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CRM in an Era of Habit Disruption

Posted on May 7, 2020May 7, 2020

The Covid-19 pandemic has disrupted people’s daily routines. Want to grab that favorite cup of coffee down the street? Sorry, the coffee shop is closed. Spaghetti and meatball night? Too bad, the local store ran out of ground beef. Client meeting at the office? Nope, Zoom meeting with surprise appearance of adorable kids or pets is the way to go now.

In these and many other areas of life, the well-rehearsed habits people had from the “old” days are suddenly thrust into the spotlight of their consciousness. As a result, old habits are breaking, and in their place new habits sprout. These transformations in habits have significant consequences for business. Some brands are being left behind from broken old habits, while others are discovering opportunities among the new habits. Overall, businesses that understand this habit transformation process about their customers will be better prepared to transition through the pandemic and beyond.

This article looks into psychology research to shed light on the habit transformation process and discusses how customer relationship management should respond to such disruptions.

The Loyalty Puzzle: What Loyalty Research Needs to Answer Now

Posted on April 19, 2020April 19, 2020

In the last couple of months, I have been super busy starting a new exciting research initiative, the Loyalty Science Lab. Housed at my university, the Lab’s mission is to create and promote cutting-edge scientific research on brand and customer loyalty. Through collaborative efforts between marketing practitioners and academic researchers from multiple disciplines and multiple industries, the Loyalty Science Lab identifies high-priority loyalty-related issues, engages in deep, evidence-based scientific research on these issues, and disseminates the insight to benefit loyalty research and practice. I am happy to say that the Loyalty Science Lab is now up and running!

As its first major initiative, the Loyalty Science Lab spoke with a group of leading marketing practitioners and academics. The purpose of the conversations was to identify important loyalty-related issues that need deep, focused research. The questions generated through this process were further narrowed down by the experts on our advisory board into a list of top-tier and second-tier questions.

In this article, I would like to share with you the major loyalty issues we’ve identified that need more research at this time. For a complete list of the research questions, you can download The Loyalty Puzzle 2020–2022 edition.

Research Focus: Who Benefits in a Coalition Loyalty Program?

Posted on March 25, 2019March 25, 2019

Many loyalty programs do not stand alone. Frequent flyer programs and hotel loyalty programs take on partners such as other airlines, hotels, restaurants, banks, and retailers. Other programs, such as Fuel Rewards in the US and Air Miles in Canada, are by design a coalition of businesses that come together to share a common program currency and reward structure. For consumers, such coalition programs are great because they allow consumers to earn points faster through many different means. But what about the participating businesses? Is it worthwhile to be part of such a program? If you do, should you set a generous point earning and redemption policy? In today’s Research Focus feature, I find some answers in a recent Marketing Science Institute Working Paper (Report No. 19-101) by Professor Stourm and her colleagues.

What Did They Do?

The researchers looked at a credit card based coalition loyalty program in Europe. In the program, card holders earn points by shopping at various partner businesses. Each participating business decides its own reward ratios, from less than 1% up to 3%. When a preset reward threshold is reached, consumers are automatically issued a reward voucher that they can use toward future purchases. Participating businesses can choose whether they accept reward vouchers or not. Accepting reward vouchers comes at a short-term cost as the program operator reimburses only 90% of the values of the vouchers.

In their analyses, the researchers focused their attention on one particular European city. They studied 1,636 consumers that used their card at least once across 40 partner stores located in the city. The research team was interested in finding out whether offering rewards created positive or negative impact among these partner stores, what businesses benefited, and how point devaluation as a result of an overall program policy change affected the landscape.