Designing a Customer Strategy Focused on Genuine Loyalty
By definition, the word “loyalty” means allegiance, faithfulness, or devotion. So it seems ironic -- an oxymoron, even -- that many retailers today say customer loyalty is fickle.
The rationale is flawed. If you’re incentivizing loyalty with transaction-based discounts (as far too many retailers are), you’re attracting customers devoted to bargains, not brands. They’re loyal, just not to you.
To build genuine loyalty -- a customer base with intrinsic preference for your brand -- retailers need to break with old-school tactics, realizing instead that earning consumer trust, preference and loyalty is a strategic initiative that goes far beyond points, coupons, discounts and mass-blasted emails.
Related: 3 Ways to Increase Customer Loyalty
A number of factors cultivate genuine loyalty. Your channels. Your incentives. Your frequency of contact. But five strategies in particular have proven most effective for brands to deliver experiences that kindle authentic customer connections.
Find your most valuable customer (MVC).
Traditional marketing budgets earmark 80 percent of funds for customer acquisition and 20 percent for retention. Yet MVCs account for 75-85 percent of revenue. Retaining these customers clearly calls for more than a 20 percent investment, and finding your MVCs is the first step in deciding how many dollars retention efforts deserve.
To start, brands must analyze data across multiple channels. Analysis should go beyond purchase amount and examine overall shopper value. Who interacts with your brand the most often on social media? Who spends the most time in stores? Who makes frequent purchases and who spends the most? How does each consumer like to interact with the brand -- what channels do they use and which do they ignore?
MVCs are already on their way to genuine loyalty. Converting them to brand fanatics requires personalized engagements and carefully tended relationships. But before that can happen, you must further understand their behavior.
Uncover what’s motivating your MVCs.
Understanding how consumers are motivated to interact with a brand will help structure your customer onboarding strategy. Some customers may spend less but make more frequent visits to your store; others may spend more but shop less often. Identifying patterns and motivations enables customized communication.
Whether you’re requesting an app download, extending an invitation to a rewards program, or offering an email or direct mail subscription, structure the engagement to the target. Sift through previous successful and failed campaigns and cross-analyze this data with available consumer information.
Doing so will help you 1) better understand the drivers and barriers to achieve the desired customer response, 2) establish best practices for future initiatives, and 3) create campaigns with higher conversion rates. Even if the benefit is uniform across all consumers, marketing incentives that directly appeal to the target audience will drive relevancy and increase consumer interest.
Return to the drawing board.
The look and feel of promotions, offers, products, events, content and other marketing initiatives should also be tailored specifically for the intended audience and delivery platform (desktop, mobile, social, etc.). Although it might consume more resources in the development stage, customized design has a measurable impact that leads to higher levels of interaction and greater returns. Dissect every mailer, every email. Use compelling visuals.
One automotive brand that is already seeing the benefit of this strategy is Meineke. Its previous mailers included imagery of brake pads, oil cans, and car parts -- equipment that was unrecognizable to its car-novice customer base. Replacing its mechanical graphics with storytelling -- the mom with kids in the minivan, the construction team with a work truck -- created a conversation its customers could relate to. As a result, the brand experienced increased promotion response rates and plans to tweak its digital and direct mail strategy based on customer communication preferences.
Related: 25 Tips for Earning Customer Loyalty
Analyzing the actions, milestones and events used to deploy engagements is vital to understanding customers across their path to purchase and overall experience with the brand. Every touch point should subtly push the customer toward purchase. Each interaction should cater to customers’ purchase behavior and previous brand interactions, offering exactly what customers want exactly when it’s most relevant.
The smartest retailers will find innovative ways to predict when a customer needs to make a purchase. Meineke, for example, sends promotions in tandem with schedule-based service needs -- time for an oil change, time for inspection. Some major footwear retailers are experimenting with wearable tech integration that would record use and send customers an offer for a replacement pair when they hit a milestone number of steps.
Make sure timing is on point.
Maximizing response rate begins by examining the timing of customer engagements. Identifying the right cadence and deployment timing should dictate your strategy.
Consumers interact on multiple channels in diverse ways and at varied times. Improve efficiencies by understanding when and how often consumers prefer to be contacted. In some cases, less is more, and forcing interactions too frequently can tarnish your customer relationship. In other cases, more is more and consumers may feel isolated if they don’t hear from you regularly.
Time of year is just as important as time of day. During the holiday season, athletic apparel manufacturers can target customers with a bounce back offer to encourage gift buyers to shop for themselves in the New Year. During the lunch rush, one quick service restaurant distributed coupons to boost its breakfast sales slump; doing so resulted in a 30 percent spike in (the good kind of) morning traffic.
Related: Think Small to Win Customer Loyalty
When brands deliver relevant experiences that create meaningful customer connections, they build genuine loyalty. How long will that take? There’s no universal answer. Figure out how many interactions it takes to turn a visitor into a brand loyal; then continue to invest in keeping them engaged. As the poem goes, make new friends, but keep the old -- your new customers may add silver, but your loyal customers are gold.
Mark Harrington is vice president of marketing for Clutch, which delivers advanced consumer management solutions, including strategic customer identification, understanding, targeting and engagement to the world’s leading brands like Pandora, Harley-Davidson, New Balance and The Body Shop. Harrington’s unique expertise spans publishing to payments and education to ecommerce, serving strategic marketing roles with leading corporations like eBay, Citi and Pearson and pioneering startups like Half.com, Ecount and Infonautics. He’s excelled in Inc 500s to Fortune 500s, been instrumental in landmark exits worth over a half billion dollars and helped catapult an array of pioneering industry solutions.