There are always two sides to the ROI equation

Whether you're a practitioner, manager, executive or CEO, ROI is always on your mind -- either because someone else is creating pressure around it or because you're internally aligned to the ROI centric management mindset.

For all its complexity, ROI can be distilled down to two core factors: Investment/Cost and Return/Value.

And loyalty programs are no exception

At their most atomic level, the battle is fought on two fronts:  1. minimizing the cost / investment in loyalty programs and 2. driving higher return / value

The typical approach is half baked

Most companies we've worked with have treated the two halves of the loyalty program ROI coin in a very unimaginative way.

Investment (cost) management is seen as a question of setting budgets and switching vendors for pricing advantage (eg. choosing a lower cost provider of prepaid gift cards).

Return (value) enhancement is focused on rotating rewards and criteria for those rewards to optimize the impact that reward programs have.

Innovating when your company is committed to loyalty programs over the long term

Companies spend a lot of time innovating in a lot of areas -- product, systems, employee management.  But they often take a less proactive approach to loyalty programs.

Given the importance that your customers have in your business -- is there anything more central? -- we would think innovation would focus on on all customer facing efforts including loyalty programs.

So what are some of the missed opportunities?

Discover Card provided  good recent example

If you look closely at the Discover Card rewards programs, there are two key facets that are happening behind the scenes.

One is the use of seasonally enhanced rewards -- particularly as cash strapped consumers go out to buy Christmas gifts they're not sure they can afford.

The second is leveraging partnerships -- with companies that are dependent on seasonal volumes to address specific business model issues they may have 

Enhanced Rewards Impact via Fine Tuning

What are some of the ways that your company could vary and time your rewards programs to greater effect?

What tools or providers out there could provide infrastructure to allow that?

Offering higher rewards / lower redemption rates based on timing suiting customers

Consider the Discover card example and, in particular, look for ways within to same spend achieve higher impact from rewards.

Cost of Rewards

Which partners can you leverage --  ones which have an intermittent need to generate revenue at any price?

Leveraging their needs, can you generate rewards for your customers while at the same time lowering your rewards costs.

Timing rewards to match partners' critical periods -- like low periods for airlines will present good ways to stretch the impact of your budget.

The Key Point: Strategy and Innovation = HIgher ROI

Upto a certain point, linear thinking can impact the ROI of your loyalty programs.  But as they mature and become a more entrenched part of your business, looking for more strategic ways to enhance ROI will yield greater results.