Turning customer loyalty from habit to passion
There are generally two types of loyal customers in the world: habitual and passionate, according to UK-based loyalty provider, Avios. Both are important to brands as customer loyalty is all about attracting the right customer, getting them to buy your product, encouraging them to spend more, more often and ultimately drive retention and recruitment.
However, the goal for any brand or organisation should be to encourage a shift from habitual to passionate loyalty. To do that, brands have to go that extra mile to constantly deliver a high standard, and inspire and motivate customers on a regular basis. A tall order you may say, especially in the current economic environment but, as this article will explore, the rewards can far outweigh the investment.
Habitual loyalty - the recurrent, unconscious pattern of repetitive purchase behaviour - isn't necessarily a bad place for a brand to be, as it means consumers might be making rational decisions that bring in regular revenue, for example purchasing a train ticket or filling up with petrol.
However, it is questionable as to whether habitual loyalty is in fact true brand loyalty. Habitual loyalty, by its very nature tends to be automatic and the audience is not actively engaged, nor emotional about the brand. But habitual loyalty isn't a dead end. In fact it is arguably just latent passionate loyalty, waiting to be unlocked.
To do this, it's important to remember that passionate loyalty isn't just about points or rewards, it is much more than that. It's about rewarding the right customer behaviours and getting customers actively excited and talking about the brand.
Data collected on customers enables loyalty programmes to identify these customer segments and effectively map rewards to ensure they are relevant and rewarding - key to encouraging progression up the loyalty value chain, from habit to passion.
This is when investment in loyalty really starts to pay off, as activation of this latent passion could drive an emotional attachment to the brand, leading to advocacy and, in turn, genuine, active loyalty.
This theory of emotional attachment reflects our experience at Avios. For example, with the British Airways American Express credit card account we see a significant number of consumers take out the card, that don't currently fly with British Airways - rather they have an emotional attachment to the brand name, that drives their participation in the brand experience, through the credit card account.
This passionate loyalty toward British Airways means retention rates for the credit card account are high. But this doesn't occur without significant effort from British Airways and American Express to surprise and delight customers with rewarding and relevant offers.
This demonstrates that passion for a brand can be somewhat irrational, but the benefit of this is that when people are passionate and emotional about a brand they automatically become advocates, recommending the brand to others and thereby becoming recruiters of new customers for the brand - a welcome by-product of passionate loyalty.
So how does a brand achieve this 'passionate' status? The first step is to encourage consumers to have an emotional attachment to the brand. But brands need to provide a reason for this, by really bringing the brand to life.
This can be difficult to do for some brands, for example credit cards, which may struggle to evoke any emotional attachment to the product. In this instance, brands need to look to enact this passion by other means. For example, through a loyalty programme such as the Lloyds TSB Avios Duo credit Card Account, the reward for buying the product - such as Avios' Money-Can't-Buy travel experiences - makes the emotional connection with the customer, in turn creating passionate loyalty toward what consumers usually view as an otherwise 'bland product'.
Brands should therefore assess all customer touchpoints and their experiences, analysing how to surprise and delight them about the brand in order to drive passionate loyalty.
For example, at the Isle of Wright festival in 2012, Carling was the main lager supplier. While its audience at the festival could have habitually purchased the drink while at the festival for a limited period, Carling decided to drive passionate loyalty toward the brand through a promotion that tapped into consumer needs at that time. It offered them the chance to win a luxury shower every time a pint was purchased. This instantly transformed the way people engaged with the brand and get excited about what would otherwise be just another pint of lager. Who wouldn't want a luxury shower at a muddy, cold and wet festival?
Brands also need to be able to distinguish between what customers say is important, and what is actually important to them. Avios does this through establishing the rational incentives and offers that are important to customers, but the company also encourages the emotional, passionate loyalty between customers and loyalty partners by inspiring members with travel-related aspirations.
Bridging the rational and the emotional needs of customers to enable genuine, engaged and passionate loyalty to flourish, by consistently being able to exceed these needs and expectations, has to be the driving force behind any brand's attempt to turn habit into passion.