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The reach of the Web and advances in database technology have made this same level of personalized attention attainable by e-tailers thousands of miles away with a virtual staff customers may never meet. With customers now free from the shackles of distance, they can comparison shop and fill out a profile that enables a personalized element where e-tailers remember their name and preferences at a level that exceeds what a brick and mortar retailer can provide.
The Web is empowering customers, making them more demanding of a great shopping experience, and consequently more fickle than ever before. Customers today have the world at their fingertips and keeping them loyal has become even more difficult. This is why websites are failing at an alarming rate. It's more obvious than ever before that success lies not only in attracting customers, but in retaining them. Although many of the strategies for building loyalty remain unchanged, many companies have failed to learn how to transfer these techniques to the web.
In e-Loyalty, leading customer loyalty expert and nationally acclaimed speaker Ellen Reid Smith offers the definitive and essential step-by-step guide to creating and managing highly effective online loyalty and retention strategies. In Internet parlance, she has mastered the secrets of creating "site stickiness."
In this breezy and invaluable guide, Reid Smith walks readers through strategies and techniques for humanizing digital loyalty. Using some of the Internet's leading consumer and business-to-business websites as case examples, she takes readers from the early stages of implementing e-loyalty marketing programs all the way through budgeting and evaluating their impact. From explaining the key concepts of e-loyalty, to advising on critical website design factors, the techniques Reid Smith imparts in this book can be applied by companies of any type or size—from the Fortune 500 companies that she is regularly called upon to consult with to Internet start-ups.
Most of all, what truly distinguishes Reid Smith is her unwavering focus on not just retaining customers, but retaining a company'smost valuable customers through customer lifetime value modeling. Her advice will help companies ensure their retention programs are focused on the most profitable customers. Ever the visionary leader, she recognizes that this aspect of online marketing will increasingly become the most important issue facing websites everywhere.
No matter which segment of the online economy you hail from, this is the essential handbook for initiating, cultivating and extending that rarest of company assets—e-loyalty.
Loyalty marketing has become a worldwide trend in some industries. The reason for this trend is simple: intense competition for a larger share of an industry's best customers and the realization that share-of-market strategies based on advertising-driven acquisition programs do not maximize profits over the long haul. It has been a difficult lesson for offline marketers to learn. With leading dot com companies spending unreasonable proportions of their marketing dollars on advertising, and very little on loyalty marketing to build share-of-customer, it appears to be an equally hard lesson for online marketers to learn.
I'm sure you've heard it before but it's true, loyalty marketing all started with airline frequent-flier programs. But have you heard the rest of the story? Robert Crandall, CEO of American Airlines when the AAdvantage program was born, said he would discontinue the AAdvantage program if it were only possible. You see, once the other airlines matched the program there was little loyalty advantage in just the miles. It was merely an additional cost of doing business. So, Mr. Crandall, being the smart man he is, had his marketing staff differentiate the program by adding elite tiers, which were unfortunately also matched by its competitors. Then customer services were layered onto these best customer tiers, and these, too, were matched. To make matters worse, American Airlines' competitors invited AAdvantage gold and platinum members to instantly become an upper tier member in their own programs. The one-upmanship was maddening. The frequent-flier wars continued to escalate with point promotions,redemption specials and additional member benefits. American Airlines, once known for developing the greatest competitive pricing software in the industry, had to develop the same rigor for monitoring their competitors' frequent-flier programs. What was the flaw in this strategy?
The programs were too easily matched by competitors. Are they effective today? Due to the high cost of launching a program, they are extremely effective in keeping new airlines from entering the market. But their real effectiveness is providing a reason for customers to be tracked so the airlines can target these customers with special benefits.
With accurate customer data the airlines are able to make better marketing decisions, improve forecasting and, most important, build relationships with their best customers to increase share-of-customer. Additionally, loyalty strategies that were developed to support the frequent-flier programs have been adopted by many industries. In fact, many of the best direct marketing techniques we use today--targeted marketing, personalized marketing and relationship marketing--were perfected by the airlines. That's why many of the Web marketing terms we use today, such as permission marketing and viral marketing, are tactics the airlines have employed for years, but have called "membership marketing" and "member-get-member marketing." But it wasn't just the science of loyalty marketing that the airlines perfected; they also perfected the art of building a lasting relationship.
Airline marketers are also leaders in some of the most profitable database mining techniques: database design and analysis, profile-driven communications and collaborative filtering. Because the airlines had some of the largest customer databases, airline marketers learned to "slice and dice" their databases, maximizing each direct marketing campaign. And to support these expensive direct marketing campaigns, the airlines turned their customer information, database skills and relationship-building tools into gold. There were years when the AAdvantage program was more profitable than airline operations due to the partner revenues and incremental revenue generated.
