Category Archives: Marketing

Direct Mail – not just for dinosaurs …

TRexThis is just a small addendum to my post on Direct Mail last week.  I found a fascinating Millward Brown case study conducted for the Royal Mail which I wanted to share.  In Using Neuroscience to Understand the Role of Direct Mail, fMRI scanning was used to understand how the brain reacts both to physical and virtual stimuli.

The headline results from this study, are:

  • Tangible materials leave a deeper footprint in the brain
  • Physical material involves more emotional processing, which is important for memory and brand association
  • Physical materials produced more brain response connected with internal feelings, suggesting greater “internalization” of the ads

The Royal Mail’s James Kitovitz (Insight Manager) said:  “They successfully turned cutting-edge neuroscience into a practical marketing project, and delivered completely new insight identifying fascinating differences in levels of brain engagement for the two types. We have put the findings at the heart of our communications about the intrinsic power of direct mail, and how physical media have a place in any fully rounded marketing campaign.”

The research is fascinating and illustrates the real need for a fully integrated approach, using both physical and digital marketing material.

Thanks to Direct Mail Manager for pointing me in the direction of this article.

Whether you agree or disagree about Direct Mail’s role in the  marketing mix, or if you have a story to tell, just reply below and let’s have a chat about it…

Victoria Tuffill – victoria@tuffillverner.co.uk   01787 277742 or  07967 148398.   Have a squint at  our website.  And yes, we’re on Linked In, and Twitter

Direct Mail – still part of the marketing mix…

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There’s a belief that Direct Mail is long dead.

“It’s too expensive,” people complain. “It’s just junk mail” … “People just throw it in the bin – they don’t even bother to read it” … “email’s so much cheaper”… “it’s all online now”

chess pieces on a glass boardWell, there’s some truth in some of those statements.  But more worrying is that so many people don’t even know how to run a direct mail campaign any more.  They don’t understand the significance of – or indeed how to capitalise on –  the extraordinary wealth of data available to help refine the target market, the creative approach, and the message itself.  

Equally important is how to integrate direct mail into the overall marketing plan, using the channel in combination with online and other offline activity.

So I think it’s time for an objective look at direct mail – starting with its strengths and weaknesses. 

DM strengths & benefits

Continue reading

Direct marketing – 13 communication channels …

Puffins larger and croppedThere’s a lot of huffing and puffin-g around marketing, even down to definitions of words and phrases. Take Direct Marketing, which seems to have a variety of definitions, including the very limited perception that it is just another name for Direct Mail.

Regardless of channel, direct Marketing is really all about communication. The Wikipedia definition states:Direct marketing is a channel-agnostic form of advertising that allows businesses and non-profits organisations to communicate straight to the customer.

Shouting loudly in public may generate awareness, but it won’t generate effective engagement.

Direct marketing is indeed channel-agnostic. And effective direct marketing needs to be targeted to a specific audience, with the individual marketing communication (through whatever channel) written and designed for the group of individuals who will receive it.

Direct marketing should also generate some kind of measurable reaction or response from the recipient – whether that be to visit (and buy from) a store, website or social media platform; to reply to an email, or to place an order by post, online, mobile or telephone.

Measuring the response to direct marketing activity can be challenging if the desired reaction is less tangible than, for example, an actual purchase or physical response to the marketer.

Over the next months we’ll cover the main channels in our blog, including the top thirteen which are (in no particular order):

  1. Direct Mail
  2. Email
  3. Online
  4. Mobile / smartphone
  5. Telephone
  6. Press advertising
  7. Inserts and product despatches
  8. Social Media
  9. Billing and loyalty devices / vouchers
  10. Direct Response TV
  11. Direct sales (eg Tupperware parties)
  12. Door drops
  13. Content marketing

The disciplines behind direct marketing carry through all of these channels. Regardless of whether you are mailing, calling, advertising or selling online, the key elements of a successful direct marketing campaign are:

  1. Data quality and accuracy (postal address, email address, telephone number, mobile number)
  2. Understanding the customer or prospect (purchase history, demographics, geography, lifestyle and affluence profiles)
  3. Turning data, analysis and research into insight, to ensure appropriate marketing, relevant list and media selection (online and offline); appropriate selection of channels and channel integration
  4. Determining offer and price
  5. Creating copy and design (which will need to be specific to each channel)
  6. Budgeting, including break-even metrics and “what-if” scenarios to evaluate and establish required financial performance
  7. Forecasting response and financial performance based on history and recent evidence
  8. Measuring performance regularly and ongoing
  9. Proactively developing and refining marketing strategy based on performance
  10. Maintaining appropriate levels of service and quality

Finally, there is a great deal of talk about integrated marketing, and while it’s an excellent start to have cohesive brand and messaging delivered through all channels, there’s more to it than that.

