How to do cutting edge Customer Loyalty? For a question, the answer to which has long been a preoccupation of many enterprises, surprisingly few really get it right.
In fact, all too many companies pay little more than lip-service to loyalty and run outdated, unimaginative programmes that fall far short of surprising and delighting customers. So, how do you best address loyalty, how do you improve returns and reduce churn, how do you identify winning use-cases and suchlike?
A good starting point in answering those questions is defining what loyalty is. We’d propose this working definition: “Loyalty is when customers choose a particular brand more often than competitors, based on their belief that the chosen brand will be a better choice both rationally and emotionally.”
If we accept this, then we can see that loyalty has two aspects:
- Behavioural: This is reflected when customers stick with a brand, buying more of it than they do of competitors’ products.
- Attitudinal: This is reflected in the more abstract reasons why a customer might prefer one brand to its competitor’s offering.
So, if we’re looking to identify the components of an effective loyalty programme then the key question is “what drives behaviour and positive attitude towards a brand?”
The correct answer, beyond the transactional, might be that Loyalty is founded on something that’s hard to measure (which, perhaps, is also why a detailed definition is less straightforward than it appears). We believe that Loyalty can only be truly developed as an effective strategy if the basis of an offer (driven by price & service) is consistent in its appeal but we would also suggest that instead of creating an entire marketing strategy around what prices and services you want the customer to prioritise, you would to better to prioritise instead a strategy driven by how we want the customer to feel. In short, emotions and returns are not mutually exclusive.
Separating what we’ll call our humanity from your immediate marketing goals is important because real, lasting brand satisfaction is achieved through the application of different strategic parts, not just the obvious ones. And in our years of experience as loyalty marketing experts, emotion lies at the heart of true loyalty more than anything else.
Emotion is the glue that binds together all the other elements (service, price, trust, reliability, empathy, rewards, timeliness etc.) that contribute to satisfaction and creates a compelling, desirable offer.
In simple terms, what really counts is how we make customers feel about the component parts of the offer we’re presenting them with, how we wrap and position everything and how/when/why we communicate our offer and brand. These are the steps that will really define the kind of relationship and associated emotions we try to build to represent our brand. Accept this as true, and we believe it is, then only brands that build more positive emotional relationships with their consumers will enjoy a higher rate of long-term profitable revenue growth.
So, accepting that brands which build this (more positive emotional relationships) with consumers enjoy a higher rate of returns over time then we need to understand the drivers of Brand Loyalty in some depth in order to build these lasting relationships. To do this, you have to take a structured, data driven approach built on the following elements:
- Total brand experience: This means excelling at every interaction with the customer by providing superior value. It involves anticipating problems and offering a relevant solution, tailoring personalised offers, pricing and experiences, and simplifying interactions to the point of eliminating any friction. The goal here is not to adequately meet your customers’ needs but to surprise and delight them.
- Customer recognition: Acknowledging what matters to customers rather than exclusively to you is vital: time together, special days and events, dedicated offers and experiences, recognition of usage patterns, profiles, changing behaviour, aspirations, beliefs all count.
- Rewarding experiences: You need to deliver tailored and curated brand benefits, gifts and offers; surprise and delight offers mean actions beyond that expected, such as exclusive and curated rewards, emotional and functional benefits, a proactive approach etc.
- Customer participation: We know that active customer participation leads to higher memory ranking; gamified mechanics like challenges, milestones etc. driving interaction and engagement deliver better results.
Follow these steps as a starting point and the results can be pretty significant. One of our clients who took this path now has more than 50 percent customer engagement rate – engagement defined as customers redeeming benefits in the last 12 months – far exceeding the industry average.
Typically, traditional points-based loyalty programmes achieve around a 20-30 percent engagement. The same customer’s Net Promoter Score, another of its KPIs, has moved from 3rd to 1st place in its market in both prepaid and postpaid segments.
Harnessing emotion means surprising and delighting your customers. In the Digital Age, that’s a good idea.
Written by Xabier Miqueo (pictured), Senior Marketing Consultant and Keith Brody, VP of Marketing at Evolving Systems.