Can social media really drive customer loyalty?

1st Dec 2011

Most current loyalty programmes are short-sighted in their approach, with basic 'points win prizes' rewards, says Nick Brown. Enter social media. 

You’d be far stretched in life to find someone who didn’t want to be rewarded. The feeling of being valued and wanted is an emotion that we all hold dear and strive to achieve. For a number of years now, retailers around the world have been playing on this basic human emotion and have been driving customer retention and sales by creating loyalty programmes.
However retailers aren’t getting it right all the time. In fact, most current loyalty programmes are short-sighted in their approach, offering basic ‘points means prizes’ rewards. To elevate their position, retailers need to analyse the identity data they have on customers and offer them a reward that is relevant to their engagement with your business. Whether it is a supermarket offering a regular port drinker a set of crystallised port glasses, or a sports store offering a regular buyer of tennis products an opportunity to get cheap Wimbledon tickets, retailers need to break the loyalty mindset of ‘one reward for all’ and find the loyalty element that fits each of their customers individually.
Can social media help?
Social media has been a game changer for the way that retailers collect data and interact with their customers. It has allowed them to gain access to more personal information about their target market than ever before. Retailers can now see in real-time what their customers are interested in, they can also interact, ask questions and learn. Monitoring the conversations that customers are having online can play an integral role in shaping a successful loyalty programme. By harnessing the power of social media and using it as a tool for learning, retailers will be able to profile their customers with more accuracy and can therefore better tailor the rewards they offer them.
Retailers can not only use social media to learn about their customers. It can also drive customer loyalty itself through interaction and conversation. When customers advocate and work together with brands, this can lead to brand reinforcement and the development of brand ambassadors. 
The internet gives users a feeling of control, connectedness and the opportunity for ‘verification and comparison’ and retailers must realise this. But with any level of relationship, there is an investment of both time and emotional energy. Just as the best customer service people are the ones that take the time to understand the customer they are speaking to, look in to their history with the company and spend the time getting to know them; the best new age customer relationship and loyalty managers will do exactly the same thing, in real-time across different information silos.
Many consider this to be an expensive exercise and worry that engaging one-on-one may prove non-profitable in the long run. However, a two-way conversation with your customer or consumer does not always require active participation from you. Take for example your company’s website or email marketing. Using behavioural analytics and customer profiling, the platforms can be adapted depending on the visitor and interaction they have with your brand.
Reaping the rewards
There are more and more uses emerging for social media and the development customer loyalty and loyalty programmes is just one of them. If businesses can utilise social media to help create an environment of perfection, where customers feel loved and receive appropriate rewards, then it is guaranteed to have a positive influence on increasing the average spend from the customer over a lifetime or tenure; increasing the frequency that they spend at your store: and increasing the average order value for each individual purchase.
So it is no secret that, in a world where there is a real chance of people becoming saturated with loyalty programmes, online retailers need to be creative about how they give their loyalty programmes traction. By harnessing social media, retailers can tap into the trust and emotions of customers and deliver rewards with a real emotional value - leading to not only more, but also happier customers.

Nick Brown is MD of GB Group.

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