Wise Marketer sketched out loyalty trends for 2020 in customer marketing and based its thoughts in some quantitative research accomplished during recent months. At the end of this process, we realized that most of the items had a déjà vu feeling to them. In other words, these topics have been on the list of “things to solve” for most marketing professionals for the past 2-3 years.
It’s clear that the industry is still on a journey to execute well on the challenges we already know about. The biggest question we have for 2020 is what it will take to create a “tipping point” that closes the gap on some of the challenges cited and actions substantial and noticeable change in customer loyalty marketing.
After we published our article on Loyalty Trends in 2020, we put our ideas to the test, asking experienced professionals in the industry to offer their own perspectives on possible upcoming loyalty trends. We intentionally solicited input with geographic diversity. The comments below from John Bartold, BLK Consulting and Chuck Ehredt, Currency Alliance represent North America and Europe, respectively.
Trend #1: How do we meaningfully improve customer experience to impact customer loyalty?
How should brands strike the best balance between CX, incentives, and customer service in forming its loyalty strategy?
John Bartold: It begins as an inside job. Meaningful improvement starts inside the organization:
- Brands need the ability to collect the right data, organize the data, understand the data at the context level, and decide what will improve the customer experience and service.
- The organization must free associates to act on the customer opportunities while the organization builds capability through technology, people, and processes to more effectively and efficiently deliver to the consumer longer term.
- Incentives may prove valuable in the short term, or tactically, to sustain consumer interest along with associate efforts while longer term capability is developed.
Chuck Ehredt: What I find remarkable is that in 2020 we still find the CX team and Loyalty team in separate areas of most businesses. I would argue that driving customer loyalty needs to be a top 3 priority for every brand. That loyalty will come from the customer’s cumulative experience with the brand and their overall perception of value.
The CX received through digital channels can enhance or detract from their perception of cumulative experience. But if brands get their digital transformation right, the CX delivered through digital channels will be aligned and consistent with how the brand wants to engage with and treat customers.
Trend #2: Are loyalty points and currency programs still relevant?
Financially responsible marketing is favored in the executive suite these days and to measure the impact of marketing dollars, there must be a way to keep score. Nevertheless, the argument about whether using points currency continued in 2019.
John: There will always be a debate about points, or promotional currencies. The debate isn’t really about the currency, it is about the value exchange proposed through the currency design. Get the value exchange right and the debate subsides. Face it, there are brands with ‘points’ who receive minimal comment, such as Starbucks. Starbucks members perceive value in the currency and how the currency provides the value members expect.
Keeping score for the sake of understanding impact is important, but many brands are measuring things that are meaningless. There is a widening gap between what the executive suite understands, versus what is actually happening at the customer level. And that’s because the executive suite sees the spreadsheets and the bottom line without having any context.
The term financially responsible marketing feels like a nice way to say, “do more with less”, or “automate” — instead of spending meaningful time on strategic planning and questioning outdated metrics and zero value exchange (not a one-way street).
Chuck: Currency Alliance is clearly in the points business, but we do not believe that giving customers points builds much loyalty. Rather, a points-based program is another excuse to maintain a dialog with customers, but perhaps more importantly, a fairly easy way to measure results.
Offering loyalty points can enhance the perceived value customers receive, but only if those points have real utility for the customer, i.e., what can the customer do with the points. Far too many brands still only make their points valuable when frequent customers have a lot of them.
The majority of customers for any brand simply don’t have the frequency to collect a lot of points, so if brands want those customers to also engage with a loyalty program, they must collaborate with complementary brands. This allows customers to earn points in many more places they shop and/or enables some useful redemption options for customers with lower point balances.
Every marketing activity must be financially responsible — and especially a loyalty program because a lot of value is at stake. The beauty of points-based programs is in the magic that can be created when the customer’s perceived value of rewards far exceeds the cost of redemption. Too few brands take advantage of buying attractive (but distressed) products or services at a cost well below the customer’s perceived value.
Trend #3: Mobile Apps
Everyone has a mobile app. That is not exciting to your customer. The question is, how can you pack your mobile app with value and utility to make it worthy of download and repeated usage?
John: Brands are missing additional context here — WHY are people using their mobile app versus some other channel or why would they want to use a mobile app? What is the utility? Why do I consistently use Starbucks to pre-order, but Dunkin as a wallet to pay? There is a reason.
Understanding the motivation and experience of a mobile app user requires asking questions to get insight, and then action on that insight. Let’s start with understanding ‘your’ consumer and how each consumer prefers to interact with the brand and what they do through each channel or would like to do through each channel.
You may need to ask yourself if you even need a mobile app based on your audience. Think opti-channel and what your consumer wants, and then engage in their channel.
