Today’s digital world offers an array of loyalty programs that are enticing to customers at first glance. Yet, as the needs of customers are constantly evolving, these same customers are now catching on to red flags affiliated with these programs.
Today's digital loyalty programs are increasingly common, not sustainable and viewed as suspicious. According to Vernit, “[48% of customers], say they are suspicious about how data from online brand engagements is used.”
How do you rebuild a durable relationship with those (apprehensive) customers? Moreover, in the modern age of digital strategy, how do you leverage innovation and emotional connection to develop a loyalty strategy: one that will both outlast and outperform your current loyalty programs that may not be meeting the altering needs of consumers.
We’ve pieced together 5 helpful hints in restructuring your loyalty strategy powered by stronger relationships, rather than by better rewards.
Step 1: Acknowledge the problem and prepare to pivot.
Fact - Digital Technologies have forever changed consumer expectations. In fact, according to EMC, “93% of business leaders worldwide said technology had changed customer expectations in the past five to 10 years.” Driven today mostly by the millennial crowd, digital customer expectations have been forever changed by the brands that lead with experience; Google, Starbucks, Amazon, Uber, and AirBnb.
In fact, according to a Lim College Study, “66% of millennials may have abandoned what had been their brand of choice in 2013 because the brand no longer fit their identity, 66% had a simple desire to switch brands, 64% due to the availability of desirable new alternatives and 64% because the brand was no longer unique.” Digital innovators today are beginning to acknowledge this new reality and pivot away from myopic points only based systems.
Step 2: Talk to your customers and ask them what they really want.
Fact – During the time required for most brands to launch a new digital loyalty program, the intended program recipients’ motivations, goals and expectations may have completely changed. Innovative brands inherently know this, and have adopted a new planning paradigm. They use the social web to ask consumers what they really want, prototype new programs on the customers’ terms, then test and learn in near-real time.
If you already have a customer community, simply by listening and responding in a 1-to-many fashion, your community platform becomes the driving force of change that will add a whole new social component to your customer loyalty strategy.
Step 3: Design around outcomes and experience first, business metrics and process second.
Consumers born in the cloud define “loyalty” not by programs, but by immediate emotional connections. To develop deep loyalty among consumers born in the cloud, today’s global brands should take a service design driven approach toward planning the digital customer experience. We know, from Rosetta Consulting, that “Engaged consumers buy 90% more frequently, spend 60% more per transaction and are five times more likely to indicate it is the only brand they would purchase in the future. All of these factors lead to engaged customers delivering three times the value to the brand over the course of a year”.
While working with a top-notch bunch of strategists, designers and technical consultants among the Lithium Services Team, I’ve learned to embrace a simple phrase you’ll often hear at HQ; “pants first, then shoes.’ This means, start every digital development initiative by understanding people and the social objects they value first, then, and only then, can you begin to design the digital interactions that define shared experiences which stand the test of time.
Step 4: Measure changes to customer satisfaction and delight first, directional changes to business financial metrics second.
Detailed social media measurement both on-domain and off-domain is critical. Innovation on your digital platform of choice should be empowered by data. Whether you are measuring passive or active engagement metrics, makes sure the value of social object creation and sharing is captured to the nth degree.
Once you can measure which actions [logging-in, sharing profile data with other members], activities [participating in an open and social online discussion that includes photo sharing] and behaviors [creating stories, blogs and discussion topics] are being performed by your community, you can start rewarding your most valuable social behaviors with tangible rewards such as points, minutes or miles that can be redeemed in real life. Analyze key behavioral changes you’ve pre-identified as tied to your business outcomes such as [NPS, number of photo stories created, shared, etc].
Step 5: Wash, rinse, repeat.
While loyalty is massively important, loyalty programs are becoming irrelevant. Loyalty programs do not replace shoddy services or products. Innovative brands proactively design customer experiences that are simple, uniquely digital and personally rewarding.
To sum things up, I’ve learned that loyalty is not a program; rather, it is an emotional state. A connection that starts with and stays with a customer from moment to moment, or one that does not. It’s these “or-nots” that marketers will fret over for the next decade.
Xavier is Senior Director of Strategy at Lithium. His time at Lithium is spent focusing on building digital transformation and long-term customer engagement programs and solutions for our enterprise retail, marketing and media customers. Xavier has been a featured speaker on topics including web analytics and digital branding, CRM and customer loyalty at shop.org, eMetrics, The Word Of Mouth Marketing Association and the University of Washington’s Foster School of Business.
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