e-Loyalty: How to Keep Customers Coming Back to Your Website


Customer loyalty has always been grounded in human interaction. Years ago, you'd walk into your favorite store and the staff would know your name, they'd remember your favorite brands and they'd smile, nod and take pains to make sure you came back. Because you were treated well by a personable, friendly staff—and because you were physically constrained by time and distance to limit yourself to particular stores—you'd go back to the same stores again and again.

The reach of the ...

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Customer loyalty has always been grounded in human interaction. Years ago, you'd walk into your favorite store and the staff would know your name, they'd remember your favorite brands and they'd smile, nod and take pains to make sure you came back. Because you were treated well by a personable, friendly staff—and because you were physically constrained by time and distance to limit yourself to particular stores—you'd go back to the same stores again and again.

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.

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Product Details

  • ISBN-13: 9780066620701
  • Publisher: HarperCollins Publishers
  • Publication date: 10/17/2000
  • Edition description: 1 ED
  • Pages: 304
  • Product dimensions: 6.54 (w) x 9.56 (h) x 1.08 (d)

Meet the Author

Ellen Reid Smith has been on the leading edge of loyalty marketing for the past decade. She has an unusual blend of financial analysis and creative talents which enable her to teach readers both the art and science behind a great e-loyalty strategy. As the vice president of Worldwide Marketing for IBM's Consumer Division, she spearheaded the first customer relationship program in the PC industry that featured personalization techniques before most marketers even knew what the term meant. As a veteran of both corporate and consulting loyalty work, she directed strategy for Brierley & Partners and American Airlines. She now runs a successful web strategy consulting agency, Reid Smith & Associates (ReidSmith.com), whose recent clients have included Budget Rent A Car, DaimlerChrysler, Hewlett Packard, IntelliQuest, Games.com by Hasbro Interactive, MyMoneyLife.com, Quick&Reilly.com and Windamere Venture Partners, to name just a few. She is a frequent speaker at national and international conferences and her loyalty programs have been featured in Brandweek, Adweek, Marketing Computers, and many other publications.
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Read an Excerpt

Where e-Loyalty Marketing Got Its Start

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.

Call It What You Like, but It's All About Loyalty

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...

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Table of Contents

Preface ix
Acknowledgments xv
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
Index 281
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