Chief Marketer newsletter provides us with a list of 10 non-obvious benefits of loyalty programs. Funny thing, these 10 could be applied to almost any customer-data-based marketing programs. Loyalty programs are among the most difficult of these programs to execute properly, but they can drive a huge return on the investment when designed and executed correctly. Unfortunately, Loyalty Programs have a bad “ROI rap” because many are designed poorly and have to be killed.
I beg to differ on this statement in # 10 though: “There is always selection bias in any voluntary program, and loyalty programs are no different.” That’s a design issue. The recruitment design doesn’t have to be “voluntary”. You can usually find a way to selectively and specifically invite different types of customers, at least in the beginning, so that you can look at profitability versus a control group. That is what was done in the cellular case study linked to above.