Customer loyalty is a term that has been thrown around so much that it has become a business bumper sticker. Brands have relied on loyalty programs for customer retention and for good reason. In a study by Bond Brand Loyalty, 81% of consumers say that loyalty programs make them more likely to do business with brands1. But at the end of the day, most loyalty programs make a few faulty assumptions like — loyalty is binary and the act of signing up for a loyalty program in itself qualifies a customer as loyal and so on. Customer loyalty is a complicated phenomenon and it isn’t binary anymore.
Customers enroll with loyalty programs for a myriad of reasons and to name a few —
Emotional benefits – Sephora’s loyal customers are given early access to new products, experiential rewards, exclusive offers and personalized recommendations which makes them feel special and unique.
Symbolic benefits – The Starbucks Gold Status Reward program is considered a status symbol among many Starbucks customers.
Functional benefits – Cinemark’s Movie Club subscription service delivers value on price and offers for casual moviegoers.
Be it whichever bucket your loyalty strategy falls in, all loyal customers can be categorized into two groups — active and passive loyalists.
In the case of Sephora and Starbucks, loyalty is more attitudinal and customers are influenced by their psychological and social values that lead to a bond with a brand. These customers are consistently loyal to a brand and this commitment influences their purchase decisions, making them monogamous or active loyalists. They are part of a brand’s loyalty loop2 and it’s in their mindset to think of that brand and its offerings first when they have a new need in mind. Loyalty programs that focus on fostering an emotional bond with a customer are instrumental in cross-selling and increasing a brand’s share of wallet.
On the other hand, Cinemark’s loyalty program fosters passive loyalty, where customers repurchase from a brand because it is convenient and beneficial for them. Casual moviegoers benefit from Cinemark’s price discounts on tickets and food, but that’s not going to get them to stick with the brand. These customers are loyal to a pool of brands ( say, Cinemark Movie Club, Sinemia, AMC Stubs A-list) that share similar loyalty programs and offer little to no brand distinction. In the advent of a new need, these customers go back to their pool of accepted brands and choose one based on convenience and availability. While they will give you a lot of business, they are likely to make a switch when there’s a flashier offering out there, despite their professed ‘loyalty’.
As a business, if your loyalty program plans to build trust through functional benefits like, special discounts and offers, customer loyalty will be fleeting and customers will switch to brands that can beat you at that game.
It’s imperative to understand that offering functional benefits will only go so far in building loyalty. Businesses need to structure their loyalty programs to offer emotional and symbolic benefits that both help boost their brand stature and foster active loyalty.
But, how do you do that? Here are a few tips:
Focus on Customer Experience
Customer service(CS) alone won’t cut it anymore. CS has become a must-have and comes in handy after the post-purchase stage. By then it becomes too late for a brand to change the mindset of a customer and fails to create a long-lasting bond. Customer experience(CX) on the other hand is what every brand needs. Brands need to show prospects that they care about their experience right from the get-go. Your commitment to creating a positive experience at each stage will help foster active loyalty! The memory of a smooth decision journey will spring back in the mind of a customer when they have another need in mind and that will push them to a repurchase. In fact, 86% of buyers3 will pay more for a better CX but only 1% of customers feel that brands meet their expectations.
Take Amazon, for example, the Prime subscription offers to solve pain points at every stage of the customer journey. Customers can,
– filter products by using the Prime tag in the Awareness and Consideration stage
– use the Amazon Prime credit card for exclusive deals in the Purchase stage
– use the Amazon Prime Key feature for a free in-house delivery so that customers don’t have to wait around for a package to be delivered in the Post-purchase stage.
Amazon is a clear winner in crafting experiences to wow its customers and gaining active loyalists effortlessly.
Chart out your customer’s journey and identify the pain points they face at every stage right from awareness to post-purchase. Come up with solutions to eliminate those pain points and make the customer journey seamless and fluid.
Active loyalists develop a bond with a brand because they feel its values align with theirs. This alignment is a major driver of active loyalty and is also what pushes customers to recommend a brand. To keep the relationship going, it is vital that a brand remains consistent and plays to its strengths. This will give customers the confidence that a brand will deliver on its promise every time. Making your brand dependable will magnify your brand equity and also elicit repurchases.
