Loyalty Programs and Building Loyalty


One of the biggest challenges that brands face today is to find and cultivate loyal customers. Most brands have some sort of loyalty programs to reward loyalty from their customers. Most of these loyalty programs that I am a part of, totally miss the point of loyalty itself.

In general, the expectation from enterprise customers or consumers have significantly increased and they now expect brands to not just deliver great products and services but also acknowledge them as individuals and engage, excite and/or woo them to become loyal customers. Add to this, the fact that we are today also living in a world where switching costs are going down and its become easier for customers/consumers to switch products and services that don’t match or even exceed their expectations.

In this scenario, it is critical that brands have a good loyalty program that works for the brand and also for their customers.

HERE ARE MY 2 CENTS FOR MAKING YOUR LOYALTY PROGRAM MORE EFFECTIVE

1. Loyalty Programs should be for Loyal Customers

Today, I am part of at least 25 different loyalty programs, each with a different retailer or a business. Does that mean that I am a loyal customer to all of these businesses. Definitely not. Just like millions of others who enroll in a loyalty program, I was also auto-enrolled by the billing clerk while getting my purchase billed. I understand that businesses need to collect information about consumers and then track their purchases and affinity towards their business, to make many tiny decisions.

However, getting everyone part of the loyalty program indicates to me that you don’t value the loyalty but just the business. By doing this the business is also setting the expectation that you will get some discounts by being part of the program and maybe there are levels in the program which entail a lot of benefits for you as a loyal customer. What this tells me as a consumer is that if I want better discounts from the business, I should enroll in the program. Nothing more and nothing less.

In my opinion, instead of enrolling every customer into your loyalty program, businesses, should be very selective about who gets invited to their loyalty programs and as the next logical step, what benefits should be offered to this elite list of consumers to keep them coming back for more. As Eddie Yoon defines, the loyalty programs should be defined for the SuperConsumers.

These class of consumers can not only help your brand grow but can also play a significant part in your product growth strategy, new innovations and even help your brand become a lot more relevant. For more information about Superconsumers and how businesses can find them, engage & learn from them, read the insightful book by Eddie YoonSuperConsumers.

2. Engage people with exceptional experiences.

One of the most diffucult things to do for marketing is to engage people and do so en masse. However, Creating engaging experience does have a significant impact. They elicit emotions which make your brand memorable and makes people eager to share.

When it comes to eliciting emotions, the best emotion to go after is positive surprise. If you are able to positively surprise your customers, most other things can and generally do take a back seat.

Everyone still remembers the KLM surprise act where they spontaneously gave relevant presents to customers based on their social profiles.

3. Create Rituals or traditions! And not just your annual Christmas card. 

As humans, we have always been creatures of habits and evolved using rituals or traditions. Think about what kinds of habits would you like to instill – in yourself, in how you engage your customers and in your customers themselves. Habits create traditions; traditions turn into values. One need to be cautitious here so as to not be selfish in this activity, as it will most certainly backfire. You need to keep your customers life and ambitions central when you are thinking about creating rituals or traditions or habits. This is how cultures are built. One habit, one ritual, one tradition and one story at a time.

4. Give them a voice & Connect them. 

Nurturing a great relationship between your brand and your customers is as important as creating opportunities for your customers to discover other similar customers with similar interests. It is an important pillar that most brands forget when they are building the loyalty programs.

Some Common Mistakes to avoid

  1. Most times, the way loyalty programs are designed are dictated by the technology they use to manage the program rather than the other way around. It is critical that we understand this and not make this mistake when one designs a new loyalty program.
  2. It is important to not hide behind customer sat numbers (yes, I’m talking about the NPS or any such customer satisfaction measurement program). Averages don’t tell you the full truth and can at times be out-right dangerous. So, Go out and meet your customers so you can create meaningful experiences AND traditions. It’s all about people because, in the end, they make up the numbers.
  3. Loyalty programs are for loyal customers and not the other way around. You can’t build loyalty among your customers by enrolling in a loyalty program. Loyalty needs to be earned.

If you are planning or working on creating a new loyalty program, and would like to bounce off ideas, reach out to me and I would be more than happy to share my thoughts and ideas with you. You can reach out to me on twitter @rmukeshgupta.

Lessons In Customer Loyalty

lessons in Customer Loyalty

The Offer:

I got a message from Raymond indicating that they missed me as I had not shopped with them for some time and that they would love to have me back to their shop. And that they would like to give me a  gift of INR 500.

