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5 ways to optimize customer loyalty in a changing landscape
Published on December 13, 2015

By Stephen Hay  |  Analyzing Customer Data  |  Dec. 10, 2015

Earning and retaining customer loyalty for brands is a more complex endeavor than it used to be. Use these tips to gain consumers' devotion and fortify long-term relationships.



Customer loyalty used to be simple. Give people a card and some points and, if you've done the math right, customers will be loyal. Well, this is no longer the case; customer loyalty has become a more universal nirvana that just about every brand now aspires to build.

How to build loyalty and cultivate a stronger, more profitable relationship with the customer is one of the greatest challenges for marketers. So, here are five critical ways ro drive greater customer loyalty.

1.  Make them pay

It might sound odd, but customers that pay for loyalty will be more loyal. There needs to be a clear value exchange. In other words, customers will expect to hear a tangible proposition to buy from you. Once they have invested their own hard-earned cash in something, they will work hard to get the maximum benefits from it, which means buying more from you.

Amazon Prime is a classic example where customers subscribe to the service, for which they get free shipping, free content, and some other goodies. Though a little coy about their actual performance numbers, Amazon's program seems to be working well in terms of adoption and prime member performance. An RBC Capital report in September estimated that Amazon had between 60 million and 80 million global subscribers. Two years ago, 25 percent of Amazon customers said they were Prime customers, but RBC Capital says today it's 40 percent. It also found Prime members generally spend more money than non-Prime members.

Paid loyalty can also sit comfortably alongside traditional programs.

IHG's Ambassador program allows guests to pay an annual fee to receive room upgrades and additional services or amenities, while at the same time, lets them continue to enjoy all the reward benefits of the IHG Rewards Club.

In today's Generation Y / Post '80s instant gratification consumer culture, customers are often more willing to pay their way to the top rather than slowly earning their way up the traditional loyalty status tiers.

2.  Real-time relevance

Making customers pay more for loyalty extends to better real-time benefits.

Picture yourself walking through the airport; your phone beeps and invites you to the executive lounge for only $20. As you pass some shops, it beeps again offering a $40 store voucher for $20. Real-time offers are not new, but intelligent, respectful, and sensitive targeting perhaps is.

Spamming irrelevant offers just because you can destroys loyalty and builds brand hostility. But intelligent analysis of behavior preferences, timing considerations, and response history allows brands to make more unique offers to customers. Such offers let consumers know that brands understand and care about their customers, and in return, customers give greater loyalty.

Consider a young mother in the supermarket; a beacon picks her up in the baby care aisle. A quick scan of her purchase history suggests her preferred brand of diapers should be running low about now, and then an irresistible competitor brand message conveniently pops up. Being provided such options has made her happy and loyal to the supermarket, and this was all paid for by the competitor diaper brand.

This partner revenue model has the potential to drive brands towards more responsible marketing. Brands that hold a close relationship with the consumer have the most to gain financially from allowing access to their customers. For example, in travel, it could be a frequent flyer program (FFP) or around town, it might be a mobile operator or a credit card business. However, they also have the most to lose, alienating those same customers with irresponsible marketing.

3.  Build better dialogues

Imagine a conversation with a friend, in which you attempt to discuss something that seriously concerns you, but your friend just insisted upon chattering away about his new phone. Clearly, this person is not a very good friend.

Amazingly, this is what many brands still do when they try to talk to their customers - minimal targeting, little versioning or customization, and no appreciation for context or what the customer is trying to tell them.

Brand communicaiton has gone increasingly one to one. From digital diplays and YouTube ads, to email and mobile messaging - all of this is being served up more personally by brands that genuinely want to be your friend and earn your loyalty. Art and science finally meet where great content that customers will genuinely love, is presented perfectly by a balance of targeting and relevancy.

The science is the marketing cloud, the next generation of automation tools that can deliver the entire marketing dialogue based on increasingly big data. This data extends well beyond traditional campaign history and web sessions to include satisfaction data, product usage, performance, and social dynamics. The brands are learning to listen on a one to one basis, to improve their communication one to one.

4.  Points 2.0

Reward points are not quite dead, but for all their historical success, customers are often becoming jaded with slavishly saving points up for promises that are often not fulfilled. Recently in Australia, top retailer Woolworths announced their departure from the market leading Qantas Frequent Flyer program in favor of a more tactical approach, keeping rewards and customers in-store.

In reality, reward points are moving away from the be-all and end-all of a loyalty strategy and are evolving into a new relationship enabling tool that delivers customers the brand experiences they want, when they want them.

Customers want feel-good treats such as games or other fun content that is easy to share, and experiences are becoming increasingly diverse in response to such demands. For some, that may be the sugar rush of instant gratification like cash back, while others may want more aspirational rewards that are traded for status or recognition. Whatever their desires are, it's clear that customers have taken more control over their own destiny.

5.  Beyond the call of duty

Beyond incentives and rewards, brands that genuinely care for customers can win them for life.

When your car breaks down, you have an accident abroad, or your hard disk crashes, typically you'll have insurance or warranties that cover the cost of such eventualities. But dealing with an insurance company can sometimes be more stressful than the original mishap. Brands, often led by banks, are teaming up with assistance partners to ensure that their important customers are covered every step of the way. When that customer needs help, it's one phone call away to someone that will take ownership and work in the brand's name to quickly make things right.

Tales of customer misfortune typically don't make good marketing stories, but they do make good marketing stories, but they do make great word-of-mouth and social media stories that get passed around until they become legends. Therefore, brands that want consumers to love them, they need to give a little love also.

In conclusion

In the past we may have just chosen only one of these paths, but a single path does not reflect the whole relationship or the entirety of a customer's experience with a brand.

These strategies need to be increasingly applied in combination to construct more personalized propositions. Ultimately this will ensure that every customer feels individually recognized, valued, and special.

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