Targeting relevant customers through relevant channels based on what the customer wants – while allowing them to respond through their own channel of choice (which may be different again) is a vital part of any successful direct marketing campaign.

The channels should interact in a way designed to ensure engagement – maybe by moving consumers across the channels, for example from TV to social media platforms, like Daz, Innocent, Aero and by getting them involved in alternative or more complex storylines, or voting for favourite characters or flavours, or entering competitions etc. This is the sort of behaviour that engenders brand engagement, affection and loyalty.

More puffins croppedVictoria Tuffill       01787 277742     07967 148398   victoria@tuffillverner.co.uk

new heading for consultancy

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Social media, offline and online media … joining the dots

Because social media is so relatively young, and fast moving, there is a view that it doesn’t need to follow traditional marketing rules.   This is simply not the case.

Social media is a fantastic marketing opportunity for businesses today – whether it’s  b2b, b2c, b2b2c or c2c.  But social plans built without a solid strategic foundation are doomed to failure. The building blocks are critical, and should include marketing strategy, target audience, customer and prospect communication, channel choices, content and integration with the overarching brand principles.  Any social media campaign should also be integrated with other online and offline channels such as print, telemarketing, DRTV, press ads, sales promotion or PR.

In my view, joining the dots between social media and any existing or new media channels, (whether online or offline) is critical.

There are six key elements in the social media process:

  1. Strategy
  2. Marketing planning
  3. Marketing implementation and integration
  4. Ongoing engagement and responsiveness
  5. Considering social media data
  6. Measuring results

If a business wants to develop a social media presence, it needs to allocate the time and resource to ensuring that these steps are managed.  Also, as part of the engagement strategy, just like any other marketing channel, regular social media activity needs to be scheduled and delivered.  It is also worth considering that social media operates 24 / 7, so there will be a need for businesses to consider how to monitor customer posts that occur out of hours and at weekends.

Joining the dots

Social media marketing needs to be integrated into existing online and offline  marketing activity, keeping the social media channels and messaging consistent, and producing a fully rounded, integrated marketing story for a brand.  To achieve this, consideration needs to be given to the brand itself, the company’s values, the overall marketing strategy, budgets (both in terms of money and resource), measurable goals, social strategy, and customer communications.  It is also essential to explore the key metrics and the end goals of the business before starting the process – whether that’s gaining customers, making sales, or revenue, donations or profit.

Strategy

The critical starting point part is the strategy, which requires thought, commitment and understanding of the business’s audience, and how best to communicate with prospects and customers.  What is the size of the market?  Any trends to be aware of? Who are your customers and prospects?  What are their needs?  What and why do they buy?  How much do they spend?  What does the competition look like?

Once that research is complete, you can begin to work out the communication strategy – how can you best make a connection with your specific target audience?  What are your brand values?  How to do you want to communicate with your customer or prospect – offline? online?  What should your website look like?  Is TV appropriate?  Or print?   Which social media best fit your goals?  Where and how is your audience they likely to engage with you?  Facebook?  Or Pinterest?  Or Google Plus?  Or You Tube?  Or a combination of all of them?  Is it about competitions, or building a network?  Understanding the demographics of the various social media channels is every bit as critical as creative, which – no matter how clever or witty or engaging – will fall on deaf ears if it’s inappropriately targeted.

Having made that decision, how can you link them all together into one over-arching message?  For me, social media is about creating an ineractive buzz – it’s about moving the conversation throughout the marketing channels both online and offline – teasing your customers into engaging with you – developing a brand and story, interrupting the story and moving it across channels all the time making the process fun, engaging and interactive.

Once you have engaged your audience, the job becomes increasing reach while maintaining engagement levels, coming up with fresh material and content … with the ultimate goal of making it easier and more appealing for your audience to buy from you.  And that’s the secret – you need to make them want to buy from you, recommend you to their friends and connections, talk about you.