 

It clearly says that the discount code is not valid for a certain items and end the message with T&C, with no further information.

I did feel good about this and decided to take them up on their offer. I visited their showroom and was in for a surprise. The first thing I was informed was that I can redeem the code only on a purchase of INR 3500 or more.

I did expect something of that sort but was still disappointed by this step taken by Raymond. The minimum ticket size of anything that I could pick up from the store was about INR 1500 and i was hoping that the brand would have allowed the discount to be applicable on that ticket size.

However, that was not be the case and that did not leave a positive impression on me or a few other customers who walked in using the same offer.

I did exit without actually doing any purchase.

My brand loyalty with Raymond did take a hit as a result of this transaction. The next time they send me a message like this one, the message most probably would hit the trash as I’ve lost trust.

Now lets look at another example of a similar exercise done by Amazon.

 

I also got an email from Amazon with a gift voucher for INR 50. It was simple, small and a sweet gift that was sent to me (and am sure to a countless other customers) just before their big festive sale is about to begin. This small little token from Amazon, while not very much in terms of monetary amount, but came with no strings attached. I could spend that amount on anything that i wanted (within a month of course).

I am sure that i will end up buying something from Amazon (whether or not I originally planned to) and more importantly my loyalty with Amazon has been strengthened as a result of this transaction.

Now lets try to decode what could marketers learn about customer loyalty from these two examples:

What could Raymond have done differently:

They used this as a tactic to lure me into their shop. It was all about the brand from thereon.

Don’t Trick Your customers. Its not good for business.

Ideally, they could have used the principle of reciprocity and not have the minimum purchase term at all. This would have created a more positive affinity towards the brand.

They could have mentioned that the discount is valid only on purchase of INR 3500 only in the text message that they sent out. They did mention that the coupon cant be used on certain things, they could also have said about the minimum purchase condition.

Alternately, they could have given a smaller amount as a discount and not have any strings attached on the minimum billing, similar to what Amazon did in the second example.

Be Creative & Use Psychology of Influence/Persuasion

The brand could have been a bit more creative and ask us to share the message on social media about the offer from the Raymond Shop once we bought something from there.

They could have also paired it with a voucher code that the customers could send to a few of their friends to use. This could have the potential of increasing the brand affinity of the people who buy from Raymond as they have publicly stated that they like Raymond and have invited their friends to try out as well.

In addition, this could also have helped in building a pipeline of prospective customers for the business who may or may not have been a Raymond customer.

Think from the Customers Perspective

It is important to put yourself in your customers shoe and think about your offer from their perspective. This is what allows you to think through the entire interaction with the brand and not just one off transaction. Had someone thought through the entire journey, there could have been multiple touch points where they could potentially have found ways to not only improve the brand affinity but increase their purchase and potentially create new customers as well.

Conclusion

So, if you are a marketer, where is your offer failing you?

 

Why Marketing Should Own Customer Loyalty

Who Should Own Customer Loyalty

 

When I ask a room full of marketing professionals,

What is the role of marketing?

the typical responses are some variation of

“Getting customers into the sales funnel”.

When I then ask them

What role do they play in keeping these customers happy and loyal?

Most of the marketers indicate that it is not part of their role. When I then ask them –

Whose role is it?

I get varied responses –

Its the role of customer service or account management, sales  and not marketing.

What marketing teams don’t understand is that keeping customers happy and loyal should not only be the role of marketing, but should be a key focus area for marketing.

We all know that it is easier to sell to an existing, loyal customer than to convert a new prospect to a customer. Marketing spends a lot of money, time and effort to bring in new prospects into the sales funnel. By just spending a fraction of that time, effort and money, marketing can have an impact on customer loyalty.

By becoming custodians of customer loyalty, the marketing organisations will not only make their own jobs easier, but also get to know their customers better, which in turn leads to better insights about their customer behaviour, which then has an impact on new customer acquisitions.

Thus, just by taking ownership for customer loyalty, the effectiveness & efficiency of the entire marketing function goes into a positive feedback loop.

What do you think? Should marketing own “Customer Loyalty”?

PBTO23: Building Fiercely Loyal Communities – @SarahRobinson

Building Fiercely Loyal Communities

In today’s episode, we host Sarah Robinson. She is an author, keynote speaker, entrepreneur and a consultant.

In my opinion, she has great ideas about how to create fiercely loyal communities.