Google is in the top three brands of 20184 and one can argue that it’s because the brand is viewed as dependable. Google has consistently offered value to a point where they’ve become synonymous to what they set out to offer. Times are such where search engines are called Google and the act of searching online is called ‘Googling’ because customers depend on its consistent, fast, and accurate results. This consistency is what helped Google amass a high top-of-the-mind awareness and makes users think of Google every time they have something to search for.
Ensuring consistency in brand voice and image is not an easy task. Start out by conducting extensive research that involves focus groups and in-depth interviews with your target audience. Identify what their values are, what drives them as an individual, what their aspirations are and use these insights to tailor your brand communications. Establish values that resonate with your target market and lay down guidelines to ensure brand consistency. Conduct periodic audits to measure your brand awareness and strength, and witness how your brand fares in the minds of your customers.
Win Them Over
The lack of a bond with one’s customers is the very reason why many loyalty programs fail — they help get repeat purchases, but don’t convince customers from shifting to competitors. Brand commitment is a huge ask and cannot be bought by discounts and offers alone. Here are a few strategies to win over your passive loyalists:
– Share a personal bond with your loyal customers to show them that they are more than a transaction! Create a sense of community among your patrons. Starbucks, for example, has positioned itself as the preferred “third place” between home and work. This has made the brand more than a coffee company and a cafe that just serves coffee. Customers share a personal bond with the brand as they see it as a safe environment to bond with their peers.
Build a community for your brand and choose the right platform. Set goals for your community and give your audience a reason to join. Have strategies in place to empower your customers to interact within themselves which will help your community thrive.
– Start personalizing loyalty strategies and craft them to wow customers. Start with personalizing communications by including a customer’s name and add a personal signature5 to make it seem less automated. Delight customers with product suggestions based on their previous interactions and searches. Also, use purchase data in hand to give them relevant gifts and rewards as there’s nothing more off-putting than an irrelevant gift.
– Thank your customer every chance you get. Take a moment to thank customers to honor the commitment they have for your brand. You can send them a thank you note when they become your customer6,
Or to win them back7
Never Lose Touch
A customer engagement study by Gallup8 shows that fully engaged customer results in a 23% increased revenue, profit, and share of wallet compared to the average customer. Notwithstanding the business standpoint, having a constant dialogue with your loyal customers is healthy and helpful in reinforcing the value they add to your business. Don’t let deals and offers be the only thing you communicate to your loyal customers.
– Celebrate your customers’ wins like they are your own. Discover Card Services never let go of an opportunity to celebrate their customers. Discover Good Grades is a student reward program, that celebrates student customers who maintain a GPA above 3.0 by offering them a $20 statement credit each semester. In addition to this, they make it a point to send out personalized congratulatory emails when the student graduates, coupled with a credit line increase to make them feel good about their wins!
– Sometimes, all you have to do is to listen as this opens up a two-way dialogue that will help you identify your true brand advocates. Listening to your customers will help you meet their expectations and sometimes even exceed them. And that is precisely when a brand earns the undeniable loyalty of a customer.
– Proactively reach out to customers to show your commitment to customer satisfaction. This creates an avenue for you identify any roadblocks customers face at any point. Constant interactions will help you boost your brand’s top of mind awareness.
Fostering customer loyalty is a demanding task and when done right has a tremendous effect on your business. Chart out great experiences for your customers right from their first interaction with you and keep that conversation going. If you make sure to deliver customer delight consistently, you can go ahead and erase the thought of losing your loyal customers to your competitors!
1 — https://cdn2.hubspot.net/hubfs/352767/Bond%20Loyalty%20Report%202017%20Exec%20Summary_Launch%20Edition_US.pdf
2 – https://generalassemb.ly/blog/loyalty-loop-replacing-marketing-funnel/
3 – https://blog.sprinklr.com/your-customer-experience-survival-guide/
4 – https://www.interbrand.com/best-brands/best-global-brands/2018/ranking/
5 – https://www.instagram.com/p/BgANlXQFPff/
6 – https://twitter.com/VioletFeline/status/1039710038926024704
7 – https://twitter.com/meg__walker/status/1000386251369996288
8 – https://www.gallup.com/services/169331/customer-engagement.aspx