I recently escaped the rat race to take a relaxing vacation on a warm, sandy island where computers were few and far between. I could not connect to the Internet; therefore, I received no e-mails. Except for a couple of miscalculated bar tabs, there were no data quality issues. Though this was incredibly refreshing for me, by the third day I found myself going through a form of CRM withdrawal. Not that I missed working, but I missed companies battling for my attention as a customer.
You see, I traveled to this island on frequent flier miles. I paid for my hotel with discount coupons acquired by cashing in frequent flier miles. My luggage was purchased using points from an auxillary credit card program. But, once on vacation, where was the relationship management? I was not receiving any attention and, to be quite frank, my feelings were hurt. Poor Larry.
It occurred to me that there is probably a small subset of CRM that exists to drive short-term loyalty. Even though the major goal is to create long-lasting, profitable relationships, there seems to be opportunity to create and exploit some form of temporary or short-term loyalty. These opportunities seem to exist during events that cause customers to act differently — such as a holiday, a change of season or a vacation. In some other situations, customers are a captive audience and "loyalty-like" offers could cause them to increase their purchases in the short term.
During the year, many of these events occur that cause us to change our behavior for a short amount of time. Whether it is the hassle of finding a costume for Halloween, the bliss of sunny days in Chicago or the torment of shopping for the holidays, we change our purchasing patterns and daily routine to accomplish these necessary activities.
This concept seemed to jump out at me while I was on the aforementioned vacation. Here I was in a foreign land, with little knowledge of the local brands, with no specific plans and, most importantly, I was in a spending mood. Though my plans were sketchy, I knew a few things for certain:
- Several times a day I would need to eat preferably something I could not get back home or food that is bad for me.
- Because the island has something that Chicago doesn’t clear water I knew I wanted to participate in a water sport.
- We would need some form of transportation to get from here to there.
- At night, we would be interested in some form of entertainment.
- While on vacation, I am an avid collector of toothpicks, umbrellas, large flowery things, plastic fish and small mechnical boats that originate from multicolored, neon beverages.
Now, don’t misunderstand me. There was no shortage of advertising. I saw three or four scuba diving shops per block during my cab ride to the hotel. The choices were certainly plentiful and all appeared to have some sort of daily deal or catch, but these offers were similar to multiple gas stations at a corner same price, no differentiation.
The issue for these businesses is the following: for the next five days, how do they capture the largest share of a tourist’s wallet? If the service and execution are good, then the tourist may come back at his/her next visit or tell a friend (long-term loyalty), but that could be years away. It would be much more beneficial for businesses to capture as many purchases per person as possible during any single trip.
The correct solution could be for the different businesses on the island to band together to form the opposite of a buying group a special kind of selling group. This would be similar to the airlines offering frequent flier miles if you use partner carriers, rental cars or hotels or even the types of promotions you see at ball games such as "Take your ticket to our restaurant and get half off if the Cubs win." (Obviously, in a short-term loyalty situation, you will need to offer your customers better odds than the Cubs actually winning.) Essentially, the island could be carved up by partnerships where a scuba shop would refer a lunch restaurant, which would refer a venue for a live band that evening, which would offer free drinks or half-price admission if referred from one of their partners.
Note that short-term loyalty forces businesses to always discount because there is no time for customers to build up points in order to reap rewards. Any type of program that will not help the vacationer immediately would be viewed as a hassle. In my opinion, if I am forced to calculate how often I will need to use a service in order to identify if I will receive any benefits while on vacation, I will pass.
Once these programs, partnerships and selling circles are created, the next challenge would be market awareness. Advertising and brochures would not work because it would be too difficult and time-consuming for travelers to figure out the right solution for them. There would need to be a sponsoring entity that helps create the awareness of the program. The maintenance of the program would also be important, especially in a vacation situation, because the partner companies may or may not have the internal system sophistication to track and reward points. Even though Don Sotto’s dive shop may have state-of-the-art dive boats, it probably does not have the sophisticated database and programming expertise of the Hyatt to maintain this type of loyalty program.
Awareness, at least in this vacation example, needs to stem from the point of entry, like the hotel or the travel agent. These types of companies usually have the wherewithal, financially and technologically, to maintain, promote and direct the selling groups. For some amount of time, these organizations also have the customers’ attention. Awareness could be spread through television, at breakfast, with leaflets on the bed or descriptions in itineraries. Just imagine the amount of money these organizations are leaving on the table. The travel agent does not reap many benefits once the vacation is booked, and the hotel loses a lot of business as visitors leave to eat, drink and entertain themselves. Fees for the maintenance and usage of such a tracking system could be recovered in incremental business received.
However, in the non-vacation space, is there an obvious point of entry? If we look at specific holidays like Christmas, Thanksgiving or Halloween, is there an obvious place consumers "begin?" At Halloween, for example, an individual needs to buy a costume, attend a party, buy candy and may want some literature on the holiday itself. Who/what/where is the point of entry? Who is in charge of awareness?
What about a "loyalty portal" on the Internet? Imagine going to a Web site and entering a shopping list, a list of interests or activities or a list of companies you would like to do business with for some period of time. For example, during the summer you may want to join a pool or a tennis club, take in-line skating lessons, rent a beach house and go mountain biking. You could register these interests in a loyalty portal, and your own personal loyalty program will be created, complete with a list of discounts, further discounts for usage, the list of companies you will do business with, contact names and a schedule. These portal participants could use their combined buying power to achieve the correct mix of services and prices, and you receive instant recommendations for companies and rewards for using the "group."
Many situations in our daily lives cause us to be a captive audience. In these situations, for one reason or another, an organization has won our attention for some determined or undetermined amount of time. This may include visiting a Web site, shopping at a store, reading a magazine or riding public transportation. The same type of situation that we talked about in our summer example exists in these situations, but the time frame is now even shorter (much shorter for a Web visit) and will probably not span multiple companies (with the exception of possibly a shopping mall). In these examples, the company must quickly determine the needs of its customer and make a value proposition without the benefit of specific information about the customer’s interests or needs.
In a retail example, the idea of discounting at the cash register is a good one and will contribute to long-term loyalty but may or may not increase the size or volume of the immediate purchase. Let’s take a look at what the future may hold: A customer types his/her shopping list into his/her cellular telephone, uploads the list to the supermarket’s Web site and out pops a lists of discounts if the customer agrees to buy a few complimentary items (cross-selling) or larger volumes of certain items (cases of soda instead of six packs). The key in this example is the consumer did not have to do much thinking, coupon research or calculations to figure out the best deal. Taking this example one step further, imagine the option to purchase the items with a credit card over the phone (therefore avoiding check-out lines).
Note that although many of these short-term loyalty situations are aimed at maximizing the immediate purchase, they will also contribute to long-term loyalty as well. For example, if the consumer likes the in-line skating rental shop that the loyalty portal recommended, he/she may specifically request that shop when looking to rent snow skis.
The moral is that companies, whether they are Fortune 500 company or a little Caribbean island, only have a limited amount of time to influence purchasing decisions. To be successful, they must be creative.
Register or login for access to this item and much more
All Information Management content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access