Chuck: The key to getting customers engaged with mobile platforms continues to be the utility of the services that the customer can achieve by using them. However, it is a fantasy for most brands to believe that their app is going to remain top of mind for most of their customers. Customers may have a relationship with 50 brands, but they are not going to have 50 apps on their phone (plus the other 20-30 tools they use to manage their lives).
Brands need to consider that they exist in the lives of their customers to solve customer needs. Those needs are often complex and the best approach to remain present is to create digital services that not only exist in your own apps but can co-exist in many other digital ecosystems.
Software as a Service (SaaS) and micro-services solutions are maturing to the point now where many brands can make their services available to other digital ecosystems. Becoming relevant in those broader ecosystems requires the type of open thinking and willingness to collaborate with complementary brands that you find among companies that are well along with their digital transformation efforts.
Those brands that only digitize existing services but don’t redesign their value propositions will be left behind as they get blocked from co-existing in these new digital ecosystems (effectively open marketplaces).
Trend #4: Technology versus your associates, where is there more value?
While exciting through its innovation, technology is enabling but not customer facing. The most valuable asset in your organization could be your customer facing employees. Isn’t it time to invest more in training, wellness, and happiness to create the best possible result?
John: Yes. While wellness and happiness should always be a consideration, especially in a tight labor market, let’s specifically focus on how to make associates happier and more productive in their role and serving their customer.
All too often, associates see the gaps in the consumer’s experience well before anyone else. Yet, in many organizations, associates don’t feel empowered to address the situation or even how to go about getting change to happen to improve the experience. As much as there is a focus on connecting with consumers, brands should be as focused on using digital technologies to provide access to information and tools to allow associates to report issues or opportunities for improvement. This is not just frontline associates. We are all customers and can contribute to making the consumer experience better.
Chuck: As we have said, technology is an enabler — and for some customer journeys, it is the customer facing service because the customer does not want to interact with employees to meet their needs. But the premise is right that more effort needs to go into employee development or enablement.
I might argue that if employees have the right incentives, the service they provide customers can dramatically improve. What we find too often is that an organization will provide a lot of training on what employees ought to do, but then have incentives that are not aligned to encourage that behavior.
Trend #5: As it turns out, “Data is NOT the ‘new oil’”
Data is more than a resource that anyone with available budget can mine, refine, and market for profit. Data is a valuable, delicate, and sensitive commodity that should be treated with an attitude of stewardship, not ownership. If you don’t agree, then be prepared to turn over the potential of your marketing operations to the regulators and legislators.
John: 10 years ago, he who had the most data, won. Today, it’s 100% about having the right data and knowing how to use the right tools to filter it and create profiles that are useful to the creation of context.
Data belongs to the customer. Regardless of how it got into the hands of the brand, it still intrinsically belongs to the customer. Regulators and legislators are already involved and getting more involved.
Brands must focus on how to build consumer value from the data and what data best services that mission because data without purpose is nothing more than overhead and risk for a brand.
Chuck: Customer insight is the new oil — because it enables brands to treat customers like real people and anticipate their needs. Data can produce that insight if it is used properly, but hording data has turned out to be a huge liability; and, in most cases, enormous cost with low Return on Investment.
Brands need to understand their customers’ lifestyle preferences so they can be most relevant to the right kind of customers. The data wars are long from over, but the organizations that will win, will be those that recognize control of data is not the goal, but rather how the right data can enable the right customer touchpoints that build brand affinity over time.
Trend #6: Will the promises of “customer centricity” ever be fulfilled?
It’s almost as if the executive suite knows what it “should do”, but can’t quite attach a stronger enough financial reason to make it a priority goal. When will customer centricity become an objective that warrants sustained investment?
John: At some point in the last 10 years there’s been a perversion of these marketing buzzwords to the point of becoming meaningless. A large swath of the executive suite has not left financial mode mentality and were happy to invest in Marketing and Client teams’ “customer centricity” while the trend brought increased revenue to the business. An unrelated bad quarter and guess who gets cut? You guessed it. The customer centric people.
Customers are not won in a short timeframe. Our educational approach and business mentoring are centered on the manufacturing and product mindset of the last century. While the customer centric approach has been a topic for the last 2 or 3 decades, it really hasn’t been a practice except in a few pockets. Those pockets are showing promise because they have found without customers, there is no business.
Chuck: I agree. I think most people in management and the C-suite know what they need to do, but only the C-suite has the incentives to push for innovation — and the rest of the organization is incentivized to rock the boat as little as possible. This plays out among loyalty teams that we interact with daily.
The people know what changes they need to embrace but they have very little incentive to change. That’s a huge problem, because by the time it becomes obvious that they must change, it will be very hard to recover as their customers and customer preferences are evolving so fast.
We will continue to publish comments from other notable experts on loyalty trends from across the globe as we gather them throughout 2020.