Loyalty Lingo You Should Know

Written by Tom Peace

1. Recency

Is a measurement of when the customer last interacted with program in a recorded event such as visited the Web site, making a purchase, calling the customer contact center and so on. Recency is usually considered the strongest predictor of future buyer behavior.

2. Value-at-risk consumers

Any high-value, high-yield customer with a high propensity to churn. Often Frequency Marketers give extra weighting to Value-at-Risk customers in policy planning and award budget allocations.

3. Player Model

A way to reward customers with another company's promotional currency. It's inexpensive and customers get instant recognition but customers decide whether to be in the program and the relationship is second hand. Reward examples include long distance, hotels, car rentals, credit card usage.

4. Cluster Analysis

List analysis technique examining geographic, demographic or psychographic characteristics. Defined as the process of dividing data into groups (clusters) to meet the objectives of a particular application.

5. Tier Mobility

The movement of customers between membership tiers. Tiers are often assigned on an annual basis. Programs may add escalating customer benefits and award earning opportunities by establishing membership tiers (e.g. gold and platinum levels).

6. Rules Engine

The algorithm that determines the offer given to a customer. Variables could be the product or reward value which is determined by factors such as average spend, purchase history, frequency and recency.