What makes customers loyal, and how can I measure it?

We need to move away from thinking that there is a quick fix or a quick formula that will make customers loyal.  The reality is that customer loyalty is built by understanding who your customers are, what they want from you and then putting them at the heart of everything that you do. And, with the advent of new customer segments, new social engagement, new technologies and new media, a whole new set of expectations has emerged on the part of the customer.

The bottom line for businesses is that genuine customer loyalty is now the product of three of strategic components including customer loyalty strategy, customer experience strategy and customer engagement strategy – all of which are geared towards delivering genuine customer loyalty.

In others words loyalty, is the result of providing a seamlessly integrated loyalty strategy, brilliant customer experiences and relevant engagement with your customers, all to acknowledge how much you appreciate their business – at every single interaction with them.

This has to be supported by a ruthless focus on Customer Insights, Metrics and Commercials – helping you to develop bespoke customer strategies that are rooted in genuine customer understanding, are easily and readily measurable, and are designed to contribute to the core financial objectives of your business and deliver increased customer loyalty.

As a result of this, many brands are looking for ways to measure the effectiveness of their Loyalty Programme; one of the most important metrics is ‘Programme Participation’ which we believe is the holy-grail for Loyalty Programme success. Customers who are pro-actively participating in your Loyalty Programme and redeeming their rewards have a bigger impact in terms of spend and in terms of that top line contribution of loyalty

Customers, who use their card, pro-actively participate and redeem their rewards, see the value and vote with their feet. This is where brands see the highest ROI for their programme. For some retailers this means that customers who are in the Loyalty Programme can spend between 40-50% more and in one case in Ireland – up to 80% more, than the customers not pro-actively participating in the Loyalty Programme.

Many brands are looking for ways to benchmark their performance against their industry peers and as a result we developed The Loyalty Performance Index (LPI) which helps brands to understand what they need to aim for in order to achieve better success for their programmes. Download the Loyalty Performance Index.

To conclude customer loyalty, is the result of providing a seamlessly integrated loyalty strategy, brilliant customer experiences and relevant engagement with your customers, all to acknowledge how much you appreciate their business, while constantly measuring and enhancing everything you do to improve on their customer expectations and engender loyalty!

Do all Loyalty Programmes need a card and points format?

Absolutely not, the actual Loyalty Programme Mechanic will vary depending on the type of business that you are in, your loyalty objectives, your customer needs and insights, that’s why Strategy has to come first!  Your Loyalty Strategy will drive your decision on whether your programme needs a physical card or a mobile identifier and whether it should be based on a points programme or simply benefits and rewards programme.

A couple of interesting facts on Loyalty Cards; customers in Ireland carry on average 9 Loyalty Cards in their wallets but due to the increase of Smartphone penetration now at 86%, they are very quickly moving into a digital word where they are choosing to engage with brands through mobile phones, mobile apps & tablets, all making their shopping requirements work better around their own busy lives.  So at a minimum, your programme should be integrated into your mobile strategy.

We all know that Loyalty Points are a mechanic that is commonly used by brands as a way to give customers something back in return for staying with them. Brands like points mechanics as they are seen a tangible way for customers to see their points balance grow, which can been seen as currency and used as a way for them to get something back.

There are however various ways to engage with customers and to make them loyal that do not revolve around customers earning and burning points. Brands can choose to integrate other Loyalty Mechanics into their Loyalty Programmes and can consider using highly targeted and relevant communication strategies that add value to customers as a ways of keeping customers loyal.

It is vital that brands embarking on a Points Programme build strong commercial business cases that ensure sustainability of this mechanic as it is very easy for brands to be left finically exposed after launching a standard 1% points programme.

In conclusion, Loyalty Programmes of today need to be more integrated into the daily lives of customers and work across various platforms such as mobile apps, online, Facebook etc so a physical loyalty card is only needed if it’s what your customer want.

The decision on whether to integrate a points mechanic into your Loyalty Programme will be down to you having clear Loyalty Strategy driven by your business objectives, understanding your customer’s needs and ensuring that there is a clear business case, stacking this up commercially.

Read more about brands who have successfully integrated mobile into their Loyalty Programmes.

Loyalty Programmes are an expensive exercise, is it worth it?

We all know that it costs 8 to 10 times more to acquire a new customer than to retain an existing one so expense needs to be put into perspective.  Brands need to shift their thinking to focus on how to retain customers and build trusted relationships with them so they actively choose to stay with you.