Fully rounded activity

Having worked out which social media to integrate into your marketing activity, and how to make them engaging, build a calendar of events, posts, content and links.  And stick to it.  If you’re not able to guarantee you can keep the momentum going, don’t even think about social media.  It’s time-consuming, and can become a costly waste of time and resource if adopted on an ad-hoc basis.

Keep the activity alive – here are a couple of examples, both clever, with one slightly flawed, the other excellent:

Don’t fail to deliver on your promises

Daz has a great concept on Facebook where there’s a storyline developed along a soap opera theme involving characters from Cleaner Close.  The campaign works across channels – Daz’s Dive DRTV ad   pushes viewers to Facebook to see how the dive ends up.  BUT in this instance, Daz fails to deliver.  Though they draw viewers into the soap opera storyline, the dive is not shown in the video clip … which has clearly upset viewers who took the trouble to “comment” and express their disappointment.

A great example from Innocent

Then there’s the Innocent website – excellent in that it reflects the brand’s core values, is simple and clear to read, with great sales promotion concepts such as the Big Knit, great characters and strong links to Facebook and their blog.  It even has a link heading called “Bored?” – irresistible!

For me this is a great example of making social media work for a product which is essentially an impulse purchase.  It engages customers, builds loyalty, and keeps them coming back for more.  Not only is it fun, but it’s healthy too!   They bring the characters to life and engage their customers by running votes and competitions, their blog brings the story to life, and they pursue their brand values through charitable donations and links.

What’s clear about this activity is that it was not thought up in a day.  It was carefully planned and developed, the characters took time and budget to develop, and the activity is regularly managed and kept up to date.  In particular, there is a clear strategy and branding which is consistent through all Innocent’s marketing activity, both online and offline.

It is businesses who approach their social media strategy in such a way who will enjoy the greatest success.

We’re all for sharing knowledge and information and enjoy a healthy debate, so if you have any questions, views, tips or knowledge, please  just “reply” below.

Victoria Tuffill – Partner Tuffill Verner Associates – victoria@tuffillverner.co.uk 

 01787 277742 or  07967 148398.  

Feel free to visit our website.  And yes, we’re on Linked InTwitter  and Google+

Direct marketing … social media … and bonfires

It’s the season for bonfires, direct marketing and social media.  In the case of bonfires, perhaps in your own garden, with foil-wrapped potatoes baking at the base.  And maybe with some sparklers and fireworks to light the night sky. Or as part of a local community celebration where everyone dresses warmly for the evening and gets together for fun, chat, catching up, watching a straw effigy of Guy Fawkes burning fiercely on top, and, of course, spectacular fireworks.

There is something about bonfires that is enormously appealing.  The smell, the crackling sound, the warmth, the smoke, the sparks, and the variety, movement and colour of the flames. And there’s a primeval fierceness about a fire. The way it grows from a tiny spark  into a roaring body of light and heat is a reminder that, although it may be lit by a person or people, fire itself can be dangerous. It is much bigger than we are, and needs to be monitored and controlled if we want to benefit rather than be harmed by it.

Direct marketing campaigns are similar.  Like bonfires, they need fuel to come alive – whatever the channel or mix of channels. There can be no successful marketing campaign  without the carefully laid fuel of end-to-end campaign strategy, including product, audience, offer, price, PR, fulfilment, delivery and customer service.  As a bonfire is lit by bringing flame and fuel together, a marketing campaign gains life when the consumer and the brand, product and offer come together.

As long as the fuel has been properly laid, then the fire will burn well and provide warmth and enjoyment to the crowds.  Like a social media campaign – if the activity is planned and structured well, it will deliver your customers’ needs and provide value to your business.  If not, or if it is left untended, then either it will never grow beyond a small spark, or – worse – it will grow into an uncontrollable inferno devouring your brand and reputation as it spreads.  And those are the fires that are most difficult to put out.

A point worth noting is that social media essentially allow a dialogue between business and customer (or prospect), that is held in public.  It impacts every area of a business, so it is vital that everybody within the company understands the goals and aims of the social media strategy and engages appropriately.  And it is also essential that there is an understanding that though the conversation is held online, it is a real conversation held between real people.  So basic everyday “real life” social principles, behaviour and manners need to be considered and included in whatever social media strategy is developed.