In this free wheeling conversation, we talk about the importance of building a fiercely loyal community, what defines a fiercely loyal community and how can brands go about building this kind of fiercely loyal communities.

Most important learnings from the conversation:

  • In a world where consumers and customers can share their experiences with each other, the relevance and importance of advertising and marketing messages is constantly shrinking.
  • People today have the ability to form communities with or without the support of a brand.
  • Brands with fiercely loyal communities seem to be much more profitable and much more loved than other brands. Harley Davidson, Apple, GoPro being cases in point.
  • The biggest challenge for a brand to support a community is the fear of letting go of control over their brand.
  • A community is fiercely loyal if
    • They are proud of the brand and are willing to flaunt it.
    • They trust the brand and the members of the community itself.
    • They are a tribe of passionate people.
  • Things that brands can do to enable their communities are
    • Create connection points
    • Create support points
    • Bring in predictability
  • Building a fiercely loyal community is about doing the basics of business right (good product, good support, good strategy, etc) and allowing your customers to do the rest.
  • Fiercely loyal customers will do the best marketing for their brand, the kind that brands can’t buy.

You can reach Sarah on Twitter.  You can buy her book Fierce Loyalty.

Do You Really Know Your Customers?

Image Courtesy - Trend Hunters
Image Courtesy – Trend Hunters

Google trends shows that since mid 2007, there has been a consistent level of interest in customer advocacy as a topic.

With the advent of social media and the amplification of the voice of the consumer, brands who want to put customer engagement at the center of their strategy, are getting more and more serious about nurturing these advocates (like Telstra announced in Feb).

They start and run advocacy programs.

Unfortunately, most of these programs are nothing but “old wine in new bottle”.

What people do not understand is that you can not start an advocacy program and build/nurture customer advocates. There is a certain amount of rigour that the entire organization needs to show towards having the customer engagement at the center of everything that they do.

An interesting HBR blog about Customer Advocacy started with the following question:

Who sells your products or services?

This was not a rhetorical question. This was a profound question. The simple answer to the question used to be your sales and marketing teams. Now, the answer is gradually moving towards customers. Yes, your customers could potentially be your biggest sales drivers. However, if you really wanted to engage these customers and provide them the right platforms and help them help you, you need to first understand your customers a bit better than you do currently.

If you look at the total population of your existing customers, you shall find that there are a mix of customers:

  • Neutral Customers: Some customers who are happy with your product/service at the price you are providing, but are willing to switch to a different vendor when they get a better deal. They have no emotional engagement with you or your product/service.
  • Dissatisfied customers: Some of your customers would also fall in this category. They dont like your product or service but dont complaint either. They are dissatisfied but likely to continue to do business with you. This could be mostly due to inertia (they dont want to put in the effort to terminate your product and seek a replacement as this could mean too much work for them).
  • Actively dissatisfied customers: These are the customers who are not happy with what you do and are also vocal about their feelings of dissatisfaction. They have some emotional investment in the product/service. These customers are potentially good candidates to turn into loyal customers or even customer advocates, if treated well.
  • Loyal customers: These are customers who like what you have to offer and hence will continue to do business with you. These are the customers where you shall find that their investments with you will grow over time. These are the customers who are willing to give you a testimonial for you or your offering. These are also the customers who are willing to go on stage and talk about how you or your products have helped them whenever you want them to. So, they do all of these when asked for.
  • Customer advocates: These are also loyal customers but who on their own go out and talk about how good you or your products are . They don’t need an invitation or a request from you to sing your praises. They will find ways and means to voice their opinion. Usually, the percentage of your customers (if any at all) who are already advocates for you is very less, in the lower single digit of all your customer population.

Now, how you engage with each of these sets of customers is very different. But in order to do so, you do need to understand which bucket does a customer belong.

A good sales executive can potentially use this information about the customer to build a sales strategy around this classification. How you sell to a nuetral customer could be slightly different that how you sell to an actively dissatisfied customer and that would be very different than how you sell to an advocate or a loyal customer.

Knowing this classification can also help your marketing teams define different strategies, content and marketing campaigns for different types of customers.

Knowing this classification can also help your product development team to decide whom should they want inputs on new products from and whom should they contact for a feedback about a feature in the existing product/service offering.

Knowing this classification can also help your customer service team to treat them accordingly.

If you try and treat all of these types of customers the same and try to make them all your advocates, you shall not only fail in creating more advocates but also potentially run the risk of losing some of these customers.

So, do you really know your customers?