Do Loyalty Programs Really Work?

Written By Ted Grigg

I believe that well conceived loyalty programs provide both immediate and long-term benefits to the organization. But how should the direct marketer go about proving the effectiveness of Customer Relationship Marketing activities?

As the sophistication of loyalty programs increase, so does the evaluation process.

The increases in customer loyalty budgets should translate into share-of-customer growth and additionally, more cost effective acquisition efforts. These need to withstand the scrutiny of the CFO with quantified results.

But here’s the rub. What would have happened in the absence of any loyalty program?

How does the marketer create a control group that totally isolates customers from the overarching influence of powerful loyalty programs? I have yet to see results that do not create more questions than they answer.

In today's multi-channel environments, it is almost impossible to isolate customers totally from their peers and other indirect influences.

It appears that the changes in the marketing space have placed new demands on direct marketers. We must now confront the same analytical problems that our branding brothers face. It works, but what yield am I getting from my marketing budgets?

We are well beyond the simple cost-per-sale and cost-per-customer indicators with new, more advanced evaluation criteria. We must now begin to apply hard numbers to soft data. Judgment replaces certitude when assigning credit to various media expenditures and complex, interdependent strategies.

In a sense, the promise of strategic integration has outpaced our ability to evaluate it.

There is a crying need to train analytical staff to take on more strategic and broader roles in today’s organizations. We need people who not only know analytics, but individuals who know how to create actionable recommendations from an oversupply of information.

Do you think that loyalty programs generally work? Or are there now too many such programs for consumers to care about anymore?

Ted Grigg
What Ted does best is increase response by beating controls, applying multiple channels to target markets, profiling customer databases and generally improving sales results using deep direct marketing principles. Regard Ted as your personal “think-tank” for your direct marketing planning and strategy development. After analyzing several hundred million dollars of direct response testing in all channels, he brings with him the knowledge accumulated from seeing what tends to work and what does not. Having worked on both the agency and client side of direct marketing, Ted understands the unique challenges faced by agencies and their clients. Agencies need to sell themselves and deliver sales results. And clients not only require results, but need ideas they can implement while focusing on tracking response using a relational database. If Ted brings nothing else to the table, by profiling customer databases and creating response propensity models, he quickly becomes the clients’ expert on their own customers. His formal training includes a BA from Abilene Christian University and two years of graduate work at Texas Tech University. For a national direct-to-consumer insurance company, Ted developed a revolutionary direct mail format that beat most standing direct mail controls for this company. He also generated more profitable business for this firm by expanding compiled list circulation of less than 10% to more than 30% of total direct mail circulation within a year. (Insurance business generated by direct mail demonstrated higher persistency than customers coming from other media such as print and DRTV.) Ted’s plan and implementation of Medicare lead generation campaigns for over 60 regional and national HMO/PPO organizations combined multiple channels that surpassed some sales projections by as much as 60%. Additional industry experience over the last 30 years includes B2B or B2C for finance, securities, home security, healthcare, insurance, manufacturing, government, technology, nonprofit, retail, transportation, communications, and multiple categories in the services industry. As the founder of Wyse Direct (a division for Wyse Advertising in Cleveland, OH), he successfully launched and branded a new technology product for Seiko-Mead by supporting a nationwide sales team with a predictable flow of qualified sales leads. While a VP of new business development for the Grizzard Agency, Ted acted as the direct marketing strategist who refocused the agency’s culture to attract new commercial and fundraising accounts. At the time, Grizzard was essentially a direct mail fund raising production operation. His leadership and team building effectiveness prepared Grizzard for the eventual Omnicom acquisition and Grizzard’s successful integration into Omnicom’s large group of advertising agencies. An independent DM consultant, Ted continues to write numerous articles and conduct webinars on direct marketing techniques. He also wrote The HMO/PPO Marketing Plan — A Step-by-Step Guide publishing it through Executive Enterprises in New York City. During his youth, Ted was raised in Lille, France with his missionary family attending French schools becoming fluent in reading and writing French. Away from the job, Ted is a computer geek, blogger and science fiction buff!
http://www.dmcgresults.com
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