Laying the fire

Before deciding you want to build a social media strategy, the first thing to consider is why. What do you want to gain out of it?    Are you looking to extend awareness of your brand?  Or improve your reputation?  Or engage with a particular audience?  Do you want to increase sales?  Or improve customer loyalty or customer service?  Or do you want information to help you deliver better marketing – whether in terms of product or price or delivery?

Having addressed those questions, if you decide to go ahead, then you need to know your own brand’s  audience.  Where are they to be found?  Are they on Facebook or Twitter or Linked In?  Do they use Pinterest or Instagram?  Google + or You Tube?  If so, how do they use these networks? What’s their style and tone of voice?  Does it match your brand values? Might there be value in creating groups and forums on your own websites. What do you think your customers or audience would want to get out of a social media relationship with you?  What do you want them to get out of it? Where should you focus?  Do they talk about you?  If so,what are they saying?  Are they complimentary or are they promoting your competitors?  And if so, why?  And so on.

At this point it’s probably sensible to start outlining, in words, diagrams, flow charts and pictures, exactly what you want to do and how you intend to achieve your aspirations and integrate a social media strategy  throughout the business.  You’ll need to establish a team and allocate responsibility. You’ll need to make sure that what you are planning complies with all legal requirements.

If you use a third parties to manage your direct marketing and social media activity, the communication between your business and that agency or those agencies will need to be ongoing and seamless from all areas of the business.  Especially where your brand is concerned – any third party will need ongoing information on what is going on in the business, what is under development, what are the current key areas of strength and weakness. And  if you want to build trust through your social media activity, that information needs to be up-to-date, relevant and honest – whether the news is good or bad.

Your communication style will need to be considered.  Generally speaking, it can be more relaxed and fun than some other channels, but it should reflect your brand values and the values of your audience.   O2 has a great social media reputation, build in part from the disastrous few days when the service went down.  Not least on Twitter, where they were able not only to address genuine customer service issues, but also turn the whole problem around and generate more loyalty simply because their responses to their customers were wholehearted, honest, apologetic, helpful and witty.  Having said that, there are inherent dangers within that sort of approach – it’s potentially only a matter of time before one ill-chosen, unfunny, “witty” response has the same effect as pouring petrol on kindling – an instant explosion that – at the least – removes your eyebrows and much of your hair and probably blows you backwards!

Tending the fire

Fires need to be controlled, and monitored until such time as they are put out, or run out of fuel and die down to embers, which can then be allowed to cool, or be used to start a new fire.

Having laid the groundwork for your social media campaign, you then need to consider what you want to measure.  If your campaign is designed to increase awareness, you’ll be looking at likes and shares, reach, comments and other forms of engagement, subscriptions to newsletters, blogs and emails.    Sales and loyalty can be measured through a variety of methods – including mining data retrospectively,  using control groups to measure differences in performance, and measuring sales from social e-commerce.  Again, what you want to measure and how you intend to do so needs to be part of your documentation, and what you learn from this analysis will enable you to drive your ongoing activity based on performance.

You’ll need to be ready to deal immediately with issues that will come up in real time like complaints that come up in a public forum or negative comments on your Facebook page. So it’s well worth the time to brainstorm before the issue comes up so that your team know how to respond to a negative comment before it actually comes up.  You also need to monitor whether what your fans are saying is appropriate to your brand, and, if not, how you should deal with them.

Having established your policy regarding the networks on which you want to concentrate,  how you want to use them and integrate them with other channels, how you want to communicate with your audience, how you will resolve any issues, who your team is, who will do what, what competition you will monitor and how that will be reported, how you will measure your own performance etc etc …you need to execute your plan.

This means you need to know what content you are going to create, where you are going to post it, how you are going to promote your social media activity.  For a start, you’ll need to include icons, links, addresses on your website, promotions, advertising, invoices, email signatures, letters, employee business cards,  and all your communications so that you encourage your audience to visit and engage with your social networks.

You need to provide content for each of the networks – whether you want to blog or promote or sell direct or chat or conduct research or offer prizes in return for information or just run simple but fun competitions. As well as integrating with other channels, you can also integrate social media channels – use Twitter to promote a competition on Facebook, use You Tube to broadcast results and promote the next.

