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Are these the four trends influencing customer loyalty?

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13th Jan 2014
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What will a brand need to do in the future to maintain, or even increase customer loyalty? Specialist CRM and customer engagement agency Underwired has identified a shift in consumer attitudes towards loyalty programmes where experiences have started to trump a simple points approach that many brands still employ.

They've shown that millions of pounds in points are being sat on every year, indicating a fall in rewards value.

To succeed, brands need to use customer insight, placing it at the centre of marketing activity, rather than placing too much value in the loyalty programme itself.

Below, Underwired highlights the four elements should lead the development of customer loyalty moving forward:

1.    The heart rules the head. Neuroscience is revealing new insights into the role played by emotion in influencing seemingly rational activities such as our purchase decisions. What’s really interesting is the extent to which this happens without our being consciously aware of it. Consequently brand owners need to consider the emotional ‘story’ as much as the rational argument.      

2.    If you have to buy it, it ‘ain’t’ loyalty.  A programme that serves to ‘buy’ desired behaviours can provide short-term gains but is just not sustainable as brands find themselves having to out-gun the schemes their competitors set up in response. Simplistic points-based mechanics are easy to imitate and easy to exceed. If one brand can buy loyalty one week, so can a competing one the next. The net result is that you risk being left with a programme that has become an undifferentiated commodity. 

3.    What’s the real value?  Given the cost of loyalty programmes, they can dilute profit and drain resource with little positive effect on consumer consumption habits, simply mirroring existing behaviours amongst existing customers. Furthermore, loyalty programmes can cause brands to waste huge volumes of rich data - viewing customers as blunt generalised groups understood only in terms of functional behaviours.

4.    Loyalty is the outcome. It’s important to view loyalty as an outcome of a wider customer strategy. True loyalty is the natural result of ensuring your customer experience is strongly aligned with the needs and motivations of your consumer and understanding what they value most. True loyalty meaning; earned not bought, difficult to replicate, enduring, emotional not simply functional.

“As the airline industry discovered to its cost some 20 years ago, consumers have come to regard traditional loyalty programmes as something of a hygiene factor – one which is expensive for the brand owner to maintain and increasingly ineffectual in actually promoting loyalty," said Underwired's planning director, Tim Williams.

"Act on this insight and you will find yourself having created a highly effective loyalty programme almost by default. Not only that, but as a bonus you will also have created a sound basis for your acquisition, retention, win-back, social media and advocacy strategies," he concludes.

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