For centuries, brands have been transfixed with the idea of loyalty. It’s easy to see why: loyalty is the gateway to advocacy, which meant that brands could count on their consumer champions to amplify their sales and marketing efforts, boost sales and drive acquisitions.
But what was once a very linear journey to loyalty has now become more of a game of snakes and ladders, with pitfalls, stumbling blocks and potential wins along the way.
A recent report from the DMA, Talking the Consumer’s Language, has shed new light on changing purchase patterns. Research shows that 76% of consumers are willing to spend time researching items or products in order to get the best value, rather than going back to trusted favourites. Increased competition, rising customer expectations and the proliferation of choice online have combined to drastically alter the loyalty landscape – and brands are having to employ new tactics to draw customers in and keep them coming back for more.
In the past, brands had only a very limited picture of their customers. Often, they would make assumptions about loyalty levels based on a crude demographic segmentation and what little information they had about their previous purchase behaviour.
But stereotyping customers like this is a short-sighted hangover from the pre-digital age, with old models of loyalty becoming increasingly irrelevant in the new era of customer connection.
Loyalty isn’t a one-size-fits-all concept. It manifests itself in different ways across different demographics and in different situations. As a result, brands need to be careful not to pigeonhole customers into certain boxes and make incorrect assumptions about how they will behave.
Fickle loyalty
It might seem like an oxymoron, but today’s customers are fickle, and loyalty can change at the drop of a hat. The factors that engender loyalty will vary over time – as consumers’ lifestyles and preferences evolve, they are less and less likely to be “locked into loyalty”. For example, the logic behind loyalty may at first be driven by price, only to later change to convenience-driven or habitual.
It’s a dynamic, not static landscape. The new breed of loyalty can be slippery and transient, meaning that brands must continually listen and learn from their customers over their lifetime.
Powered by data
It’s clear that today’s consumers are keeping brands on their toes, so businesses must make the best of the tools they have available to them to win the war on loyalty.
Essential to their arsenal is the wealth of insight into customer behaviour that brands now possess - helping them better understand what makes customers tick – and click.
In the past, if a customer’s engagement with a brand began to wane, marketers were left scratching their heads as to what led to this loss of loyalty. But in the digital age, data provides a series of clues and cues. By following the breadcrumbs, brands can identify the drivers behind customer behaviour. They can then set out to reverse lapsed loyalty with tailored communications that they know will resonate with the individual customer.
For example, brands can now use data to differentiate between those driven by cost, convenience or rewards. By basing their targeting on observed rather than inferred preferences – through web analytics, for example - marketers can reignite their relationship with a customer by offering them personalised and practical offers.
Capturing the right insight
Data, then, is the key to cracking the loyalty code. But businesses of all sizes can struggle to make the most of this data – particularly when it’s coming from various sources. For smaller businesses, the sheer amount available can seem overwhelming. For larger companies, who have the capacity to interpret this data correctly, it can be tricky to know when to take a step back to look at the bigger picture and ensure they are meeting their customer’s needs in a sustainable way, rather than focusing on the granular details.
Insight gained proactively from mobile interactions could offer a key enhancement to a marketers’ view of the customer. Done in an engaging way, overlaying these moments of insight with data gained from other channels can be one of the most effective ways of understanding the nuances of customer behaviour. Mobile can enable a new type of fun and engaging data capture by vertical or product type, almost like running a campaign specific focus group, but at a much cheaper price point. This in turn will give marketers a clearer, crisper picture of individual loyalty patterns and help them target their customers accordingly.
The good news is that a large proportion of customers are creatures of habit. In fact, the same DMA research reports that 43% of consumers surveyed admit they are habitual shoppers who buy from the same brands.
This shows that customers are essentially looking for consistent, reliable, and – perhaps most importantly – insightful service that will keep them coming back for more.
Data allows brands to provide this level of service in the most powerful way possible. Loyalty should be a two-way street - like all good relationships, the key to proving your commitment is first to show your customers that you understand them, and then making sure your understanding adapts based on their behaviour throughout the relationship.
By Juliet Schuler, SVP and MD International at Zeta Interactive
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