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Why CRM and Loyalty are NOT different things

This post originally appeared on LinkedIn here.

What can ruin your day?

A bad customer service experience. Spending 10 minutes trying to figure out how to redeem a loyalty “reward”. Receiving a snazzy marketing email that offers a discount off the product you’ve just bought at full price.

Companies find no end of ways to screw up customer relationships – often through the acquisition of new CRM or loyalty technology that was aimed at improving customer relationships.

Recently I’ve been hearing a lot of talk about the need to “join up” CRM and Loyalty programs, like this one from AIMIA that recommends “integrating” the technology behind them. Whilst that may be a step in the right direction, let me explain why it’s not enough.

CRM and Loyalty are NOT different things, and shouldn’t be treated that way.

Old World Loyalty, meet New World Loyalty

In the “old world” of Loyalty and CRM, it might have seemed sufficient to gather *lots* of data in a (very expensive) loyalty platform and use it for customer insight, recognition of “best customers”, earn-and-burn… meanwhile running CRM campaigns based on little more than an email address. Loyalty and CRM running in two very distinct business “silos”, with their own agendas around retention and acquisition.

That model doesn’t work anymore, for the business or the customer – and customers are savvy enough to realize they’re being sold short.

Denis Pombriant just wrote an interesting book about how “loyalty is broken”. His solution: ongoing, meaningful, relevant customer engagement. It’s a quick read, and worth it. Loyalty to a brand requires more these days than the ability to earn points or stamps and redeem them for rewards; it requires strong, differentiated brand values, an authentic brand “voice” and a genuine appreciation of what customers want.

Old world Loyalty was a one-size-fits-all approach, with customers becoming loyal to the perks rather than to the brand. A genuine relationship it certainly wasn’t.

CRM Has been Travelling the Wrong Path

CRM has suffered a similar fate, thanks to the advent of email marketing. Before email, in the days of direct marketing, marketers took time to think about their target customers and ways to emotionally connect with them… because it cost money to send mailings. They collected data and created customer segments, they measured and they analyzed.

Then along came email, and it became a volume game. Email was cheap, it gave the illusion of being easily measurable with vanity metrics such as “opens” and “clicks”, and it was seductive to be able to hit and instantly connect with thousands of unsuspecting subscribers.

Marketing “best practice” suggested that marketers should remove as much friction from the subscription process as possible, harvesting email addresses to feed a heartbeat of un-targeted “email blasts”. Was that what customers wanted? Who cares, when the clicks are filling the website funnel.

As with loyalty practices, a genuine relationship it certainly wasn’t.

Moments of Truth Require a New Way of Thinking

Customers want to feel pleased, valued and cared for at every interaction with a brand. They want to be spoken to with a genuine, authentic voice and they want to be told about things that matter to them. They want to be recognised as a valued customer, whether they’re talking to customer services, being reminded about their points balance, or receiving sales offers.

The lines between loyalty and CRM are now not only blurred, the two functions need to operate completely as one. Consider a retail purchase, made by James – a member of the brand’s loyalty program. He adds a jacket to his ecommerce basket, but then decides to check it out in-store before committing. He walks into store that afternoon, and receives a “hi, welcome back” message on his iPhone. He is greeted in store and asked if he’s still interested in the jacket. He makes his purchase then and there, sees his updated points balance on his phone and is prompted to share his thoughts on Twitter.

This is the future of retail, and it won’t happen if loyalty and CRM are running as separate systems.

We’re well into a new “always on, always now” digital era, where customer expectations are way higher than in the days of dial-up and the yellow pages. Their buying behaviour has changed too, in ways that can’t easily be modelled with separate “marketing”, “sales” and “service” business functions. Customers can share experiences, post reviews and choose to stay or switch in a heartbeat.

If James calls customer services afterwards, his experience will be so much richer if the agent knows that A) he is a loyalty member, B) he just purchased a new jacket in store, and C) he’s in the top 20% of customers by annual spend.

Loyalty is all about positive experiences in “moments of truth”, when a customer touches a brand either in person, on the phone, on the web, through an app, on social or email. These moments need to be handled consistently well, with a focus on delivering customer value.

How can you achieve that if your CRM and Loyalty programs are loosely coupled – or worse still, not coupled at all?

Remember the “C” and “R”, Not Just the “M”!

It’s time to remember that CRM is about customer relationships, not “email blasts”, and that customer relationships require a brand to be loyal to its customers… loyalty is a two-way street.

It’s time to make all customer experiences equally relevant, meaningful, engaging, rewarding. It’s time to throw away the old model of “CRM” and “loyalty” systems, and embrace the new world where they’re one and the same thing.

Do you agree? Let me know in the comments, thanks!

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