Reports of Loyalty's Death are Exaggerated
There's been a lot of talk recently about the death of loyalty and, although it's clear to see where this has come from, Barry Smith, senior consultant for Ikano Insight says he's putting his stake in the ground and completely disagreeing.
We all know that tablets, mobiles and laptops have radically changed customers' behaviour. Buying that new outfit is no longer an experience saved for a special Saturday shopping trip. The weekly food shop can be taken care of whilst watching the latest episode of Coronation Street (probably on catch up TV). And, as we finally catch a glimpse of spring, new gardening equipment can be taken care of via an app on the commute to work.
The customer is now more in control than they have ever been. Freed from the restrictions of store opening times they can buy what they want whenever they want it (assuming suitably convenient delivery schedules can be arranged).
Web-based services also put unprecedented amounts of comparative data into consumers' hands - at the touch of a screen we can now read reviews, compare prices, and find the closest supplier of a product or service.
"I believe this instant access to data and a shift toward being 'always on' is causing the 'loyalty is dead' remarks. Connected consumers no longer have any reason to be loyal, right? No. That's wrong," asserted Smith.
Customers still want brands they can trust, brands they know will deliver the good service they expect. The last experience your customer had, good or bad, will affect whether they chose to remain loyal. For example if a customer orders online with the guarantee of receiving something by 12pm the next day and then it doesn't arrive, are they likely to order from there again? Or if they order their food shop and when it arrives most of it is close to its 'use by date', would they want that happening again?
So loyalty is more complex than just price and convenience; it's about overall customer experience.
What is perhaps true is that traditional mass marketing is dead. The one-size-fits-all email to every customer that doesn't take into account anything about the customer is fast becoming irrelevant (and ineffective).
But whilst crude, generic marketing tactics may be long past their use by date, it is important to remember that the fundamental principles of marketing are the same as they have always been.
The proliferation of digital channels has allowed brands and businesses to better understand their customers' preferences and - crucially - to engage with them in real-time, when they can add most value.
Multiple channels provide marketers with opportunities to retain their loyal customers through tailored communication. It allows them to find out more about their customers, and engage with them on their terms, therefore building lasting, mutually beneficial relationships.
However it's not easy to make a loyalty programme work simply by interacting with customers through every available channel. You need the right type of data - not just lots of it - if the messages and incentives offered are to be more relevant or targeted than before.
If you consider the number of brands that the average shopper might interact with, poorly thought through loyalty programmes could force customers to tune out completely, desperate to get away from the marketing noise. So targeting people with direct marketing emails, apps, in-store tablets, iBeacon alerts and social media will not necessarily translate into high conversion rates.
Truly skilled marketers know what excites their customers and what annoys them. They can cut through these opportunities and embrace those that make for an exciting and engaging experience. The right loyalty programme will deliver significant, measurable value for both the retailer and the customer, because it hits the sweet spot of maximum benefit and minimum interference and enables the retailer to build trust with their valuable customers.
The goal is to provide a consistent in-store, online and mobile experience across all platforms, to both minimise confusion and retain trust in your brand. This is what retains engagement long term and improves the quality of the data that underpins a successful loyalty scheme. Get the technology and communication balance right, and the complete process will work hard to increase profit.
"Building loyalty is hard work, it requires you to get to know your customers and to engage with them in a conversation. Just as your friends and family members are unique and subtly different, so too are your customers," concluded Smith. "If, as a brand or retailer you can't recognise this and use it to your advantage to build a strong, lasting relationships with your customers then for you, yes, loyalty is probably dead. But for those doing it properly and taking advantage of the new opportunities provided by ever more sophisticated channels, the concept of loyalty lives on as strong as it always has."