CRM vs Loyalty: Are These Two Any Different?

A CRM or Customer Relationship Management software is a tool that helps you in collecting, organizing, and managing customer information. Loyalty on the other hand, includes a series of events where a customer is offered rewards, discounts, and many other incentives for their actions/purchases.

When a brand decides to launch a marketing campaign, one of its obvious and major goals is customer engagement. We all want to attract as many customers as we can through our marketing tactics (and killer content!). But as we begin our marketing journey two terms are seen used back and forth - CRM and Customer Loyalty. A lot of marketers get confused so this article will help you break the tension and bring some clarity. So, whether you are an entrepreneur, a retailer, or a marketer, this blog is going to clear a lot of things about customer engagement, CRM, and Customer Loyalty. 

First things first…

What is a CRM? 

A CRM or Customer Relationship Management software is a tool that helps you in collecting, organizing, and managing customer information. A business can use a CRM in many ways: 

  • Automating the customer journeys: Suppose a customer interacts with your brand for the first time. You can start sending them emails as a part of their welcome journey so that they can know the brand more and understand your unique selling points. Your CRM will be used to send automated responses. Similarly, you can automate the abandonment cart journey where a customer is reminded of the products they have left in the cart. 
  • Breaking data into valuable insights: A CRM is a powerful tool that can help in collecting and analyzing data. For instance, you can find more about the shopping preferences of your customer or their search history. 
  • Managing feedback from customers: You can use CRM to detect customer queries on different social media platforms or web chats and send out instant responses to them.
  • Creating Multi-Channel Digital Campaigns using customer understanding: You can use CRM to detect customer queries on different social media platforms or web chats and understand what they expect from your brand. Then, you can run different campaigns for different types of customers. 
  • Track & optimize all your campaigns in one place: No need to manage your campaigns from different platforms. Instead of banding your head on Facebook and Instagram Ad dashboards, CRM dashboards allow you to see all the campaigns and optimize them in real-time. 

What is a Loyalty Program? 

A loyalty program includes a series of events where a customer is offered rewards, discounts, and many other incentives for their actions/purchases. A loyalty program can help a business in many ways: 

  • Customer retention: Loyalty programs make it easier for brands to retain customers by intriguing them with different discounts and offers. Nowadays, customers are not only rewarded for making a purchase but also for their actions like following the brand on social media, sharing their personal information with the brand, or even downloading their app. Not only this, customer retention can help in increasing your sales and revenue to a great extent as compared to reaching out to new customers every time and trying to make a sale. 
  • Increasing brand advocates: A happy customer can help promote your brand. A loyalty program can also be turned into a referral program where you and your customer both get the benefit. 
  • Offer exclusive experiences & benefits: Today customers are not looking for the 5% cashback! Instead they are looking for experiences that make them feel special and a loyalty program can do that. For example, updates and rewards, complementary products, surprise bonus, etc. 

In all, we can say that both CRM and loyalty programs work in providing a better shopping experience to the customers. They help in gaining more information about the customers so that you can enhance the overall customer lifecycle. They help in retaining customers and increasing their engagement with the brand. 

Yet, both the CRM and loyalty programs work differently. They target customers/potential customers differently and have different technical requirements. Let us explore them one by one.

A CRM and a Loyalty Program both have different strategies

A CRM is a tool that works for a larger customer base. This includes website visitors, app users, potential customers, current customers, dormant customers, and more! It can help you manage different campaigns by segmenting your audience and reach out to a lot more people than you think. 

A loyalty program, on the other hand, works for only the top 20-30% of your customers. This is because not every customer is willing to be a part of your loyalty program. So, for anyone who does, the main aim of a loyalty program is to make these customers feel valued and provide them with incentives so that they keep engaging with the brand. 

A CRM and a loyalty program both have different technicalities 

The loyalty program is visible to the customers. So, it needs to have perfect timing and functionality. For instance, if you are not sending a thank you message within a day once a customer competes for their purchase with you, your message might not even make an impact. How your CRM works might not be such a big deal for the customers. 

A loyalty program will gather all kinds of data from every touchpoint. This means transactional data, behavioral data, and program engagement data. This data can further be used to segment the customers. A CRM on the other hand works on gathering basic customer information and customer feedback-related data. 

A quick example to explain how loyalty programs and CRMs work. 

You visit a website, browse through their products and add some products to your cart. But you do not complete the purchase and close the site. The next day you receive a message reminding you about the items that you have left in the cart. You also get free shipping if you complete the purchase. This is a CRM working in the background. 

Now, let us see how a loyalty program works.  

  1. Suppose you receive an email from your favorite shopping app that you can win double points on shopping this month. You read the email but you do nothing 
  2. After a few days you are visiting the mall and a notification popups from the same brand once again. It reminds you of the double points. 
  3. You visit the store and shop and win double points. 
  4. Now you have not shopped for a while from the store. So you again receive an email that you are missing here at the store and they even mention some product recommendations based on your past purchases. That’s the loyalty program enticing you to buy again from the brand! 

I hope now it is pretty clear how a CRM works and how a loyalty program comes into action. Now, the question is, what does your brand need?

Do you need a CRM or a Loyalty Program? 

In my opinion, a brand needs both. While a CRM can handle and provide automated communication to all kinds of customers a loyalty program can focus on some VIP customers and help enhance their shopping experience, thereby the reputation of your brand. With a CRM and an effective loyalty program, you can achieve the best of both worlds and deliver the best shopping experience to your customers. 

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