus offering a more valuable service to members.
The above use case illustrates the social behaviour of three different travellers namely John, Emma and Paul and the corresponding response mechanism adopted by the airlines. John has a very good experience with a particular AB airline while Paul is highly dissatisfied with the crew of the same airlines. They end up writing their feedback on the Twitter platform of the mentioned airline. The airline chooses to filter out the sentiment echoed by Emma as she is talking about some other airline XYZ. It should be noted that John has a higher social influence than Paul as substantiated by his number of followers on Twitter. AB airline stores the social behaviour of its customers in the big data database with the details of Twitter handle and the message. These inputs are then fed to an intelligence engine which helps in identifying these customers based on the records in Reservation system. John is found to be a mid-value customer as per his details in the CRM system. Paul’s Twitter handle details were not stored in the CRM system earlier but after identifying him as a high value customer, the big data database is enriched with Paul’s information as well.
Once the airline discovers that John is showing the behaviour of a brand advocate by continuously tweeting positive experience with the brand, it decides to reward him. The airline might want to reward John with an upgrade in his FFP tier or offer him free miles/ any other ancillary services free of cost. At the same time, airline tries to address Paul’s concerns by making an outbound call from the contact centre and finding out the reason for his negative sentiment. This mechanism ensures that the airline responds to the social sentiments of its customers in real-time and works towards converting a disgruntled customer into a happy and loyal customer.
Stronger Brand Advocates
The era of Shared Loyalty has dawned, 30 years after the first frequent flyer program. Social platforms turn loyalty into something that can be shared across each customer’s own social communities to develop more new customers for the company.
When customers are engaged with the company, it becomes their default choice. They become advocates for the company. With social media, engaged customers can – and do – endorse the company to tens of thousands of people instantly.
The cost of new customer acquisition is usually significantly more than the cost of customer retention—up to 7x more according to KISSmetrics.Social mediums, like Facebook and Twitter, among others, gives customers the opportunity to not only interact with the brand but also share their experiences with others. Targeting and rewarding loyal brand advocates via social capabilities ensures that the same advocates plant the seeds that will grow new advocates for the brand, adding up to higher sales, lower cost of customer acquisition and less inclination to switch to another brand.
About the Author
Naveen Kapoor is the CoE Practice Head for IGT Data Warehouse and Business Intelligence Practice. Naveen holds a Masters in Business Administration degree from University of Dallas, Texas and has 18+ years of IT experience. He has been involved in many “end to end” enterprise level DW/BI projects and worked with many companies like Sabre, EDS, HP and American Airlines in Travel domain. He can be reached at firstname.lastname@example.org.