According to the State of Marketing Budgets 2021 and insights from Gartner’s Annual CMO Spend Survey, 8.3% of marketing budgets are being allocated to loyalty programs. It’s hard to say what that exactly means operationally.
A loyalty program is designed to enlist and reward customers for continuing to shop or use the services of a place of business. If you are a member of an airline’s rewards program and earn points every time you fly, you are a part of a loyalty program.
A loyalty program like this one is transactional. You sign up. You book a flight. You take your trip. And then you earn rewards. It’s not complicated at all, assuming you have the right technology to scale a program of this magnitude. In fact, many loyalty programs follow the same model.
There is a distinction between a loyalty program and customer advocacy. In this context, a loyalty program is a part of a marketing strategy with the allocated budget, based on Gartner’s analysis.
Customer advocacy is more about a mindset, requiring almost a culture shift. Customer advocacy spoke to the DNA of the culture and is accounted for in every business and marketing decision made.
What does a customer advocacy program require to be successful? Here are three considerations.
Technology Considerations
Depending on the program’s mechanics, there are a couple of things to consider when investing in technology. In some cases, large brands are creating online communities and inviting their customers to be a part of them. The assemblies consist of Q&A forums, resources, one-to-one messaging, and in some cases, the ability to write articles.
Another consideration is customer advocacy software, which is like an online community but has built-in technology that activates customers to perform specific tasks. This could be sharing on social media, providing product feedback, or participating in surveys. Software platforms like this typically have built-in gamification to keep their customers engaged and coming back.
And lastly, with more minor formalized customer advocacy programs, some brands are leveraging social listening software to listen to their customers and just being proactive with outbound engagement.
Budget Considerations:
There is no such thing as cheap technology. Whether it’s social listening software, a branded community, or specific customer advocacy software, an investment in this type of software would range anywhere between $60K in $150K per year.
It’s not just for software either. In many cases, a program might need internal community managers and a content plan to keep the communities engaged. If this weren’t done by an internal team member, an investment would have to be made into an agency or consultant to support this workstream.
Strategy & Planning:
Putting a plan together might seem obvious but doesn’t happen as often as you think. Sadly, customer advocacy is an afterthought for many companies and is not necessarily planned for every fiscal year.
A strategic plan would encompass the vision and goals of the program over two to three years. It would include the goals and objectives of the program and the potential business outcomes.
Part of the plan will also determine the program’s mechanics, which will provide specifics and show how the program works. This will dovetail into the technology requirements and budget needed to make it happen and scale the program effectively.
Lastly, a strategic plan will outline how a customer advocacy program will be integrated across other parts of the business. Whether it’s customer care or product management, or outbound marketing activities like social media engagement and general brand building.
Reaching audiences on public social media channels will only get more difficult in the future. Brands need to think about new and innovative ways for building customer advocacy to solve customer problems, build brand reputation and maintain existing customer relationships. This might require more than 8.3% of the marketing budget. The question is: what’s your customer worth?