Dove Direct Print & Marketing Blog - “The Keys to Creating Customer Loyalty”

Brands that made the effort to increase brand loyalty demonstrated a propensity to offer various types of customer incentives to make that happen. For example, the now defunct Sam Goody stores ran an all out customer retention program called the "Replay Club," whereby every in-store purchase was accompanied by a $9.99 sign-up that would give an instant 10% discount and in many cases would make the sign up free.

Starbucks came out with their customer retention program that provided a customer loyalty card that tracked purchases; once the customer reached the 10th cup; the 10th cup of coffee was actually free; a reward, so to speak, for having purchased the first nine cups. In a nutshell, there have been multifarious strategic marketing plans that offered customers some type of a reward across industries and across the nation. Some were successful and others were deemed to be a marketing misstep; nevertheless, provided lessons along the way.

Take for example, the Gap. In 2000, it was floated in some media circles, that the GAP made the decision to cancel it's 4th quarter television advertising and redistribute the spend to a loyalty reward program. At any rate, the program provided $100-dollar gift cards aimed at brand loyalists who were expected to spend more at their brick and mortar locations. However, there was a catch. The promotion required customers to spend a minimum of $100 in order to activate the card. This did not go over well. The required upfront spend deemed the promotion a disaster, causing some of the Gap's top brass to ultimately be fired.

Understanding Your Market

In the aftermath, GAP's fate was sealed so to speak, and as of 2011, GAP stock was down over 50%, clearly a lesson in part of what to avoid when it comes to creating and keeping loyal customers. It is unclear however, as to what single issue could have been responsible for those trends, and to that end, it is also uncertain if the decision to go with the $100 gift card was a strategic one, or one based on other symptoms present in the market during that period. No doubt there are a multitude of brands that exhibited and continue to pursue that long history dedicated to the development of various customer loyalty programs, and in todays' digital world of communication, brand loyalty programs are all around us.

However, it is critical to understand the wide array of variables that play into any marketing initiative, including customer loyalty programs. In short, these variables can range from market conditions, product demand, brand equity, state of the economy, value perceptions, and of course, competitive advantages, or the lack thereof. And those are just a few variables to consider. Fast forward to today. We are operating in a nano-second, digital universe, and as fundamental as loyalty programs appear, there are now legions of brands available for consumer choices, and just as many of them for consumers to pass on.

The ultimate question that permeates all marketing decisions is the one that focuses on the customer. What pushes a prospect to purchase a product/service from a particular brand over those products and services competing with that chosen brand? The following keys will assist you in your quest to positively influence your prospect's buying methodology.

Customer Service Leads the Way

With all of the online areas consumers have access to, including review sites, social media communications, blog comments, and consumer apps, they can either support the brand, or denigrate it. Brands now have a brand voice in the digital spectrum, whether they like it or not. A significant aspect of that brand voice surpasses product quality, competitive pricing strategies, or even expensive top-of-the-line advertising investments. It is customer service. The customer service experience makes all the difference and when it is considered to be sub par, typically the sales numbers will demonstrate that reality.

Great brands have lost consumers due to poor execution of customer service. In fact, how many times have you left a brand due to poor customer experiences, even though you were basically happy with the product or service? Keep in mind, that as we began this post focusing on loyalty program examples, those loyalty programs will fail to incentivize consumers if the customer experience is considered to be sub par. Therefore, the first key to creating customer loyalty is to ensure that customer service has been revamped, if necessary, and has received stellar reviews. That is the first step in creating the keys to customer loyalty.

Personalize All Messaging

In this world of individuality, people are more apt to respond to communications that speak to them directly, which includes their names. And this is across the board, from graphic communications, videos, emails, and more, people have a craving to see or hear their names. Many of you are probably aware of Coca-Cola's personalization initiative whereby their products have been personalized in every aspect, including the cans.

Personalization is rapidly becoming ubiquitous to include providing a purchasing experience that transcends products, to every communication asset such as coupons, brochures, catalogues, emails, and every touchpoint the brand has made available to consumers. Customizing the personal shopping experience to each individual target will make all the difference. Segment, a data customer platform entity stated in a recent study, that 44% of consumers came to the conclusion that personalized shopping experiences would lead to another future shopping excursion. Therefore, developing a personalization strategy is the next key to creating a customer loyalty strategy.

Loyalty Programs are a Boon for Consumers

If you have developed a superior customer experience model, along with a personalization strategy for all your touch points, it is time for the next key. If you guessed Loyalty Programs, you are correct. Consumers gravitate toward loyalty programs. For the record, according to a report by Bond Brand Loyalty, 81% of consumers stated that loyalty programs compel them to be more likely to continue doing business with brands that have loyalty programs.

And if that's not enough, from the same report, 73% of consumers are more likely to recommend brands that have good loyalty programs. Any experienced marketer will tell you that word of mouth advertising is priceless, and further, happy customers provide a great service that is akin to free advertising for the brand, along the lines of becoming brand influencers. Therefore, it makes total sense to create and usher in a loyalty program. That is the third key to creating customer loyalty.

Loyalty Program Timing Is Critical

The old adage that states, 'reaching the right customer at the right time with the right message in the right place,' makes all the difference when it comes to sales conversions. Even though we live in a digital universe, that same old adage applies today. To that end, and again deemed from that same Loyalty Report, loyalty program communication is directly tied to marketing content relevance. Further, 93% of consumers who strongly agree that communications from a loyalty program are relevant also report high satisfaction with the loyalty program.

This is where big data comes into play. In order to deliver timely loyalty program messaging, brands must invest in data collection to better understand their consumer targets. Any form or social media interaction, trade show or events where prospects are asked to provide a name and email address is a good starting place. This process along with a CRM program will greatly aid any brand looking to establish and build a relationship with consumers. What is interesting here is that 82% of consumers that have demonstrated an elevated emotional engagement with the brand will "Always" purchase from a brand they have become loyal to. Remember, the expense of converting new customers is much greater than nurturing those consumers who have been brand loyalists. Therefore the 4th key to creating customer loyalty is being able to deliver timely relevant loyalty program messaging to both existing customers and prospects.

The Environment

Corporate social responsibility cannot be overstated in this world of extreme weather being perpetrated by climate change. More and more consumers are looking for brands that are actually taking a stand on sustaining the environment, and the planet at large. Brands that demonstrate they care about the same issues that consumers care about and are talking about will fare far better than those organizations that fail to do so.

The numbers don't lie. Nielsen recently reported that just shy of 66% of consumers would be willing to spend more for a brand's products and services if that brand has demonstrated a commitment to supporting environmental and social impacts. Therefore, developing a strong social and environmental policy is the 5th key to creating customer loyalty.

The Net-Net

Customer loyalty programs are beneficial for both B2B and B2C brands. Developing and maintaining a top notch customer loyalty program will elevate brand equity, reduce churn, and inspire brand loyalists to influence other prospects and consumers across the board. Thanks for reading "The Keys to Creating Customer Loyalty!"

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