But what is absolutely vital is that your content is planned and scheduled before you push any buttons.  If social media is done randomly or on a whim, if it is unplanned, or if too little time, resource or budget is spent on it, the whole campaign is likely either to go out or – more tragically – be rained on before the fire is properly lit.

We’re all for sharing knowledge and information and enjoy a healthy debate, so if you have any questions, please don’t hesitate to ask.  Or if you disagree with any of our views above, just let us know why.  And of course, if you have a social media strategy and would like to share your tips or thoughts, please feel free – in all cases, just “reply” below.

As ever, if you’d like some help with your social media strategy, don’t hesitate to ask – you can reach me on 01787 277742 or 07967 148398.  Or email victoria@tuffillverner.co.uk  If you’d like to know more about us before you do so, by all means visit our website.  And yes, we’re on Twitter and Linked In.  And if we believe we can’t help you, we’ll make sure we recommend one of the good guys.

Multi-channel marketing, data … and fly fishing

As  keen fly fishers, we’ve travelled to a variety of rivers throughout Scotland, Wales, Ireland and, more exotically, Iceland and Russia for Atlantic salmon, Arctic char,  sea trout, brown trout, greyling and any other species that is prepared to jump on the end of our lines.

Despite my propensity to fall into rivers (tricky in chest waders which can fill up fast if you get it wrong), the experience has always been delightful.  Not just for the fishing, but also for everything that surrounds it – good company, the sight, smell and sounds of the river,  the scenery, the wildlife, and the good company that almost invariably accompanies a week of fishing.

So what does this have to do with marketing? Actually, pretty much everything.

Understanding your customers

Firstly, whether you’re fishing or marketing, you need to understand your prey and their circumstances.  Is the river in spate?  Or is it a dry ditch?  Are there likely to be problems reaching the fish?  Or indeed, landing them?  In fact, where are the fish?  What are they doing?  And how many are there?  Are they migratory?  If so, when will they run?  Are they a good size?  Are they fat and healthy, or diseased and thin?  Are they young or old, male or female, shy or aggressive?

Reaching your customers and prospects

Then you need to consider how to reach them.  Is it tricky to cast?  Is it too deep to get in and wade to get closer or a better angle?   What’s the wind direction?  Is the water too warm or too cold?  Is it a long, arduous climb to the hill lochs?  If so, is the end result worth the effort?  Having invested the time and energy in climbing the hill, is it a good idea to spend a little more time up there?  Perhaps even pitch a tent and spend a night or two to catch the dawn and evening rises and make the most of the opportunity?   How can you best stalk the fish in the clear waters of a chalk stream? How can you avoid the weed – either before or after hooking a fish!

What are the fishes’ motivations for taking a fly?  Is there a particular size or colour that will appeal?  How should it best be presented?  At what angle, depth and speed?  How frequently should you cast over a fish?  Especially if you can’t see it so can’t be absolutely certain that it’s even there.  And what do you do if a fish takes your fly, but not properly?   Vary the speed?  The depth?  Change the fly?  Go for something larger?  Or smaller?  Or a different pattern?

In addition to all of that, there’s a need to identify and understand the competition – Seals?  Otters?  Commercial fisheries?  Bears, or other predators?

Depending on the answers, you need to use appropriate and varied techniques to catch your fish.  For example, sea trout are shy creatures, best caught at night.  This means fishing in the dark, so you need to do your research during the day – spotting fish where you can, identifying likely fish-holding lies, working out the length of cast you’ll need, the speed and depth of the water.  That way you have the knowledge you need to have a fair chance of getting your fly out to the right place and fishing it well.

In a chalk stream where the water’s very clear, you need to stalk your brown trout, making sure you can’t be seen, then lay the fly gently upstream on the surface of the water so that it drifts right over their nose and becomes irresistible.

Salmon are different again.  Here you need to be able to read the water and understand where the fish will lie, then make sure you put the fly where they can see it and make them want it.  And it has to be the right fly, moving at the right speed and in the right way.  And when one takes, you don’t “strike” in the same way as for a trout.  Actually, Atlantic salmon don’t even eat when they’re in the river, so they need to be enticed to take your fly for other reasons.

