Brands have long relied on loyalty programs to build customer devotion. Rewards programs designed to motivate shoppers to purchase more frequently have grown in membership year after year: a Colloquy survey found that US loyalty programs reached 3.3 billion members in 2014 — a 26-percent increase over just two years — and the average household belongs to 29 loyalty programs.
However, a deeper look at this report suggests that the explosion in programs and overabundance of offers may actually be making them less effective at driving customer retention. According to the findings, more than half of loyalty program members don’t even participate in the programs, and active participation has been on the decline since 2010.
At the same time, consumers are rapidly changing their behaviors, making it harder than ever for marketers to create and maintain relationships with them. It’s now “The Age of the Customer,” where empowered consumers shape the marketing landscape.
They expect consistent and relevant experiences that provide immediate value both in person and online, and they will hop from brand to brand until they get it. In fact, 78 percent of customers are not loyal to any particular brand, according to Nielsen. And once a customer is lost, chances are they’re lost for good. Only 15 percent of shoppers say they would give a brand or product a second chance after a poor experience, an InReality report found.
Traditional loyalty programs aren’t actually fostering loyalty
Too often, loyalty programs aren’t actually creating relationships with consumers, but instead simply prompting them to rack up points and rewards for transactional benefits. So what’s a marketer in the high-stakes Age of the Customer to do, especially when future revenue depends on customer retention and repeat purchases? How can marketers surprise and delight consumers with experiences that turn them into fans and keep them coming back again and again?
The secret to creating loyalty among these “all about me” consumers is to know more about them and to use that knowledge to power more relevant interactions. But this is easier said than done. Today, consumers connect with brands on any number of different devices: mobile phones, tablets, computers, even wearables. This leaves brands with a disconnected view of their customers and limits advertising to targeting cookies in channels and endpoints, rather than real people.
Fortunately, loyalty marketers have access to a gold mine of first-party data that reveals rich insights about customers. With a people-based marketing approach, the data can be used to segment and personalize messaging across devices and channels, making every interaction more impactful — and ultimately retaining more customers and wasting fewer ad dollars.
Here are three people-based strategies for building customer loyalty that will help marketers thrive in the Age of the Customer.
1. Reach customers through addressable advertising
Most traditional display ads have a paltry average click-through rate of only .07 percent in the US, according to DoubleClick’s benchmarking tool, because they lack context and relevance. But what if an advertiser or media buyer could use first-party data to target their known customers — not just website cookies or device IDs — through display ads?
This approach is called addressable media, and it is a huge opportunity to break through the digital clutter and engage with customers on a personal basis. By targeting real people across devices based on their in-the-moment interests and past interactions, advertisers will create loyalty rather than ad waste and consumer frustration.
2. Connect first-party data for a complete view of the consumer
People don’t think in channels or devices; they want to seamlessly traverse the offline and online worlds as it suits their needs. By gathering first-party data wherever customers interact, such as on email, the web, in mobile apps and from CRM and POS systems, marketers can create a single 360-degree profile for each customer.
This holistic customer view is the engine for delivering messages exactly where, when and how customers want them. Timely, relevant experiences are what will keep customers loyal and coming back.
3. Personalize across the entire journey
Nearly 80 percent of shoppers say they will only engage with an offer if it is related to how they previously interacted with the brand delivering it, a Marketo survey found. But building engagement is immensely valuable: once hooked on a brand, a customer will buy 90 percent more frequently (PDF), spend 60 percent more per transaction and be five times more likely to say they’ll only purchase from that brand in the future, a Rosetta Consulting survey found.
This is the picture of a loyal customer, and it can be achieved by personalizing every customer interaction. Leveraging first-party data that hold valuable knowledge about the customer across every touch point in the shopper journey promotes engagement and creates affinity between a consumer and a brand.
Marketers have a wealth of customer information available to them. It’s time to put the data to use for a people-based marketing approach. Winning loyalty is about recognizing your customers across channels and devices and being relevant whenever and however they choose to interact with your brand.
Making every interaction about the customer is the key to building trust, keeping your brand top of mind and creating lasting relationships that will drive marketing ROI.
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