“Loyalty is when customers choose a particular brand more often than competitors, based on their belief that the chosen brand will be a better choice both rationally and emotionally”.
There’s no shortage of column inches devoted to the subject of Customer Loyalty; how to address it, how to improve it, how to identify winning use-cases. Yet, despite this, relatively few articles start by defining what loyalty is. We suggest that one working definition of loyalty might be: “Loyalty is when customers choose a particular brand more often than competitors, based on their belief that the chosen brand will be a better choice both rationally and emotionally”.
Accordingly, we propose that loyalty has two aspects:
1. The behavioural: This is reflected in customers sticking with a brand; buying more of it than of competitors products.
2. The attitudinal: This is reflected in the more abstract reasons why a customer might prefer one brand to its competitors.
With these fundamentals in mind, the question remains “what drives behaviour and positive attitude towards a brand?”
We think, beyond the transactional, that Loyalty is built on something that’s hard to measure (which, perhaps, is also why a detailed definition is less straightforward than it appears). Loyalty can only be truly developed as an effective strategy if the foundations of an offer (based on price & service) is consistent in its appeal but we also suggest that instead of creating an entire marketing strategy around what prices and services we want the customer to prioritize, we should prioritize instead a strategy driven by how we want the customer to feel.
Separating what we might call our humanity from our immediate marketing goals is important here because brand satisfaction is achieved through a combination of different parts, not just the obvious ones. And in our experience, emotion lies at the heart of true loyalty and is the glue that binds together all the other elements (service, price, trust, reliability, empathy, rewrds, timely etc.) that contribute to satisfaction.
In other words, it’s how we make customers feel about the component parts of what we’re offering them, how we wrap and position everything and how/when/why we communicate our offer and brand that will really define the kind or relationship and emotions we build to represent our brand. If true, and we believe it is, then only brands that build more positive emotional relationships with their consumers will enjoy a higher rate of long-term profitable sales growth.
If we accept that brands which build more positive emotional relationships with consumers enjoy a higher rate of sales over time, then we need to understand the drivers of Brand Loyalty in some depth in order to build lasting relationships. To do this, you have to take a structured, data driven approach focused on the following elements:
1. Total brand experience: This means excelling at every interaction with the customer by providing superior value. It involves anticipating problems and offering a relevant solution, tailoring personalised offers, pricing and experiences, and simplifying interactions to the point of eliminating all the friction. The goal here is not to adequately meet your customer’s needs but to surprise and delight them.
2. Customer recognition: acknowledging what matters to customers rather than exclusively to you is vital: time together, special days and events, dedicated offers and experiences, recognitions of usage patterns, profiles, changing behaviour, aspirations, beliefs all count.
3. Rewarding experiences: You need to deliver tailored and curated brand benefits, gifts and offers: surprise and delights offers mean actions beyond expected such as exclusive and curated rewards, emotional and functional benefits, proactive approach etc.
4. Customer participation: We know that active customer participation leads to higher memory ranking: gamified mechanics like challenges, milestones etc. driving interaction and engagement delivers better results.
Follow these steps as a starting point and the results can be pretty significant. One of our clients who did just that now has more than 50% customer engagement rate - engagement defined as customers redeeming benefits in the last 12 months – far exceeding the industry average. Typically, traditional points-based loyalty programs achieve around a 20-30% engagement. The same CSPs’ Net Promoter Score, another KPI, has moved from 3rd to 1st place in its market in both prepaid and postpaid segments. If you want to learn more harnessing emotion to surprise and delight your customers, please click here and we’d be happy to send you a detailed Case Study.
By Xabi Miqueo and Keith Brody