Loyalty Programs Don’t Treat Heavy Buyers as Special

Loyalty Programs Don’t Treat Heavy Buyers as 

Special

Welcome to CPG Webcast, a service of CPGmatters and the Shopper Technology

Institute. I’m your host, John Karolefski. Thank you for joining us.

Today we’re talking aboutloyalty programs and top shoppers. There’s been an

increase in the number and type of loyalty programs launched in the last few years.

This is due, in part, to new technology. Unfortunately, many of these programs

aren’t treating top shoppers – that is, heavy buyers – as special. So says today’s guest, 

Michael Schiff, managing partner of Partners in LoyaltyMarketing, a consultancy 

based in Chicago.

To start off, Michael, please explain why there are so many new loyalty programs

nowadays.

SCHIFF: There are several reasons. Mobile messaging is growing; Entry Point

Marketing offers front-of-store targeted offers; My Coke Rewards brought proof-

of-purchase into the digital age. The proliferation of direct mail shows no signs of

abating. The growth of the digital arena has made it easier and faster for these types of 

programs to come to life; there are so many new tactics that are developed on almost a 

daily basis that is is increasingly hard to keep up. Meanwhile, it has become hard for 

manufacturers and retailers alike to ignore the large amount of data that is available – 

be it POS, customer segmentation studies, panel data, or internal databases. They are 

all saying that the current customer base is vital to the health of an organization. The 

weak ening economy and the complex competitive landscape has magnified the “churn”

 rate – a problem only made worse by the increased difficulty in attracting newusers to 

a brand. This, combined with new technologies, is why there has been renewed focus on 

the core or“heavy” buyer.

That brings us to the point of today’s webcast. You say that many of these loyalty

programs aren’t treating top shoppers as special. SCHIFF: That’s right. Unfortunately, 

many of these programs are not driving incremental volume. Even worse, many are 

simply subsidizing a sale that would have occurred naturally. They are simply not 

treating heavy (or core) buyers as special. When these programs fail to produce positive 

returns or drive incremental volume, managers are often quick to blame the vehicle. 

They lament that the program was too costly to pay out, or it failed to engage with

the correct customer, or it was not aligned with the customers’ purchase cycle. And so

on. In other instances, they blame the consumer. They figure that consumers are only

interested in coupons. Some believe that their core customer target is too broad to

reach in a cost-effective manner. 

And the real reason is what?

SCHIFF: It’s the one area that rarely receives the blame: Messaging or creative. More 

often than not, the creative used to communicate with one’s core buyers is a slight 

repurposing of a brand’s national campaign. Sometimes it isn’t even repurposed at all. 

It is merely copied wholesale and sent to these heavy buyers. 

Why is that?

SCHIFF: The rationale for this is simple and obviou s. A lot of time, effort, and money 

goes into developing the national campaign. It is tested, placed before consumers, modified, and tested again. Most of this creative is aimed at incenting trial – getting non-users to try the 

product; at best, it may be focused on getting lighter users to use more. To do that, 

much of the communication has to focus on the brand’s key equities. The problem is that

most heavy buyers have already bought into a brand’s national campaign – usually before it 
launches. That’s interesting. Can you give us an example?

SCHIFF: Sure. We have a range of clients across a variety of industries. Let’s look

at two very different ones – a pain medication and a frozen dinner. If a core consumer 

of a popular branded pain reliever uses 300 or more tablets a year(almost one per day), I 
would hope that they have already bought into the brand’s general advertising that the medicine stops 

pain safely and effectively. If the core consumer of a frozen dinner brand buys 40 or 

more year, they probably already believe that the brand tastes good, and feeds their

family quickly and cheaply. Yet this is typical of the creative most often sent to a brand’s

strongest users. In other words, those consumers who buy the brand a lo t receive a

 “boilerplate” message, usually along with a coupon. But it really doesn’t matter how 

efficiently we can locate these consumers if we fail to deliver any special communication that

is relevant to them and their lifestyle. So, failure to treat these top shoppers as special

is really a missed opportunity.

SCHIFF: Absolutely. Brand marketers miss a golden opportunity when they fail to use 

information from focus groups, consumer segment ation and other research in a

targeted message or story sent to heavy buyers. The goal should not be to simply

connect with heavy buyers, but to connect with them on a stronger level and build

up the brand’s emotional relevance. We also do not have to hit consumers over the head

with the message. We can choose tactics, venues, and creative that align with our core 

users’ mentality. 

Again, Michael, can you give us an example to illus trate that point?

SCHIFF: Sure. ZonePerfect, an energy bar, had research suggesting their core users are 

above-average supporters and users of art s and entertainment. The company made sure 

to align their heavy buyer communication with these areas. ZonePerfect can be found in 

forums such as Cannes film festival where they pass out samples and coupons. Their 

website is very focused on the arts and they align themselves with VH1’s Save the Music.

The goal is to build up brand loyalty among heavy buyers and prevent them from

being enticed by competitive offers. Successful com munication does that by building 

up the FUD Factor – that is, Fear, Uncertainty, and Doubt – that consumers feel when 

it comes to competitive brands. Here’s the bottom line: When using all of the new 

technologies that connect with all consumers, marketers should treat their heavy buyers

 as a separate and special group.