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 n th 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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@StephanieH - Most of the feedback we have received on this was from Telco and retail customers who have a vested interest in speed and designing for immediate engagement. IS you thought that different industries see things differently? interested to know more. - X
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Looking back at 2014, many Lithium customers were engaged in efforts to transform their social customer experience. Advancing the business’s orientation around the customer's point of view was an overarching goal for 2014. Re-envisioning the enterprise value of community or envisioning a more integrated online community, were also top of mind for many customers.
As we enter 2015, three best practices for managing the social customer experience are emerging. Large B2C brands, focused on managing the customer experience all have a similar short list of key focus areas.
This post outlines a three emerging best practices for managing the social customer experience.
Know me: our customer expects personalized digital experiences. Community must support personalization efforts with advanced technology.
Engage me: customers expect to engage on their terms, not on the brand's terms. Our community extends beyond our domain. We must begin to customize engagement on a channel by channel basis
Make it easy for me: Simple trumps WOW! Community must help us focus process and resources on making it easier for our customer to do business with us.
Personalization: Know me Today's digital consumer expects to be known. When brands show they know the customer, loyalty develops. Designing shared experiences that align the customer lifecycle with the customer journey is critical.
Personalization initiatives that are on tap in 2015 include:
Figuring out Social Identity: Our customers repeat the same thing over and over about social identity. - Don't ask the customer to create an account, ever. Know who your customer is before she gets to your .com landing page, community thread/post or customer support portal. Allow consumers to login using their social identity.
360 degree view of the customer: Always be prepared to have an intelligent conversation with the customer. Regardless of channel or device, know the customer tenure and status. Know the products they own, rewards they've earned, the shopping events involved.
Customization: Engage me Acquiring and retaining customers by promoting product features is expensive and risky. Access to product and price info via search and social channels is undermining brand loyalty.
Customization initiatives that are on tap in 2015 include:
Optimize the paid, owned and earned media mix by asking customers how they want to interact with the brand. Explore tools able to gather intel across all channels and all devices.
Digital and social communication programs must evolve to speak the language of the consumer. Use social customer experience data to evolve how the brand engages consumers on a channel by channel basis. "Total community" learning is critical to our engagement programs remaining relevant on social channels.
Process Optimization: Make it easy for me Learn how to make the customer experience simpler. Identify the critical employee-to-customer engagement touchpoints needed to build innovative products and experiences.
Process Optimization initiatives that are on tap in 2015 include:
Focus process optimization efforts on making it easier for the customer to do business with the brand. Use social customer interaction data to identify barriers to delivering successful customer experience outcomes.
Tie social marketing and social support program success metrics to successful customer experience outcomes.
So what does this mean for 2015?
So as much as things change, they also stay the same. 2015’s trends build on what we have already seen working well this year. Businesses need to embrace the outside-in point of view. Marketing programs must use all information available from the social customer experience. Customer experience will trump product feature and price. 2015 will be the year that customers demand simplicity from the brands they love. Brands who deliver beautifully simple experiences create consumer habits that make loyal lifetime customers. Brands who can’t deliver simplicity, will become irrelevant.
Xavier is Director of Social 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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@KevinK - thanks for the notes. Glad to hear we are all speaking with one voice here.
@paddysteen - I like the term you used "sense of belonging" i'm going to use that more frequently when speaking oin this subject as it seem to more fully express the collective emotive nature of what happens when a community comes together, which after all is the whole point of having a community.
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