So it shouldn't be surprising to find that the leaders in loyalty marketing, database marketing and now Web marketing came from the airline industry. But before readers who work in the hotel, car rental and creditcard industries get too upset, I want to add that these industries--often working closely with the airlines--have also helped to perfect many of the loyalty marketing tools we use today.
It hasn't helped my profession that e-marketers use e-loyalty terms like we were all speaking a different language. I hear terms such as targeted marketing, relationship marketing, retention marketing, frequency marketing, loyalty marketing, database marketing and many others used interchangeably and inappropriately in documents written by marketing professionals and marketing novices alike. These terms are essentially tools and tactics under a big umbrella of loyalty marketing. But to ensure added confusion, new "webified" marketing terms like permission marketing, viral marketing, opt-in and personalization have been added to the e-loyalty marketing genre. At their core, all of these terms are marketing techniques, and all are used in loyalty marketing strategies to keep customers longer and increase share-of-customer. So why couldn't we just stick with the conventional "e" system that was working so well? The answer is that e-business, e-marketing and e-support have meaning for us. That's precisely why I propose we keep life simple and stick with what we know: e-loyalty. Once all the world is one e-marketplace, we can drop the unnecessary "e" and go back to normal.
However, before I "e-ify" everything, I want to get us all on the same sheet of music when it comes to using the time-honored terms of loyalty marketing. At the risk of becoming a lightning rod for controversy, I'm going to try to define the nuances of these marketing terms.
Targeted Marketing. Uses mass and direct marketing mediums to target different customer segments of the population using different communication messages. Unfortunately, this term has been rendered almost useless because old-school advertisers now use the term to mean buying targeted media rather than developing unique messages for targeted customer segments.
Database Marketing. Uses automation of customer and prospect information to generate the highest response rate possible through the constant closed loop process of trial, measurement and revision. While database...
|Part 1||e-Loyalty: What It Is and Isn't|
|Where e-Loyalty Marketing Got Its Start||3|
|Call It What You Like, but It's All About Loyalty||5|
|Implementing e-Loyalty Applications Does Not Constitute e-Loyalty||10|
|The Youthfulness of e-Marketing Terms Inspires and Misleads||12|
|Why e-Loyalty Is the Rage||15|
|The Really Scary Part||18|
|What Generates e-Loyalty?||19|
|Part 2||Humanizing Digital Loyalty in an e-Crazed World|
|Buying into the Loyalty Mantra||31|
|The Seven Steps to Designing an e-Loyalty Strategy||34|
|1||Clearly Establish Your Goals and Objectives||34|
|2||Identify the Customers You Want to Be Loyal||41|
|3||Develop Your Website Around an Intelligent Dialogue||66|
|4||Design Your Website for Your Most Valuable Customers, Not Your Average Customers||90|
|5||Formalize an e-Loyalty Program for Your Most Valuable Customers||110|
|6||Persuade Your Customers to Want a Relationship||148|
|7||Constantly Improve e-Loyalty by Listening and Measuring||156|
|Part 3||Making e-Loyalty a Reality for Your Website|
|Developing an Implementation Plan for e-Loyalty||177|
|1||Develop and Test e-Loyalty Concepts to Finalize Your e-Loyalty Strategy||180|
|2||Develop an Initial Business Case to Test the Details of Your Program Concept||182|
|3||Create a Customer Contact Plan||183|
|4||Develop a Partner Strategy||185|
|5||Determine Resources Required, Best Sources and Associated Costs||194|
|6||Finalize the Program Forecasts and Budget||196|
|7||Adopt an Extended ROI to Justify and Defend Your Budget||197|
|8||Develop a Plan for Measuring Success||206|
|9||Develop a Viable Timeline with Implementation Leaders||209|
|The Four Biggest Challenges in Implementing an e-Loyalty Program||211|
|1||Integrating e-Loyalty and Adopting It as a Business Goal||212|
|2||Gaining Consensus and Garnering Support||214|
|3||Maintaining a Customer Lifetime Value Focus||218|
|4||Appropriating the Funding and Resources Required||221|
|Part 4||Critical Website Design Factors and Some Great Examples|
|The Basics of Website Usability||227|
|The Ten Most Important Web Design Concepts to Master for e-Loyalty||232|
|1||Make Your First Impression Count||234|
|2||Make It Simple to Solve Problems||240|
|3||Design for Your Best Customers||244|
|4||Create Value and Engender Trust||248|
|5||Include Features That Start and Continue the Dialogue||251|
|6||Seize Every Opportunity to Build Community||254|
|7||Deliver All Parts of the Sales Cycle or Subject Covered||257|
|8||Provide the Best Service You Can Afford||260|
|9||Make It Easy to Recommend Your Site||264|
|10||Create an Opportunity Cost for Defection||267|
|Part 5||Final Thoughts|
|The e-Loyalty Process Shouldn't Be Overwhelming||273|
|Resources to Get You Started||275|
|The e-Loyalty Website as a Resource||277|
|The Future of e-Loyalty||278|