Chapter 11 – Evolution & Exit Strategy

Evolution

The pursuit of loyalty is never complete.  The process of getting and keeping your house in order is ongoing.  The process of cultivating loyalty through tactical programs is perpetual as well.  But you can’t let your efforts become stale.  You must keep changing and refining your program.  Things must remain fresh through the eyes of the customer.

Keep your communication relevant.  Introduce new features and benefits, but maintain the consistency of your program brand.  Earlier in this book I discussed the potential of an advisory board of customers.  That’s a good way to ensure your program evolution is customer-focused.

Think about re-launching your program each year.  It gives you a reason to ensure that it doesn’t get neglected and drift into obscurity.

Exit Strategy

Think about this before you launch a defined program.  It’s not really an issue with a contact strategy.

Defined programs have rules.  Some times these rules are called terms and conditions.  Be sure to include appropriate language in your terms and conditions that allows you to end the program at any time.  Look at written terms and conditions from a variety of programs in the marketplace to get some guidance on what to include.

Reasons for Ending a Program

There are a variety of reasons why programs end:

·        The program is not deemed to be successful.  You’ve determined that the program has not created acceptable business results.  If this is the case, the program is probably not very popular with customers.

·        The program is too popular, but not successful.  Customers love the program, but it does not create incremental profit.  This may happen if the economic conditions of your business change after you launch the program.  I saw this happen with a video-rental chain in the early 1990’s.  They launched a program with a funding rate tied to number of rentals (rather than dollars spent).  Their rewards were third-party merchandise.  The price of a video rental dropped by 50% as a result of price wars.  Their program costs remained fixed but their revenue was cut in half.  This situation requires a little more finesse.  You’ll get many phone calls from customers when you announce the end.  Be prepared.

·        Internal reasons.  Frankly, some times this happens when management changes in an organization.  New leaders want to disassociate themselves with the marketing programs introduced by previous management.

Checklist for Ending a Program

You must let members know well in advance.  I suggest at least 90 days before the end of the program.  Be honest.  Let members know why the program is ending.  Do so as plainly as possible.

If you have a customer service operation, be sure your agents are well prepared for the calls they’ll receive.  Stage the mailing of customer notifications so the phones don’t ring off the hook all at once.  Prepare statements for the media.  It’s better to be over prepared.

Develop a plan for how you’ll settle accounts with customers.  If this is a promotional currency program, let customers know the last date through which they’ll earn currency.  Develop a policy for the final settlement.  You may want to consider rounding up balances that are within 20% of a redemption level.  Be generous.  You’re pulling something out from under your customers.

If your program requires an annual fee you’ll need to refund a portion or all of it.  Determine when and how you’ll settle the fees.

One way to anticipate your exit strategy is to announce your program with an end date from the very start.  You can always announce good news to members when you decide to renew it for another year.