A CRM program and a customer loyalty program aims to improve the relationship with existing customers by using data to understand their customer behavior’s or to communicate with customers in a more meaningful way.
Industries such as banks, insurance companies, utilities and telco companies all have sophisticated CRM programs which provide a full view of the customer – products purchased, billing, usage, etc.
This data allows businesses to make strategic and profitable decisions. However, unless customers have opted into receiving communication, these businesses cannot use this data to communicate with their customers.
A CRM program for a bricks and mortar retail business is slightly different. Here these brands will collect email addresses or mobile numbers with permission to communicate. Often customers will receive generic communications with discounts or offers, which are not always relevant to the customer.
CRM or Customer Relationship Management is a system that helps in collecting, organizing, and managing the customer information.
A loyalty program is a system of structured rewards given to customers, usually in exchange for desired behaviors, with the goals of increasing customer loyalty and collecting customer data. Loyalty programs use the psychological principles of reciprocity, commitment and loss aversion to increasing the likelihood of customer loyalty.
Have a look at Brandfire's best Loyalty Programmes of 2017.
The difference in CRM and Loyalty is often rooted in the expectations set between brand and customer. When a brand asks someone to join their loyalty program, they are asking them to do more - and customers expect more in return.
So for brand and customer, the implied commitment for loyalty is usually stronger.
Furthermore, CRM programs usually target as many current and potential customers as possible, whereas loyalty programs tend to focus on reaching just the top 20-30% of the customer base.
Brands do this because loyalty implies the creation of differentiated, exclusive experiences for members relative to the standard brand experiences they offer to everyone.
With loyalty, a brand is always implicitly asking a customer to acknowledge that:
- I am a fan of the brand and its products;
- I am willing to provide personal information including my transactions history or engagement with the brand
- In return, I expect personal, exclusive, and rewarding interactions in return.
CRM Vs. Loyalty
A CRM program doesn’t always allow for communication to the customer base. This will be dependent on whether a permission exists.
Where permission does exist, the communication is often generic and not specific to that customer.
The opposite is true of loyalty. Loyalty communication is very specific to their members usually providing rewards based on specific behavior.
In principle, CRM and loyalty have different targets, different propositions and different business goals in mind.
Although some bricks and mortar retailers will argue differently,
Many offline retailers use CRM as a form of loyalty program. This is often the case when budgets are limited, or they simply don't have the resources to invest in a full-integrated loyalty programme.
The retailer will use the CRM to send a newsletter, offers and/or discounts.
However, brands strive hard to deliver a consistent, quality brand voice across all customer touch points whether using a CRM or Loyalty program or both,
One of the ways that this can be achieved is by connecting the CRM and loyalty communications, and by making loyalty membership one of the objectives of CRM.
Strategic and tactical differences inevitably result in different technical requirements:
- Loyalty programs are integrated with all customer touch points including epos, social media platforms, app, website. This is not always the case with CRM.
- Loyalty programs will capture all kinds of customer data including transactional history, social media engagement, and program engagement. This data will support the communication and customer segmentation to reflect behavior.
- Loyalty platforms will often require more security as they hold more sensitive information
- One of the biggest difference is that loyalty program will have a reward platform and reward rules which determine the rewards that the customer can earn for a specific type of behavior
These are only some of the difference between the technology capability of CRM and loyalty. For example, High-volume email deliverability is central to a CRM-focused solution,
That’s why many of today’s most sophisticated brand experiences are powered with a dedicated CRM platform AND a dedicated loyalty platform: together they offer the best of both worlds to deliver of the best experience for all customers - wherever they are on the relationship spectrum.