“While not every business needs a loyalty or rewards program, every business does need a thoughtfully created and well executed Customer Strategy.” This snippet of dogma clipped from the Hanifin Loyalty LLC site is backed up by many examples in the marketplace. It emphasizes the importance of forming marketing strategy with your customer’s best interests at heart, and only then creating tactics for execution.

For years, Walmart has drawn the attention of every loyalty marketing business development executive who can fog a mirror, each pledging to “be the one” to convince the retailing behemoth that giving away points will drive customer loyalty. To date, Walmart has perfected the art of playing hard-to-get better than any prom queen in history.

You see, Walmart already has a loyalty program in place – it’s called the business model. Beginning with “Always Low Prices” and evolving to “Save money. Live better”, Walmart is all about optimizing its supply chain and delivering the benefits of low prices to its customers. The company website (www.walmart.com) even has a counter to show the “amount of money Wal-Mart saved American families since Jan. 1, 2008.” The graphic below was taken May 18, 2008 at 12:15pm ET. Check it again when you read this article and see how much the number has grown! Note: it is small, please click on it to enlarge it!

Tapping an example from the local retail market, every cyclist and triathlete depends heavily on their LBS, otherwise known as the Local Bike Shop. I don’t know the origins of the LBS descriptor and I’ve never heard of a Global, National, or Regional bike shop. Just take it to mean that LBS equates to your good old neighborhood bike shop where you place your trust for all your cycling needs.

For years, I frequented a shop that had a lot going for it. A convenient location, wide selection of product, and word of mouth recommendation from friends made it a no-brainer to be my LBS. Too bad that nearly every time I walked through the door I was greeted by “Need a new bike?” I am sure the owner treated this as a throw-away line of little consequence, but it just wore me down. Most people keep their bikes for years, not months, at a time and depend on the LBS for parts, service, and clothing in the meantime. In weak moments when I responded to the standard question by asking “what’s new?” the owner would point me toward the latest bike he had in stock. According to him, nearly everything in his inventory was perfect for me.

Numbed by the continual barrage of sales pitches, I visited a few competitors. My search landed me in a shop that didn’t even carry finished bikes. In fact they won’t sell you a bike without first measuring you on a test machine and then recommending a short list of frames that are compatible with your anatomical dimensions. I had suits tailored to fit before, but never a bike. The business model at the Racer’s Edge (www.theracersedge.net/) is optimal for any serious cyclist. Not only did I get the message that my interests came first, but the process of being fit to the right bike created a level of trust and respect for the staff that could not be replaced with a points program, no matter how good the offer.

It should be clear by now that winning and retaining customers can result from adoption of a unique business model that emphasizes price, service, quality as well as other factors. The finer distinction to make is that regardless of whether your business adopts a traditional loyalty program to reward customers, there is always value in collecting and leveraging customer data in order to improve the in-store experience and the economics of marketing spend.

In both of the examples cited here, there is room for improvement.

• With Walmart’s dedication to a low price strategy, it might be difficult to craft the mechanism to begin the collection of individual customer data and match it to transactions. It’s tough to pull off without creating some type of “club” and Walmart is likely to stick to its one-to-many philosophy.
• For high service, high touch businesses such as my favorite LBS, collecting customer data and preferences is much easier to embrace and the investment in such efforts is guaranteed to pay off handsomely.

Building a Customer Strategy for long term success is inextricably linked to your business model, brand, and objectives. Determining a strategy before applying tactics is the key to victory. To quote the military strategist, Sun Tzu, Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat”.

… Bill Hanifin