There is no doubt what so ever that by introducing a Loyalty Programme to customers in a way that will get the traction needed with customers, to encourage repeat behaviour and to get the return for the business that this is a long and often expensive task. However, once the Loyalty Programme is well thought though and the mechanic and rewards are immersed with the needs of your customers then the return will absolutely outweigh the initial expense. Most importantly, all loyalty strategies require a solid business case that can prove that the loyalty investment can be justified by the expected outcomes and benefits.

On average loyal customers spend 67% more with a brand compared to a new customer, so it is important to focus on keeping our existing customers loyal and to help the to become advocates in the brand, spreading positive voice of the customer.

By understanding customers better, brands can enhance the way they communicate with customers, through the channels that appeal to them the most – all driven by a strong focus on Big Data and an opportunity for you to add real value, share more useful content and relevant offers to customers in the right way, at the right time to encourage customer repeat visits, repeat purchases, cross-sell & upsell of products, return of lapsed customers bringing higher return on investment to brands.

To conclude, is it worth it? Yes, we believe so but don’t just take our word for it, find out how our clients have seen significant commercial success from launching innovative customer loyalty solutions in our Work section.

What is customer experience and why is it important?

Customer loyalty and therefore the potential to influence customers to repeat purchase can live or die based on the customer experience received throughout their interactions with brands. From the first day that a customer connects with a brand there is always potential that they will decide to return to buy another product. However this fully hangs on the experience that the customer receives during their process from realising that they need a product, to searching to find a brand that offers their required product, to finding out more about the brand and their full product offering, to actually deciding to purchase the product and engage further throughout their lifecycle.

Customer Experience Management (CEM) is the strategic process of seamlessly managing your relationship with your customers across multiple touch points, all to drive higher levels of loyalty from them. You can read about how to approach preparing for CEM here. 

There was a time when Customer experience was a simple process to manage, there were fewer touchpoints but now customer experience goes through intertwined omni-channel touchpoints of which all need to be carefully managed to ensure the processes are simple for customers and that each touchpoint communicates a consistent and helpful message. Today your customers connect with you across many touchpoints from using search engines, going onto a brand websites, via mobile apps, social media, through a customer service team, face to face in-store and so many other ways.

The process is therefore much more complex now, involving multiple channels, multiple products or services, and multiple touch points that need to be delivered in a completely integrated way. This is essential if you are to move your customers into true advocates for your brand – the ultimate test of loyalty.

Customers are not shy about liking and tagging brands, or sharing a bad customer experience with their social media Facebook & Twitter friends to comment on and to further share. With all of this in mind, it is therefore fundamental that brands start to prepare for the future of getting the customer experience right and ensuring that their brand proposition and culture is adapted to deliver a customer-centric approach.

Customers are now even more demanding than before and are constantly looking for more innovative ways to connect, more personalisation and intelligence from their received communications, with more predicted and relevant communications from brands. To get it right brands are starting to review their customer journeys to understand their omni-channel mix, their customers and potential barriers, striving to provide seamless experiences, regardless of the channel or device customers use.

In conclusion Customer Experience (CX) is now paramount because it directly impacts the way your customers think about your brand, the decision to purchase and creates instant direct positive or negative voice of the customer – this directly impacts their loyalty!

What customer rewards work best to drive loyalty?

Over the last 10 years Irish consumers have been spoilt for choice with the rise of multiple new Loyalty and Rewards Programmes – each competing with the other to generate customer loyalty to their brand. As a result of this, they have become extremely savvy in how Loyalty Programmes and their rewards work, they know how to manipulate programmes to get the highest return and most of all they can spot a flawed programme, with irrelevant rewards a mile away and simply disengage.

By giving customers a bunch of random, irrelevant rewards that do not meet their needs is pointless. The result in doing so starts with excitement when your customers register for your Loyalty Programme but within 6 months the excitement is replaced with broken promises and disappointment as customers realise that the Loyalty Programme has been built around what the business wants and not around what they want!

The market is absolutely saturated with brands offering the same multiple partner rewards to their customers, rewards that are not unique to the brand and most importantly are not tailored to the customer’s needs, life stage or relationship with the brand. This approach confuses customers with lots of rewards in the hope that one of the rewards will resonate with the customer and in return does not deliver customer loyalty or the desired ROI required.

The shift that brands have to take now is to deliver relevant rewards to their customers and this beings with Core Rewards first and foremost – customer want rewards from your brand – that is who they have the relationship with and that is why they engage. Only then, should you be looking for relevant Partner Rewards to add to your Loyalty Programme.

By adopting this approach to your programme rewards, you will see higher levels of reward redemption, programme participation and a higher ROI for your business.

You can read more about how you can choose better rewards here in the article Shift in Loyalty for the Year Ahead.