How brands fail at customer loyalty (and what to learn from it)

20th Jul 2015

The most significant evolution of brand loyalty is the empowerment of the customer. Customers are influencing every industry today – from banking to retail, through mobile payments, social engagement and online shopping. When consumers are in control and connected in every which way, it is necessary for loyalty initiatives to evolve. 

Marketing leaders are realising that loyalty is no longer solely synonymous with a “rewards program.” Loyalty today requires building an emotional connection with customers, maximising the consumer experience and adding real value to the brand-customer relationship. It is mandatory to engage customers in a relevant, timely and individualised way.

More than ever before, brands recognise and acknowledge the value of personalised communications to allow for superior customer experiences that foster long-term customer relationships. By understanding customers on a one-on-one level, brands ensure optimal customer experiences at multiple touch points throughout the consumer’s journey.    

So, why do we continue to see marketing leaders lose their way on loyalty?

1. Failure to analyse customer data and make it actionable.

Brands have a plethora of their own first-party data (data they own about their customers) at their fingertips. The key to unlocking value is organising the data, synthesising it and making it meaningful to act on. The primary purpose of data is to drive better relevance in connection with each customer, so centralising data is the biggest factor in using it successfully. 

It’s time to look beyond the data points to the individual. Does your brand’s chief marketing officer (CMO) spend time in your retail store, watching customers move and interact? Do you see customers engaging with products, taking out their smartphones to take photos? These data points act as micro-moments in time that serve to inform marketers well beyond a click or a call. Marketers must shift their perspective to see an individual person – rather than aggregated data points – to enable engagement on a one-to-one level.

2. Sticking to the standard and static one loyalty program for millions of customers.

The most prevalent programs generate bulk rewards for the customer, while successful ones identify and offer highly relevant and individual rewards and offerings for the customer, such as LuxDeco’s personalised shopping experience. Success here lies within the personal recognition the brand makes with the customer, knowing what she wants and needs in a specific moment in time.   

Ecommerce brands often have loyalty programs where the customer earns points for every dollar spent to redeem at a later time. Far too often, brands then deliver a static, mass communication to the customer with one message: “earn more points.” For a customer with high purchase frequency, this message is irrelevant. Instead, the brand should identify the right story for the right customer.

Brands should focus on the characteristics that comprise their ideal customer profile in order to build effective loyalty strategies. Deep loyalty for an omnichannel brand may mean driving purchases across product categories in order to compete with pure-play retailers such as Amazon and ASOS.

3. Limiting focus on one-time transactions at a singular touch point. Too little, too late.

It’s not just about a one-time, in-store experience. Brands should focus on putting together a program that creates an experience that builds a long-lasting relationship using trust as its foundation, and delivers a delightful experience using shared information that is relevant and timely. Loyalty is no longer a siloed marketing strategy that starts late in the customer lifecycle. Brands are acknowledging the impact of loyalty earlier in the customer lifecycle, even at the first touch point, and its ability to drive product value and service knowledge in order to combat new customer churn.

Loyalty needs to be infused throughout the entire customer lifecycle, and customer loyalty initiatives should emerge even earlier in the customer-brand relationship – at the very onset, in the customer acquisition stages. Brands need to have their loyalty strategies in place in these early acquisition stages, especially from a customer experience perspective. If retargeted display ads or abandoned cart emails continue to inundate the customer even after a transaction, it sets the relationship off on the wrong foot.

Because customer motivations evolve and change throughout the lifecycle, marketing leaders need to anticipate them and engage the customer accordingly. It’s not about loyalty rewards anymore, but about the relationship with the customer.

4. Using the wrong channels.

If you’re not talking to your customers on the channels they use most, then your efforts are likely all for nothing. Consumers today are available through so many channels; it’s impractical for marketers to favor one over another. Create channel-agnostic content, such as personalised videos, to engage consumers at any point in the customer lifecycle to distinguish your brand from the competition.

More and more brand loyalty programs today are supporting omnichannel initiatives and leveraging transactions across the standard online and in-store channels, as well as across contact center interactive voice response (IVR) systems, service and support channels. The key characteristics here are engaging customers in a meaningful, relevant way that adds value for the customer and deepens the relationship with the brand. Marketers that drive loyalty programs with customer data deliver a more personalised experience for deeper customer loyalty. A loyalty program that works scores points with the customer, not amasses them.

As chief marketing officer, Jeff Hirsch oversees SundaySky’s messaging and positioning, product marketing, demand generation and public relations. Hirsch has more than 30 years of management and marketing experience including more than 18 years in the digital space, most recently as president of CPXi. 

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