Understanding your customers and prospects

Though it might be more accurate – and certainly more tactful – to refer to your potential customers as prospects rather than prey, all these issues equally impact marketers.  What’s the economic climate?  How much money is out there for consumers to spend on your products?  How much effort and budget is required to acquire a particular customer – and are they worth it to your business?  Where do they go to buy?  Online?  Over the telephone?  Bricks and mortar?  Do you need to segment your marketing to appeal to different lifestyles and demographics?  And is your product a must-have?  If not, how can you encourage consumers to buy – particularly in a poor economy, when your competition is as hungry as you so you need to fight harder to win – and keep – customers.

Stage one is understanding your prospect.  Who are they?  Male?  Female?  Young?  Old?  Parents?  Single? Homeowners?  Students? Living at home?  Renting?  Where are they in their lifecycle?

Where do they live?  What’s on their mind?   What, why, when and how often do they buy? Is there a seasonal bias? What’s their disposable income?    What do they read or watch on TV or online?  What technology do they use?  Tablets?  Smarphones?  Smart TVs?  Or paper?  Or all of those?  Do they interact with social media?  Consumer or business?  What are their hobbies?  Are they in debt?  And so on.   Whether you’re in retail, or publishing,  financial services or telcos, technology or utilities, charities or even politics, the above issues all need to be considered within a marketing campaign.Does your product appeal to a mass market or a specific segment of the market?

And that kind of knowledge requires data – both historic behaviour and research from your own customer database, also data from third parties, which is readily available and can provide you with a wealth of geo-demographic, lifestyle, behavioural, purchase history, financial, risk and fraud data.

Of course, data’s of absolutely no use at all unless it’s turned into meaningful insight that your business can use to allow intelligent, informed decision making.  Not only that, but the ever-growing volume, sources and complexity of consumer data can be overwhelming, so it’s essential  that effective, relevant and actionable data and insights are identified for strategic  and selected to provide the best data strategy for the business throughout the customer lifecycle.  The basic goal must be to use the right data to have the right customer conversations at the right time through the right channels.

Once you know enough about them, you can start to understand the size of your market, and where to go to find prospects who look like your own customers and consider how best to attract them.  Which will be the subjects of upcoming blogs.

One final thought.  The first time you visit a river, it’s helpful to take a ghillie, who will know where the fish lie, and how best to fish for them.  Listen to every word they say and all the advice they give, so that you can learn as much as you can for the next time you want to fish that – and other – rivers. Ghillies are a canny breed, so they’ll know what you’re doing, but will generally be helpful.  

The same is true of marketing.  At TVA we are happy to act as ghillies or guides – so if you’d like to discuss how you could use and benefit from advice on data or any direct marketing channels, please don’t hesitate to give me a call.  As ever, if I can help, I’ll be happy to.  If not, I’ll make sure I point you towards people who will provide sensible, strategic advice.

Victoria Tuffill,  Partner, Tuffill Verner Associates – Multi-channel and direct marketing

Tel:         +44 (0)7967 148398  /  +44 (0)1787 277742

Email:     victoria@tuffillverner.co.uk      Multi-channel consultancy       Linked In      Twitter

 

Loyalty schemes – where bribery isn’t corruption …

Loyalty programmes

New customer acquisition is the expensive part of the marketing cycle, so from the moment a new customer starts to buy, a marketer’s thoughts need to focus on customer retention.  If you can encourage a customer to keep buying from you, the level of revenue, advocacy, good will, knowledge and data you can acquire from them will be invaluable – across metrics such as sales, profitability and retention.

So for me, looking after your customers, recognising their importance to you, and rewarding them appropriately are essential factors in business.  Particularly given the increasing ease and speed with which consumers can – and do – hop from brand to brand, provider to provider.

There is a strong argument that good overall product, pricing and service is the best way of generating long term customer relationships.  You just have to look at Apple to see the truth of that.   But there is no doubt that customer loyalty schemes can help strengthen customer relationships and retention by reducing churn and switchers, particularly given the sheer volume of loyalty schemes in the market. Tesco’s Cubcard loyalty programme is an excellent example.

