Earned, not Given: The Secret to Customer Loyalty in the Digital Age

February 12, 202014min

The SAS/Futurum Experience 2030 report has posed an interesting question: what will drive customer loyalty by 2030?

The landscape of customer loyalty is changing. Gone are the days where consumers placed blind faith in brands, shopping habitually for their convenience.

Empowered by technology, consumers are using easy browsing to compare the competition, finding the best deals for them at the click of a button. Does this mean that all hope of customer loyalty is lost?

Definitely not. Brands simply need to react to this new age and work harder to firstly understand the driving forces of loyalty, and then to actually earn it.

Customer loyalty theory boils down into two different aspects:

  • Behavioural loyalty customers repeat purchasing your brand/product. This is sometimes referred to as “continuity”, as it could be simple convenience that drives this behaviour, or customer “inertia” (can’t be bothered to switch) – neither can hardly be described as loyalty!
  • Attitudinal loyalty usually described as some sort of ladder with ‘trial buyers’ at the bottom and ‘advocates’ or ‘fans’ at the top. Some CX practitioners are of the opinion that if you ‘wow’ customers enough you’ll make them advocates (high NPS) or fans (with your brand metaphorically tattooed on their arms). There’s merit in this argument, but we can’t automatically assume that high attitudinal loyalty equals your “best” (i.e. most profitable) customers – that depends on their spending power. We also can’t assume advocacy higher up the ladder – studies have shown that new customers are just as likely to recommend a brand if their purchase experience was good

I hope that you see from this (perhaps over-simplified) description that a brand needs both attitudinal and behavioural loyalty to be sustainably successful.

For business value to be delivered, I hope it’s also clear that behavioural loyalty keeps the bread on the table.

It is sobering to realise that some of your most profitable customers (high continuity with low cost-to-serve) may have little or no attitudinal loyalty. These customers may well consider moving their business to a new entrant or more convenient provider if the competitive offer is sufficient to overcome inertia.

The question in the SAS/Futurum Experience 2030 report is clearly more focused on behavioural loyalty, asking for “up to THREE features you believe will be most important to you in deciding to be loyal to a brand or organization”.

The results give eight attributes that consumers say will drive loyalty in the future:

ATTRIBUTES CONSUMERS SAY WILL DRIVE LOYALTY 2025 – 2030

(Top three most important to be loyal)

1

High Quality Products or Services

2

Low Cost or Special Discounts

3

Special Recommendations, Upgrades or Incentives

4

Immediate Availability (delivery within a few days)

5

Immediate Availability (same-day delivery)

6

A live person on the phone to answer questions or provide support

7

Sale notifications on my mobile or app

8

Social Responsibility (supporting causes I agree with)

High quality is top of the list. It’s worth reminding ourselves that ‘quality’ is not necessarily about ‘premium’ or ‘luxury’. In its most rudimentary definition, it’s about delivering what was ordered on-time, on-cost and to the required specification – very much about getting the basics right.

‘High’ quality is doing it well! If you can consistently deliver what you promised when you promised it at a reasonable price then you stand a chance of building both attitudinal and behavioural loyalty. It’s not sexy like CX delight theory, but it earns you the right to go on and build and deepen the relationship.

The features that come 2nd, 3rd and 7th are very transactional, and consumers are confirming that their behaviour can be influenced by offers if they’re well-made and appropriate.

This very much speaks to the need for providers to excel in real-time personalisation. Companies will build loyalty if they can truly understand customer needs and propensity, and then meet individual customers on their journeys to make relevant value-adding offers.

Expectations for quick or immediate delivery have soared in recent years, and the fact that they come 4th and 5th on the list shows how empowered consumers now are. Providers used to specify what “on-time” meant. Customers can now easily decide if that’s not good enough and switch provider.

The 6th most important feature – live person interaction – is a timely reminder to companies dashing for digital transformation that they mustn’t lose the human touch. There was a chatbot option in the question but it didn’t make the top eight. Should we scrap our digitisation plans?

NO!

What we should do is have equal weighting in those plans for CX and cost efficiency. Transformations that ignore CX in favour of cost savings will lead to customers feeling like they’re just a number and that they’re being ‘processed’ rather than engaged. Good “design thinking” is always CX-driven and should always address attitudinal and behavioural loyalty.

The final feature on the list (social responsibility) is the only one that’s purely attitudinal. Brand image didn’t even make the cut!

This is definitely one to watch, particularly with respect to climate and environmental issues. Even highly loyal customers will reconsider that loyalty if you’re caught out by  something that society deems as irresponsible e.g. single use plastics.

It’s interesting to note that one of the options in the question – VIP (loyalty) programmes – also didn’t make the top eight. This is a fascinating finding in its own right. It suggests that consumers are beginning to twig that they can get a better/cheaper/quicker-delivered deal by shopping around than by sticking with an existing provider and getting a retrospective “reward”.

Is this the death-knell for loyalty programmes? I suspect not as they are often an economic vehicle by which many of the features that did make the top eight are offered. Simple spend-related programmes are now ubiquitous. My advice is that if you are considering launching or re-engineering a loyalty programme then it needs to be something very special and truly innovative.

We need to change our mindframe: “be a loyalty company, not loyalty programme”. This is how the SAS/Futurum Experience 2030 report regarding ‘Loyalty in the Digital Age’ concludes.

We must instil this attitude into our brands if we are to achieve customer loyalty. It does away with the passive approach of the past, instead urging brands to combine both attitudinal and behavioural loyalty methods. To do this, we must provide innovative design-thinking approaches to our transformation programmes, becoming increasingly customer centric and insight-led in the process.

As a result, we can disembark from the merry-go-round of ever-diminishing customers who have yet to consider our brand and begin to establish a clientele who have truly bought into the brand.

This is how we achieve sustainable business and profit.


Peter Lavers

Peter Lavers

Peter Lavers is the Director of Customer Attuned and a specialist in B2C and B2B CX management & CRM. As well as being one of the world’s top influencers in these subjects, he is also an IBM Futurist and part of the SAS Collaborators Programme.




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