As corporates transition from a Brand & Business- centric structure towards a Customer-Centric or retail structure – the impact cuts across the organization functions as we know it, financial reporting (eg by brand/business profitability vs Customer profitability etc… ), HR & technology, and of course Marketing and legal.
Over the years large enterprise corporate brands (with multiple businesses, products and services) will typically call us to enquire on managing their customer loyalty programs, many of them came to us in various stages of implementation (some already implemented)…
One of the key question that always seems to be constant with large enterprise corporates is :
Do we do a single enterprise-wide loyalty program across businesses and brands or do we do different programs for each brand/business?
This is a very simple question – and we struggle to not sound complex in our answers, but the fact remains that many of these questions come in different stages of the program(s) – some post-implementation!
So, to help you in your journey to transition from a business-centric organization structure to a customer-centric team, allow me to extend a 6-point checklist. We believe this checklist (in this specified order) should make things easier for you. We’ve also attempted to share what we typically see as emerging solutions by way of a 4-point solution summary:
- Customer: It is important to view your ambitions from a customer lens and respond to “How will my customer be happier off” or “better off” with my decision? A useful exercise that may typically help you achieve this is a mapping exercise with an illustrative Venn-diagram that demonstrates graphically the overlap of customers between various brands & businesses. And then to think through the ‘relevant’ value-proposition for each segment of that Venn-diagram, are the segments heterogenous or homogenous, will there be canabalisation/migrations (Cross sell & upsell opportunities/issues) between brands or will there be increased cross-sell/upsell and its impact on the total customer value and business impact.
- Financial: Once the draft customer value proposition is proposed, it is critical to evaluate the financial viability of the proposition. Typical questions one needs to work through are (1) Valuation of the customer and apportionment of costs, How do we measure ROI / ROC / LTV Customer value? (2) Do we have a single loyalty currency and if yes, how will it be charged / affordable across all brands? (3) How will we allow exchange of currencies? (4) How are the liabilities proposed to be apportioned? (5) How do we deal with brands and products that are earn friendly and those that are burn friendly (commodities, utilities, necessities, desirable, luxury)?
- Data: The cliche’, “data is the new oil” is not an overstatement. All brands will have the ambition of acquiring from other brands and retaining their own customers. And this risks customer resentment due to over communication (spam!). It is critical to define upfront the rules around customer permissions, data ownership, privacy, confidentiality, and the enforcement mechanisms via security applications.
- Technology is the most tangible of all items on the checklist. And it is not uncommon to have many teams have their strategy driven by the available technology. However, ONLY AFTER have we gone through the first three items should we review technology as an enabler to realize our strategies. It is critical to think through systems integration – Building technology across different platforms, and determining how practically will we host, share and offer access.
- Marketing and Communication : While being fluid and abstract, it is important to think of the relationship between the corporate brand, the individual consumer facing product or service brands, and their relationship with the customer. The relationship and the ability of various brands to execute their own promotions and communications is important to design into the program structure.
- Human Resources (HR) – All organisations need to align individual aspirations of growth and career with that of the corporate, it is best to anticipate the HR issues that will emerge from a corporate initiative. Typical questions are: How do we form the team that manages the relation between brands and the program. Softer organisational issues that typically need to be addressed include how we control and provide access to enable marketing while maintaining the individual brands and the larger corporate objective.
Coming to Solutioning – Lest we be accused of raising difficult issues (without attempting to resolve them), here are some pointers. The best fit solution often depends on the brands and customer audience and segments, corporate culture, structure and policies, here are 4 possible solution structures that we feel are can help enterprises and organisation build their customer asset:
- Single Program vs Different programs with a possible single fungible currency (this is best done when beginning afresh, a federal structure with a central governance, that offers segmentation solutions, bonusing, creating relevance, and can facilitate a central structure with independence and flexibility for brands to manage their own brand promotions and structures, the score on simplicity for the customer is in the middle, but it scores lower on recognizing the customer as an enterprise asset)
- Multiple programs with different currency this situation typically occurs when several brands and businesses within the enterprise already have deep engagement and loyalty with their existing programs. Introducing cross program exchange rates between the programs enhances the perceived value by the customers (this facilitates complete independence of brands but scores low on extracting maximum equity for the enterprise, also low on customer simplicity and wallets, added with multiple communication points between the customer and programs as well as the complexity of exchange of currency to extract value)
- Differentiate mutually exclusive customer segments such as (exclusive Luxury segments, Wide spectrum use segments, B2B segments, mass consumer goods) – In this solution the programs need to be independent with independent value propositions and mostly mutually exclusive customer audiences but with a single currency that allows for simplified technology and platforms, accounting, and possibly some members to pool earnings (for this – benefits are clearly identifiable differential value propositions but an ability to club currency to pool for rewards, simplifies communication into 3/4 programs)
- Creation of a new “Customer Asset Organization” that owns and hosts the customer asset pool with agreements on marketing, data, technology, finance, legal, ownership etc. between the businesses (this is easier said than done, needs corporate governance to address concerns of customer data ownership, customer asset valuation, data sharing, marketing access rights, creation of a new program relationship brand)
Whichever the solution whether these or another (there are more…) one thing is clear is that Enterprises need to sense the direction of the wind and strengthen their Customer assets going forward, with information and insights that help increase profitability and growth.
Wrapping the program around a single e-commerce/mobile commerce structure offers a seamless solution and create the single biggest incentive as a tool for the customer to participate with active engagement. Members of the program become an invested stakeholder in the process through issuance of points and sharing of information.
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