Integrating CRM and Analytics Key to Next-Gen Customer Loyalty Programs

When The North Face launched its loyalty program online last year and in retail stores last April, the company wanted to do more than reward customers for what they buy. It wanted to reward them for what they do.

Sure, members of VIPeak, which is based on the Tibco Loyalty Lab platform, can accrue points for purchasing a fleece jacket or some sneakers. But they can also rack up points by running in the San Francisco Endurance Challenge or talking up the brand on social media.

They can then redeem points for offers such as meet-and-greets with sponsored athletes or adventure travel. “[People] don’t just want to buy stuff. They want to buy experiences,” says Aaron Carpenter, vice president of global marketing at The North Face. “It’s a huge opportunity for deep engagement.”

Red Robin Gourmet Burgers takes another approach to a richer loyalty program: The restaurant chain tailors its offers not only to certain segments of its customer base, but also to individual customers. “We’re saying we think you’re special and we want to give you an experience that’s differentiated,” says CIO Chris Laping.

Companies are leapfrogging traditional loyalty programs based on purchase frequency to create experiential programs that make an emotional connection with customers. “These emotional connections become the differentiator,” says Darren Tristano, executive vice president at food industry consultancy Technomic.

To get there, old and new IT must be integrated. The Red Robin Royalty program connects to a point-of-sale system and pulls in data from social media and an online customer satisfaction survey.

“You have to connect all that stuff–not just what guests did, but how they felt about it,” Laping says. “But it takes nitty-gritty, gory integration and nasty, dense data analysis.”

At The North Face, which built its loyalty system atop legacy CRM and email database programs, trying to match the old segmentation tools with the new system was a challenge.

IT issues, however, are trumped by operational ones. “Doing the regression analysis that tells you whether or not something will be interesting to a guest isn’t rocket science,” says Laping. “But coupling that with clean execution is tough.” Restaurant servers, for example, are trained on the loyalty system, but may get thrown by a promotion unique to one customer.

These next-generation loyalty programs deliver results. VIPeak members visit The North Face stores and website twice as often as non-members, spending 20 percent more per transaction. And Carpenter’s marketing team gets richer information to back marketing campaigns. For example, the company used member data to predict the best timing and audience for the introduction this year of Thermoball, its new synthetic down material designed to keep wearers warm even when wet.

Red Robin Royalty customers are more profitable than the chain’s typical patron, Laping says, although he won’t say how much more. “Our competitors spend ten times more on TV ads, so we have to be scrappy,” he says. “This helps us be scrappy.”

Stephanie Overby is regular contributor to CIO.com’s IT Outsourcing section. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.