By Ryan Rose, Clutch
As an increasing number of businesses embrace “customer-centric” mantras and strive to earn consumer commitment, the concept of “loyalty” has emerged as a focal point.
Unfortunately, beyond becoming a buzz term, customer loyalty is often approached tactically rather than strategically. This diminished, misunderstood view of loyalty has largely been driven by a series of myths that have plagued industries, duping brands to miss the mark in developing genuine affinity and even evangelism for their products and services.
Overcoming these customer loyalty myths is critical to designing and developing an effective customer experience. Here’s a look at five fundamental myths that commonly snag brands’ loyalty initiatives.
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Myth 1: The Backbone Of Customer Loyalty Is Discounts
While most loyalty programs are built on a foundation of discounts, specials, and coupons, these one-size-fits-all rewards typically ignore the individual customer and lack personalization. This means brands are often eroding margin by giving discounts to customers that would buy without them. Aside from this, the discount-driven loyalty approach can end up attracting price-sensitive consumers that are more loyal to price tags than brand names.
Bottom Line: Experience drives loyalty. Bolster it by incorporating established dimensions of the business that have minimal cost, like complimentary gift wrapping or valet parking, or a personal shopper, or product sneak peeks. Simple, rewarding experiences can drive customer commitment more than a coupon or discount.
Myth 2: The Key To Loyal Customers Is Rewarding The Transaction
The vast majority of loyalty programs are rooted in rewarding the purchase, and ignore the customer’s ancillary experience beyond the checkout. While the transaction is important, and obviously drives revenue, a variety of engagement points impact the customer’s experience. From general communications to promotional campaigns and social interactions, ensuring the individual has an exceptional experience has intrinsic value.
Bottom Line: Often rewards are more valuable when they are unexpected. ‘Surprise and delight’ experiences create genuine affinity whereas anticipated rewards can lead to expectations and entitlements, derailing the fundamental purpose of the benefit.
Myth 3: Customer Loyalty Is An Expense Only ‘Big Brands’ Can Afford
Today’s “always on” consumers have so much price and product information at their disposal, creating myriad detours on the path to purchase that make genuine loyalty difficult to achieve organically. So it’s never been more critical for every brand, no matter the size, to focus on the holistic, cross-channel experience to drive customer commitment.
Bottom Line: Developing a personalized, consistent customer experience is not only economical through cloud-based technology, data synthesis, and automated marketing, but also necessary to identify a brand’s most valuable customers (MVCs) to deliver personalized engagements and experiences. Upwards of 80 percent of a brand’s revenue is derived from 20 percent of its customers, and acquiring new customers costs seven times more on average than keeping a current customer, so the return on investment is quickly realized.
Myth 4: Customer Loyalty Technology Is Too Complex To Integrate
With an array of data silos, from point-of-sale systems and ecommerce platforms to mobile applications and social networks, brands often fall into the trap of believing the effort to synthesize omnichannel data into usable intelligence is nearly impossible to achieve.
Bottom Line: Consumer Management technology with the right established integrations can centralize and synthesize customer data from practically any source a brand leverages. Pulling this data together delivers a complete understanding of customers, allowing the brand to deliver relevant, personalized engagements to the right customer at the right time via the right channel.
Myth 5: There’s Just Too Much Customer Data To Keep Up With
The sheer amount of real-time customer data a brand generates across all its channels is daunting and often even terrifying to marketing teams given their historical limitations and the unfulfilled hype of big data.
Bottom Line: Consumer Management technology delivers actionable intelligence by doing the heavy lifting of visualizing the data, allowing marketers to finally identify their most valuable customers and develop meaningful relationships to motivate their behaviors.
Today, customer loyalty has largely been relegated to a transaction. While too many brands have avoided streamlining their experience, misled by the myriad customer loyalty myths, many brands conversely are synthesizing fragmented data to derive actionable, cross-channel customer intelligence. The key to this is Consumer Management technology, which empowers the brand with centralized insight, allowing customer identification and understanding to deliver personalized engagement that motivates behavior. This facilitates affinity, trust and commitment, which lead to loyalty and evangelism.
Ryan Rose provides strategic advisory for Clutch to leading brands across an array of industries, including apparel, retail, automotive and sporting goods. He implements enterprise-level software solutions and advises a variety of leading brands on strategic marketing initiatives that span consumer intelligence, customer experience, engagement and loyalty.
