What is Customer Loyalty? How would you define it?
That one question has sparked passionate debates, both in the boardroom and in the bar. The most fundamental area of disagreement is whether “loyalty” from customers is truly achievable, or if brands/retailers should refocus on engagement and experience as the path towards building valuable customer relationships.
The future of customer loyalty is upon us and as we emerge from nearly 18 months of non-typical living patterns, it is becoming clearer each day that people are adopting new shopping habits and sharpening their preference for specific communications’ channels and payment methods.
People are also becoming more thoughtful as to which retailers they frequent, carefully measuring the values of the brand for alignment with their personal values. That evaluation process is fueled by a subjective element where consumers listen to news, scroll Twitter and Reddit, and talk with their friends to process the latest message or cause supported that might alter their perception of a favorite brand.
The debate about whether loyalty is an achievable goal over a sustainable time period is not surprising in a world that generates news at a frenetic pace and where consumer behavioral is mercurial to the point of being nearly unpredictable. The debate about customer loyalty has gone beyond curiosity in its importance and carries important implications for your corporate future.
Now is the moment to redefine what loyalty means to your organization
Consumer Engagement and Loyalty experts at Exchange Solutions know all too well how misconstrued the concept of consumer loyalty and the exchange of value can become throughout an organization. Mike Hughes, Exchange Solutions’ CEO explains why this concept drives their corporate mission.
“The concept of Value Exchange Optimization within a Loyalty framework, formal program or not, is paramount to successfully achieving your organization’s consumer engagement and financial growth goals. Creating an optimized value exchange is achieved through understanding an individual consumer’s current behaviors and interests, identifying what incremental actions they could perform, and presenting an economically rational and enticing incentive that delivers value to the consumer while ensuring an incremental and profitable transaction for the retailer. That’s how we create win-win experiences for consumers and retailers.”
All the talk about becoming customer-centric has led to the point where prioritizing customer loyalty is no longer an option, but a necessary business survival skill. It’s time to embrace your customer base as your most important asset and adopt a clear vision of how you plan to build trusted relationships with them over the long run. The “build it and they will come” mantra is waaaay more readily applicable to loyalty marketing than baseball.
The value exchange Mike Hughes describes implies that when you adopt the right approach for your brand, customers will be delighted. In turn they will reward you with additional visits and sales while investors and shareholders will reward you with increased market value. You might even amp up your annual incentive compensation in the process, so everyone wins if you redefine loyalty successfully in your business.
How do you get started on the path of creating your own vision for customer loyalty in the future? You can start by reviewing whether your business focuses in on the Big or Little “L” of loyalty.
If you are focused on the little L of loyalty, you may have a loyalty program but find it continually challenged by senior management.
- Your focus is on the program and the programs offered by your competitors. How much value are they giving away in their points or miles currency? What types of rewards do they offer? What other program rules need to be matched or bested?
- You would like to spend time investing in continuous improvement, clearing away elements of friction in the purchasing experience and eliminating pesky details of your program that restrict value for Members, but you spend most of your time defending the program to the boss.
If you are focused on the Big L of loyalty, you probably have C-Suite agreement that customers come first above all else.
- You are continually honing your strategy to become truly customer-centric and highlight it in your investor briefings or owner’s meetings, sharing metrics indicating progress towards the goal
- You may or may not have a formal loyalty program, but you are gathering a data-driven understanding of your customer behaviors and are working to collect even more information about their lifestyle, life stage, and personal values in order to serve them better
Forward-looking marketers know that expanding the ranks of truly loyal customers is the golden ticket to profitability and higher capital valuations
Focusing on the Big L of customer loyalty means your strategy is carried out with great execution and is generating incremental visits, revenue, and profit. You are connecting more effectively with senior managers as you deliver access to performance measurement, meaning you never have to reply “I’m not sure” in response to the CFO or CEO asking about how your investment in customer loyalty is performing.
Understanding the nuances of this debate is critical to your success in guiding your brand to become more customer centric. If your focus is on your loyalty program, it’s quite likely you’ll never move the needle much to increase the ranks of customers who give you the continual benefit of the doubt. People don’t care as much whether you have a program, they care about how that program reinforces your brand promise and delivers extraordinary value. They want that program to be a testament to the hoped-for truth that your brand wants the customer’s loyalty first and before anything else.
The Big L of customer loyalty is a pinnacle goal. Next level marketers realize that absolute conquest of customer allegiance does not define success. Building trust, reinforcing brand affinity, and growing value is attainable and can be the most accretive aspect of customer loyalty to the business. Executing well with the value exchange in mind, as Mike Hughes described it, is the outcome of a Big L focused organization.
Whether or not you have an explicitly defined loyalty program, you can win with a Big L focus. Your go-to-market strategy can be based on engagement-centric campaigns and a formal program is not always necessary to achieve your goals. You may or may not choose to include a promotional currency (points or miles), but you do need to link the execution of your loyalty strategy to store and web operations to ensure that loyalty is part of the customer experience and to communicate brand authenticity to customers at each point of interaction.