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Former Member

Profitable customer relationships are the lifeblood of any commercial enterprise. The need for increasing focus on the customer and customer loyalty comes from the realization that dissatisfied customers are usually gone for good, and more importantly, they can have considerable negative repercussions on the brand. Satisfying and retaining customers, on the other hand, requires up to a fifth of the expenditure and resources than customer acquisition and opens up the potential for additional sales (cross-selling).


Yet studies from Gartner and Forrester Research show that companies still do a decidedly poor job of nurturing, cultivating or even reactivating customers in order to drive sustained revenue growth, loyalty and bottom line performance. Pretty often, marketers are flying blind when it comes to leveraging customer data and analytics. Studies show that marketers are also struggling to gain a true and timely view of the customer due to inadequate or incompatible IT systems and databases, siloed data in functional areas and a limited strategic focus or management mandate on customer data integration. As a consequence, pretty often marketing executives state they have no system for reactivating dormant or lost customers, and only half have a strategy for further penetrating or monetizing key account relationships systematically. 


To address this issue, customer loyalty management should be made part and parcel of a comprehensive CRM strategy. As such, modern loyalty management systems have to be CRM-centric, integrated in sales, service, and marketing, and multi-channel enabled, giving a 360-degree view of the customer at any point of contact. The system should enable brand owners to design a flexible loyalty management strategy, and provide tools to model various loyalty enhancing tactics around member psychographics, award/status levels, and rewards/points. To react to fast changing business conditions, a robust rule modeler and processing engine are a necessary component of a loyalty solution. It is important that business users are able to model new rules and offers, without the intervention of IT.


In turmoiling economic conditions, loyalty customers become even more important and attractive: Retaining satisfied customers reduces costs and frees up marketing budgets for other important activities.


This blog was jointly written with Dr. Ralf E. Strauss, Head of CRM Marketing, CRM Global Product Management.

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