The New New: Customer Loyalty In Today's Business Landscape

by editor , David Baker, Sep 12, 2011, 11:15 AM

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There is a difference between what we deem loyal and repeat customers.   Loyalty is about creating purchasing habits to a point to which an emotional connection between the brand and the customer are the proxy.  The challenge is that marketers in many cases believe that repeat customers have developed loyalty traits and index them accordingly. 

 Does that mean you will spend more on the same item, when feature/values are at parity?   Does that mean you will be bypass alternatives that are more convenient?    We love Barnes and Noble, for the brand, for loyalty purposes, for convenience -- or for the discounts we get with our Barnes and Noble card?    My family has branded "book store" to Barnes and Noble -- much like Starbucks is for coffee.  Challenge is, there are so few "iconic" brands that have the retail presence/distribution to be that convenient.  If there had been two Borders bookstores within five miles, this purchase habit and branding wouldn't have the strength in this market segment.   Does this make me loyal to Barnes and Nobel?  Does it transcend channel (buying books online)?  Loyalty is shifting.

Switch gears to Amazon.   Many have developed purchase patterns on Amazon. We'll see very soon the degree to which convenience outweighs costs when Ttxes get levied on internet transactions. Should make for an interesting dynamic for pure play online retailers.  

As you build your customer loyalty programs, consider:

You aren't Coke, McDonald's, Starbucks or BMW.   These are iconic brands with mass distribution.  Few have the means to extend brand experiences so prolifically on and off line. Don't build your strategy around how these brands rose. 

1.  Loyalty is a derivative of the level of involvement required to make a purchase.   I love Charmin, but I'm not particularly loyal to my toilet paper and the consideration cycle is low.   

2.  Rewards and loyalty are not the same.   The rate of adoption for rewards programs is directly correlated to the rate of decay once those rewards are removed.  

3.  Communications drive engagement, not loyalty.  Digital channels deliver value in many forms, but from a customer loyalty perspective it's a fulfillment and a notification layer at its best

4.  Social engagement is distinctive, but too new to be a loyalty determinant. Social is a proxy for engagement, not for loyalty.  

Our industry is evolving not only in how we how we look at loyalty marketing, but also how consumers see brand loyalty and engagement.   A few key trends that I believe will change our businesses:

·     Goal of loyalty has traditionally been centrally focused on  increasing enrollment. It will shift with renewed focus on "engagement" as a success proxy

·     Loyalty will not be single brand, it will be multidimensional in both the brand connection and how you look at marketing insight.

·     Loyalty currency will form new methods/outlets to "earn and burn" points/miles/cash (direct with the brand and new marketplaces)

·     The new viral will shift consumer direct programs to consumer indirect programs (social, viral, influencer).

·     Virtual currency is going to rival hard currency as engagement becomes more vital.  It won't replace "redemption value of goods/services and hard currency," but it may be a bridge to the type of behaviors and patterns you seek to engender with your customer base.

Given consumer channel shifts, generational changes in purchasing patterns and  "engagement" shifts (mobile, social, retail), we'll be looking at loyalty marketing through a new lens.   As former Procter & Gamble CMO Jim Stengel has said, "If you want to understand how a lion hunts, don't go to the zoo, go to the jungle." We've been recycling programs "in the zoo," but I want to see some breakouts that shape a new form of social CRM and loyalty engagement.

 

 

 

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0 comments on "The New New: Customer Loyalty In Today's Business Landscape".

1. Paula Lynn from Who Else Unlimited
   

   commented on: September 12, 2011 at 3:25 p.m.

   Number 2 rings very true with Marriott. Their loyalty program has gone down hill and it is very easy to circumvent them when choosing a hotel as nice and less expensive. I have been on the plains where the lions hunt where you give points for seeing one instead of getting them.

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