Because so many businesses use loyalty schemes in one form or another, not doing so can put a business at a disadvantage. Obviously if competitors offer broadly the same product, price, service and quality, and one offers a loyalty scheme while the other does not, from the consumer’s viewpoint the choice becomes straightforward.  One of the suppliers is giving them additional value. For example, coffee.  Given my coffee consumption, a free cup of good coffee every 6 visits works for me! But quality is key – no loyalty card offering free cups of filthy coffee would make me buy filthy coffee more than once.

There are numerous types of loyalty programme, including money off, discounts, vouchers, retail loyalty and credit cards, gifts, prizes, points, cashback, competitions and so many more. The scheme can be developed for an individual business who wants, for example, to encourage their active customers to buy more and stay loyal, or reactivate their inactive customers; there are non-competitive businesses who can work in partnership to increase their customer base (such as Amazon and Virgin Wines);  or groups of businesses – for example, towns who want to encourage their inhabitants to shop locally rather than visit the supermarket.

What is important is that the loyalty programme should reward customers for behaviour that is profitable to the business.  There are any number of metrics – from spend to length of relationship, or even speed of payment.  My hairdresser has a loyalty card which gives me a 10% discount every 5th haircut.   It wouldn’t work if he didn’t do a good job, but he does, so that makes me feel good, and yes, I’ll spread the word.  It would be nice if he’d increase it year on year, but alas, he knows he doesn’t need to!

Loyalty programmes also afford an opportunity to reactivate those consumers who used to buy from you but have, for some reason, stopped doing so. These customers will be more responsive than cold prospects.  Assuming you have a marketing database, you will have their purchase history so will understand what, when and how they have bought.  You’ll know how much they’ve spent, so will be able to segment according to their value to you as a customer.

One of the key issues in any loyalty scheme is data and segmentation.  And this is where Tesco excel.  Their offers – from grocery to financial, to mobile phones and more – are highly targeted based on the incredible amount of data they hold on their customers and what they buy.

In the case of reactivation, it may be that, once you’ve looked at a lapsed customer’s data, you’ll discover that you don’t want to retain or reactivate them –  there’s absolutely no point in incentivising your bad customers to continue buying from you if they are losing you money.  And there is a myriad of reasons why they may be poor customers for you – perhaps you are having to chase debt, or pay out excessive claims (particularly in insurance or telco), or maybe the customer will only buy low margin or loss-leader products, or are expensive to maintain and (for example in financial services) you make no money out of them.

For customer acquisition and retention at the same time, one of the best loyalty schemes I’ve seen is from Naked Wines. A 25% discount off all future orders – which means that you always get 25% off your next wine order, and it shows up as real money available when you go online to buy your next case.

So you end up paying a painless (continuous payment) £20 per month.  When you go online to buy, that £20 has become £20 plus the 25% discount – it becomes tremendously easy to buy and increasingly difficult to move away!

Loyal customers who recommend you to their friends because of your product, offer, quality, engagement and loyalty schemes now have a multitude of opportunities to spread the word through social media as well as face to face.  So your “reach” or awareness among your market becomes significantly stronger.

But to generate that level of advocacy means that your loyalty scheme should be unique, compelling, targeted and benefit both the consumer and the business.  If you can enthuse your customers enough for them to want to spread the word among their friends, then they’ll be enthusiastic enough to enjoy it, take advantage of it, and remain a loyal customer.

We’ll welcome your thoughts or comments on this post – and if you’d like to discuss how you could use and benefit from loyalty programmes, please don’t hesitate to give me a call.  If I can help, I’ll be happy to.  If not, I’ll at least point you to someone who will provide sensible strategic advice.

Victoria Tuffill
Partner, Tuffill Verner Associates – Multi-channel and direct marketing

Tel:         +44 (0)7967 148398  /  +44 (0)1787 277742
Email:     victoria@tuffillverner.co.uk
Web:       http://www.tuffillverner.co.uk

Victoria Tuffill is a direct marketing consultant with over 30 years experience. She founded Tuffill Verner Associates consultancy with Alastair Tuffill in 1996. She is also founder and Director of Fraudscreen – a data tool that assists in the prevention of 1st party fraud. Her experience ranges across businesses including publishing, home shopping, insurance, utilities, telcos and collections.

© Victoria Tuffill and Tuffill Verner Associates, October 2012. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Victoria Tuffill and Tuffill Verner Associates with appropriate and specific direction to the original content.