A Lesson In Customer Loyalty: The CX Factor
by iperceptions, on Jul 20, 2015
I have an obsession with coffee. The smell. The taste. The entire coffee experience. From the informal chat with the barista to the indie music playing in the background to the décor, it all plays a part in the coffee experience for me. As many coffee shops do, my favorite coffee shop until recently had a loyalty program.
You are probably familiar with this type of program - buy 10 coffees get the 11th free. Recently, as I went to redeem my free coffee and swap out my old card for a new one, the owner informed me they will no longer be running the loyalty program. Instead they will surprise their most loyal customers with a free coffee. The owner realized it wasn’t the loyalty program that was driving people back to the café, it was the quality of the experience. With a unique and inviting layout, irresistible pastries and the best coffee in the city, there was no need for a loyalty card to drive visits. But the owner did want to reward loyal customers, so instead she decided to focus on providing a memorable experience for her loyal coffee drinkers by surprising them with “freebies”.
“Loyalty owned and ruled by points and discounts is dead. Long live elevated loyalty strategies that focus on creating great relationships with customers.”
This mirrors what Emily Collins, a Forrester Research analyst said, “Loyalty owned and ruled by points and discounts is dead. Long live elevated loyalty strategies that focus on creating great relationships with customers.” Research done by Ipsos loyalty scheme provider, The Logic Group, found that almost two-thirds of people who were asked said they belong to at least one loyalty program but only 26% agree it makes them more loyal. Also if you are like me you probably have a number of loyalty cards and odds are many are in direct competition with each other.
In today’s customer empowered world, the concept of loyalty is not dead but is drastically and irrecoverably changing. My coffee shop understands this and is investing in their customers experience knowing that it drives loyalty. But how does this translate into the digital world? The key to driving loyalty in the digital world is offering consistent and contextualize experiences.
Consistent and continuous experiences
According to the Digital Clarity Group, “Today customers can and will shift their allegiance immediately if disappointed. In the era of the empowered consumer, business success depends upon offering consistently outstanding customer experiences across multiple touchpoints and over the entire customer lifecycle.” This reminds me of Brad Rencher, Senior Vice President and General Manager of Digital Marketing at Adobe, who shared his experience of buying a car at the Adobe Summit this year. His experience started online, he configured the car he wanted on his tablet but when he visited the dealer he was presented with glossy printed brochures instead of his custom built car he configured online. Brad Rencher’s inconsistent experience across different touch points is not unique, this happens too often to too many customers. This disconnect and inconsistent experience harms customer loyalty towards a brand. In an article penned for Entrepreneur, Jim Joseph the CMO for Cohn & Wolfe said that, “If the experience isn’t complete and consistent, the totality won’t be effective in creating customer loyalty.” With the explosion of technology and the growing list of digital touch points, consistent experiences are key to drive customer loyalty.
Contextualize the experience
We live in an era of technology empowerment which has brought about a tsunami of data that marketers can tap into and improve the customer experience, particularly when it comes to loyalty data. The key is context. According to a new report by the Altimeter Group and StrongView, “Context provides a distinct understanding of a customer that informs the most relevant action that the firm should take.” This in turn impacts customer loyalty as Don Peppers examined in his article for Fast Company, “By focusing on deepening the context of your customer relationships, you can ensure greater customer loyalty and probably higher margins as well.” One way of contextualizing digital experiences is with Voice of Customer (VoC) programs which are the most effective way to understand your visitors’ intent, needs, and outcomes. By understanding what resonates with your customers, you can build loyalty by deepening your relationship with them.
Loyalty programs will continue to have a place in the marketers’ toolbox. The most successful loyalty programs will provide a consistent experience across touchpoints and provide context to the wealth of data collected. It’s only by putting the customer experience at the forefront will you create truly loyal customers.