The growing point of customer loyalty

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By: Wise Marketer Staff |

Posted on March 14, 2013

The growing point of customer loyalty

Customer loyalty is a phrase that many business owners misunderstand, and it is no wonder, according to loyalty app expert Steve Schroeder of AppGage, because it describes so many wildly different ideas and approaches.

In fact, the very phrase "customer loyalty" has become rather cloudy and vague. Many solutions that have little to do with true loyalty have been grouped into the space of loyalty programmes; many do not realise the potentially massive scope of a dynamic loyalty suite.

"Here, I'll share with you some of the ways that we can use data and knowledge about customer desires and behavior to grow your business and reach customers on the deepest emotional level," explains Schroeder.

Technology allows us to serve customer needs like never before, in ways that benefit businesses in the long term. A new relationship has emerged between customers and the businesses they frequent, and businesses must step up to meet new consumer expectations, or risk losing their customers forever.

We'll take the example of a customer named Mary to illustrate some ways that businesses must begin interacting with their customers. Customers like Mary are starting to expect communication that is pertinent to them and that feels personal. Here are some guidelines for effective (and profitable!) consumer communication:

  1. We need to communicate with Mary when she's out and about and near a business she's frequented in the past - even if it's been 30 or more days since her last visit.  
  2. We need to use a variety of data from a variety of sources (social media, web browsing, visits, spending, where she goes and when) to understand Mary as a person, to get a sense of what she likes and dislikes. Then, we need to be predictive about what Mary is likely to do, and send her relevant offers at precisely the right time.  
  3. We need to be creative with offers and deliver value, rather than simply discounting. For example, if Mary and her husband enjoy golfing, we might offer her a free round of golf with a cart for spending X amount of dollars at restaurants she already frequents. This way, we create a relationship with surrounding businesses, such as the country club. By doing this, we protect price points for merchants while delivering higher value to consumers.  
  4. We need to support Mary's heartfelt need in a fully transparent and accountable way. For example, Mary's purchases and spending can trigger donations to her school or church, and she can see that money being used for causes she cares about. This way, Mary feels good about spending her money.

Customer loyalty in today's digital environment is complex, and it requires more than broad digital blasts and generic email messages to engage consumers. Proper analytics tools can go well beyond purchase behavior and can educate us about what kind of person Mary is and what makes her tick. This way, we can present offers that mean something to her, allowing her to feel empowered by her relationship with local businesses. Her loyalty, in other words, has tangible benefits. Here, then, is a simple description of what businesses must do to reach today's consumers: "Businesses must apply accumulated knowledge of behavior patterns and emotional decisions to customer interactions, so that they can affect future behavior patterns and customer decisions."

Mobile Relationship Marketing, or MRM, is the new CRM in the business world. MRM was the most investigated topic in marketing in 2012, and for good reason. Today's smartphones have 14 sensors built into them-including GPS, cameras, Wi-Fi, accelerometers, touch screens, NFC, gyroscopes, light sensors, and many more. These are just the sensors that are already present in smartphones today; there will be more sensors (and thus possibilities) in the very near future.

Today's sensors can effectively determine customer behavior, like which customers stay at home on Saturday nights to watch Pay-per-View, which customers are likely to dine out and why, how much they spend, what they purchase, how long they stay out, and even whether they visit a bar after dinner. They can identify the lifestyle patterns of stay at home moms, people who are athletic or like to eat healthily, commuters, tourists, workaholics, and even people who are more stationary, or like to walk to local establishments.

In other words, dynamic behavior profiles are available to us now in ways that were formerly unheard of. Furthermore, data analytics allows us to explore why people make the decisions they do beyond their simple "needs"; new technology allows us to determine the emotional reasons that people behave the way that they do. Our framework allows us to pool this data, use it to develop trust, and then leverage our knowledge to increase business and communicate in a relevant manner to engage customers with select business locations.

The world is no longer transactional; it is emotional. Brands and businesses that recognise this fact and learn how to tap into the emotions of customers - to show that they know who their clientele are and what they prefer and treat them well based on that knowledge - will win their customers for life. Of course, they must provide a good product and good service, but that is the easy part.

The hard part is creating proper solutions to deliver what is necessary to inspire true loyalty. This can't be done by a business on its own; instead they must secure a partner with the expertise to deliver custom solutions based on specific needs. This partner needs to know how to secure customers through emotional attachment. First mover advantage is huge - once the relationship is established, it will be ten times more difficult to pry your customers away. Should you lose a customer to marketing mistakes, you're likely to lose them forever. In other words, the stakes have never been higher.

In Schroeder's opinion, then, the future of marketing boils down to three developments:

  1. Using sensors inside and outside of mobile devices to gather knowledge of customer behaviour.  
  2. The ability to feed this knowledge into the proper analytics framework to decipher individual wants, needs, and desires. Think of this as if you were dating a robot, who learns about you based on where you go, what you do, and how you communicate with them. You don't need to verbalise anything - your actions speak louder than your words. Similarly to your spouse, businesses will have this ability to anticipate your likes and desires. Like in a human relationship, if this trust and knowledge is abused by businesses, it's likely that a customer will flee, probably for life.  
  3. Basically, it's about the right communication at the right time. Communication needs be relevant and personal, as if the business was in a relationship with the customer (which it is), knowing what the customer needs and when.

Imagine if sensors outside of smartphones had similar capabilities to the ones inside of smartphones. Imagine being able to trigger messages and data to people, without requiring a specific app or even that the customer has their phone turned on. These capabilities are already being utilized for some purposes, but have never been applied to marketing. The major corporates are still vague about the proper use of this kind of data and are still making fundamental mistakes in terms of customer interaction. They have the 'widget space' tied up, but still seem confused how to confront this new arena of customer engagement and value.

Another growing practice is likely to make customers much more willing to share information about themselves with marketers, on their own terms. This used to be known as Vendor Relationship Management (VRM) and the idea has evolved greatly in recent years. VRM allows businesses to offer consumers the chance to share information about themselves and what they want at the point when they're ready to buy. For example, if you wanted a new pair of jeans, you could alert your preferred brands and they could offer you suggestions. With the new VRM, a customer is satisfied because their information sharing helps them, rather than burdens them. It helps them find the jeans they want faster, and provides information to businesses seamlessly, rather than presenting a nagging survey that the customer doesn't have time for. This, like other effective customer loyalty practices, encourages the customer to see businesses in a positive light-as making their life easier, not harder. This is always a good thing.

Relationships between brands and consumers are changing quickly and the impact of data sharing could be much greater, and far longer-lasting. What we know is that consumer expectations keep rising. Businesses who recognise this now will benefit in the long run. To meet these desires, it takes a robust loyalty framework - one that's far more complex than the punch cards, points, coupons, and discount systems that dominate the marketplace today.

New capabilities have changed the game and customer loyalty has taken on an entirely new meaning. The good news is: Businesses can now deliver value without discounting - value is more important than a low price. By learning about their customers, business owners can implement solutions in ways that make a real difference to their bottom line- all while making customers feel appreciated and important.

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