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Motivation techniques for customer retention

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The gates have opened and now more than ever before, customers are being bombarded with similar marketing techniques on the Internet, mobile devices and mass media outlets. Although branding decks and business pillars are being bandied about, most businesses do not understand the importance of differentiation and, therefore, are not getting the results SEO and marketing professionals are promising.

Yet, business owners and marketers continue to beat the same drum and hope if they hit it harder, successful results will be incoming. Some companies spend all of their marketing dollars attracting new customers and have not paid attention to the statistical reality that it is less expensive to sell new things to current customers. It is also cheaper to retain current customers than continue to pay the high cost of the shotgun approach.

Maritz Motivation Solutions is in business to do just that - maintain strong relationships with current customers and employees. In fact, that is what it is all about, right? Nurturing relationships to build trust, confidence and loyalty. Maritz has been using techniques that will help businesses actually spend less for their sales.

We decided to interview Barry Kirk, vice president of loyalty Strategy for Maritz Motivation Solutions, to learn a few of their strategies and suggestions.

Faleris: What is Maritz's target audience? (what size companies or types of business professionals)

Kirk: Maritz Motivation Solutions works with Fortune 500 companies across multiple industry verticals, including financial services, hospitality, tech and healthcare. Our target clients are seeking solutions to drive engagement with their employee community, sales force and/or customers. Our consumer loyalty programs often have a membership size of 5+ million members.

Faleris: Can you explain gamification for our readers.

Kirk: Gamification is the application of game design techniques to non-game experiences like training applications or loyalty programs. This is distinctly different than adding a game to something, a common tactic in the marketing world (i.e. spin-and-win or puzzle game used as a promotional campaign). Gamification is not an add-on – it’s a technique of integrating game elements to the existing core experience to make it feel more game-like – that is, more social, mastery-building or exploration-based. This can be done through the application of game dynamics like competition, collaboration or randomness, or game mechanics like leaderboards, missions, badges and virtual rewards.

Faleris: Why would a company want to use gamification tactics?

Kirk: The answer to that is simple – loyalty programs are, for the most part, boring. They are stuck in a “do this, get that” model that has remained virtually unchanged for the last 40 years. They have also been less than effective at embracing new marketing technologies like social media, location-based services and mobile apps.

Loyalty programs are in dire need of an engagement technology that they can easily adopt and gamification answers that need because its really just an evolution of the traditional loyalty model --- points, levels and rewards are core to most modern loyalty programs and they are also game mechanics. So, loyalty programs are already gamified, just at a very rudimentary level. We can now take that much further and to greater effect.

Faleris: What is the difference between motivation programs and typical customer rewards programs?

Kirk: Typical consumer loyalty programs are what I call “mercenary-based” because they essentially buy the loyalty of customers. Now, that can be an effective strategy, at least until your competitor is willing to buy the loyalty of those same customers for just a little bit more than what you are offering.

We work with brands to develop programs that encourage “true loyalty” or loyalty that actually resists the competitive offer. Of course its not logical to choose a brand that’s not offering the best deal financially, but consumers will do just that if there is an emotional or social connection with the brand that transcends the mercenary impulse.

We help our clients move in the direction of true loyalty by incorporating concepts from behavioral psychology and neuroscience in the design of our programs, helping them evolve their programs into more engaging experiences that connect with the core human desires for creative expression, social bonding and choice.

Faleris: Do you have any statistical information that demonstrates the effectiveness of these programs?

Kirk: It's important to understand that a brand will never attract 100 percent of their customer base into their loyalty program. In fact, most companies would be doing very well to engage 30-40 percent of their customers as program members. But the goal of these programs is not to engage all customers, but rather to incent the participation of your best and highest potential customers.

Focusing on those two segments will show the best results and highest ROI for your program investment – for example, loyalty program members generally respond to offers and campaigns at 6-10 percent higher rate than non-members. And in a recent Maritz industry study, 57 percent of respondents agreed with the statement, “I modify when and where I buy, in order to maximize the [loyalty benefits] I receive,” while 46 percent agreed with the statement, “I modify what brands I buy to maximize the [loyalty benefits] I receive.”

Faleris: Do you feel that both clients and employees should be motivated through "programs"?

Kirk: I would not say that all companies need employee engagement or customer retention programs. However, any company that takes either employees or customers for granted is asking for declining profitability and decreased retention, because your competitors are always looking to tempt away your best employees and most valuable customers. Its been proven repeatedly that well-designed motivation programs that include a mix of earning opportunities, rewards and targeted communications are the most effective strategy for retaining these key constituencies.

Faleris: Are the programs costly?

Kirk: Effective loyalty programs generally require a significant investment in strategy, technology, operational support and rewards -- most companies look to a partner to provide some or all of these components. But keep in mind that a well-designed and implemented loyalty program will reap incremental revenue well in excess of its operational costs – this is, of course, the goal of a loyalty strategy: to drive increased profitability through a lift in customer spending and retention. So your focus should be as much on your anticipated ROI as it is in the cost of the program.

On the question of rewards, my experience is that a variety of reward options is always the best strategy. In-kind rewards – those that are owned by the brand and can be offered to the member at nominal cost – can be highly effective at driving loyalty because the reward itself deepens the member’s experience of the brand.

Examples of this type of reward might include a free pay-per-view movie from a cable provider’s program or a logoed t-shirt from your favorite restaurant’s program. However, as members move up in your program, they are likely to tire of having only in-kind goods as reward options. Your best customers will be looking for choice in their program experience, which you can offer by also include a variety of external reward options like merchandise, gift cards and travel.

Faleris: Do you feel motivating clients is mandatory in the current commercial climate?

Kirk: Motivating customers has never been more critical as brands face a triple threat in the marketplace, including: 1) increased attention scarcity due to the explosion of channels and messages confronting consumers, 2) a decline in overall trust in major brands and institutions, and 3) decreasing engagement in traditional loyalty programs.

The necessary response is for brands to “rethink” the loyalty experience and start seeing customers differently. I always advocate the belief that customers are human beings first and that earning and retaining their loyalty starts with this fundamental understanding. If you truly understand that, you’ll offer them an experience that surpasses expectation, delivers true value and even includes an element of surprise now and then. This is how you earn some of their precious attention currency and their loyalty.

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