Viewpoint: Prepaid Opportunities: What Are You Leaving on the Table in the Battle for Customer Acquisition and Retention?
Consumer purchase habits have changed drastically in the past five years. Buyers have ubiquitous access to nearly every product category under the sun and can comparison-shop across the street or around the world with a few quick swipes on their phones. And research shows that personalization has become more important than ever to consumers, as they shun anonymous mass advertising in favor of individual reviews and one-to-one brand engagement.
These changes have driven retailers of all types to redevelop product, pricing and sales strategies many times over, and they must continuously adapt to remain competitive.
But what if instead of helping big brands to adapt, you were to lead the change? This is where competitive advantage comes to life. How? Understanding how to win in today’s fluid consumer marketplace requires a quick look into past strategies.
For years, major consumer brands have approached rebate rewards as a less than desirable option to incent consumers to purchase their brand. It’s viewed as a cost center, and an operational process that revolves around regulatory requirements, long lead times and passive production schedules. To be clear, we all know we have to check the regulatory boxes. A non-compliant program is a non-starter. But for these programs to be tucked away in operations—with rules and limitations as the central program driver—is the tail wagging the dog.
Step out of Payments, Operations and into Marketing
Getting the most out of a rebate reward program requires an important shift in philosophy. The first step in maximizing program potential is to recognize that you’re not in the prepaid business; you are in the incentive and reward business, and, taking it a step further, you are in the consumer engagement business. This is a marketing role, not a payments or operations role.
What does this mean in practical terms? It means that it’s time to let your partners do what they do best (like regulatory management and operations), and focus on what your customers need most.
There are three key objectives that are the mainstays of any marketer’s job, and every element of your marketing plan should be focused on one of these three things:
- Winning new customers
- Retaining and growing existing customers
- Recovering lost customers
What do various consumer segments want? Where do they work and play? How do they engage with your brand? What lists do you have access to? How can you respond quickly to customer feedback and market trends? And, most importantly, how do you build incentives and rewards into your continual cycle of customer engagement?
Take this example: A traditional reward program at a big box retailer might offer an enticing (but costly) $200 closed-loop rebate card to drive traffic and purchase behavior. Make no mistake, these incentives work. Consumers flood in, make a qualifying purchase and walk (or browse) away with a $200 card. Marketing program targets are hit and everyone celebrates, right?
Initially, perhaps. But what are the chances that this consumer is going to return once the initial rebate has been spent? You’ve incented purchase but have you impacted long-term behavior? How is the customer relationship enhanced by this transaction? It’s often just that—very transactional.
Instead of keeping this pool of newly engaged rebate recipients delighted, marketers have traditionally moved on to the next promotion to acquire another batch of buyers, and the six- to eight-week planning cycle begins yet again.
And while these promotions may drive traffic in the short term, there’s no telling if you are simply paying more to acquire the same pool of customers over and over, or if you are actually building engagement and loyalty. Why do we do it this way? Because traditional processes and systems—rather than the customer—dictate what brands can deliver.
If this sounds all too familiar, it’s time to look at the alternative.
The long-standing concept that it’s easier and more beneficial to retain customers rather than find new ones is still true and we must embrace that knowledge. In fact, Gartner Group, says that 80 percent of your future profits will come from just 20 percent of your existing customers.
Rather than grinding away at the endless cycle of long-lead promotions, follow each customer through his life cycle—starting with acquisition and moving on to retention, engagement and loyalty on a one-to-one basis with each customer.
This means refocusing your efforts on personalized and even localized marketing strategies and significantly improving speed to market. In this scenario, the customer drives the marketing schedule, not the operations cycle or seasonal trends alone. Brands can identify trends, and capitalize on targeted customer opportunities as they occur. The idea of a six- to eight-week lead-time has become obsolete.
Imagine only producing and mailing an offer to those customers most likely to respond and spend more with you. This is marketing personalization and effectiveness at a whole new level.
Using the our previous example, instead of spending $200 per customer to attract new business that’s never maximized, brands should create offers that are customized to specific customer segments and subsequently, to each customer profile, followed by multiple quick-turn touch-points based on each buyer’s response to the promotion. For a national retailer, it might look something like this:
Two different customers visit a wireless phone store—one in Tampa, one in Chicago. Customer 1 shops for an iPhone but doesn’t make a purchase. Customer 2 looks at an Android device. This time the follow-up promotion is 100 percent targeted. The customer in Chicago, (which has a hands-free law for drivers), receives an offer for an iPhone-compatible hands-free kit, while the Florida-based customer receives an Android-focused offer for a glare-reducing screen cover.
In this scenario, both of the customers are far more likely to remember and engage with your brand in an ongoing relationship because the offer is targeted, relevant and timely.
By managing the continuous cycle of customer engagement, brands can build much stronger ongoing relationships with the highest value customers in their portfolio, and turn any prepaid program into a revenue center.
As you think about your existing programs, ask yourself:
- Can you target each individual consumer in your rebate program with individualized offers?
- Can you customize artwork to match the item they were or are going to purchase?
- Can you demonstrate proof that you drove redemption?
If the answer is no to any of these questions, it’s time to get more out of your marketing efforts. By resetting your approach to prepaid acquisition and loyalty programs, you will win, retain and grow your customer base in real time.
Render Dahiya is CEO of Arroweye, provider of the only 100 percent on-demand card production and personalization platform in the industry—completely eliminating the cost and risk associated with forecasting, purchasing and storing card inventory. He can be reached at [email protected].
Chris Behrens is the president and CEO of YA, a data-driven, end-to-end engagement company dedicated to helping clients sell more products and services through a suite of digital promotional marketing solutions. He can be reached at [email protected].
In Viewpoints, prepaid and emerging payment professionals share their perspectives on the industry. Paybefore endeavors to present many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.