During economic recessions or a pandemic crisis like COVID-19, it is obvious that many companies are struggling with their financial results and that they need to take action to prevent bankruptcy. In those cases, it is often seen that the first cuts are made in marketing departments, and with that its daily activities, campaigns and in many cases also in the loyalty programs. Programs to retain existing customers; perhaps not the smartest idea to decrease efforts there? Instead of having multi-department loyalty approaches, companies tend to keep loyalty as a pure marketing responsibility with low priority. It’s time to make a change in that thinking!

Don’t cut down, but enforce loyalty efforts
The reason for these actions in marketing and loyalty programs, is that often these programs are experienced as cost centers. Every point given away for a purchase, any reward that’s redeemed or promotion activated, is a decrease in margin or a value that is either being paid out or kept on the balance. To prevent financial downfall, these ‘costs’ are taken out and unfortunately not always replaced by other activities to retain customers. While these existing customers are extremely important for the sustainability of the company. Research shows us, that it costs 6 to 7 times more to attract new customers than to retain existing customers than 5% increase in retention can result in 25% – 95% increase in profit (Bain & Company). Thus, in times of crisis, we believe that organizations should enforce their focus in loyalty programs rather than cut down the efforts.

Activate multi-department loyalty programs
So, it is a pity, that loyalty in many organizations is seen as a pure marketing effort and responsibility and not as company-wide process. When looking at our VANEIGENS Customer Engagement Flywheel, we see that Loyalty is an essential part of Customer Engagement and not standalone, and Customer Engagement is a process that is not just driven by marketing. We therefore want to stress the importance to involve setup, implementation and execution among multiple departments: for a start service, sales and marketing. There are several organizations that already approach loyalty with this multi-department focus, but there is still a gap to cover to ensure customer centric approaches are applied to more companies.