Winning the customer loyalty race
In an uber-competitive market where almost every brand has a loyalty app or programme of some description, are businesses doing enough to stand out from the crowd?
Companies like Amazon and Google are leading the way by offering experiences that add value to their customers at every turn – through personalised recommendations.
With the announcement of John Lewis’ profits falling 99% as it struggles to keep up in the race to the bottom over price wars, many brands may be wondering whether consumer loyalty exists anymore. There are a variety of factors why customers choose one brand over the other. Yes, price is a sticking point but it isn’t the sole reason. In fact, with online shopping becoming increasingly dominant, trust also determines the brands we shop with. So too has our overall shopping experience when buying from that brand, whether online or in-store.
Why loyalty is so important
Businesses offer loyalty programmes with the aim of improving customer retention and building long-term relationships. 67% of businesses state that the purpose of its loyalty programme is to improve customer retention.
When you look at the numbers, you can see why. Studies show that it can cost 5 to 25 times more to acquire a new customer than to retain an existing one and that increasing customer retention by just 5% can reportedly increase profits anywhere from 25%-95%.
What’s more, 87% of respondents in a recent McKinsey survey said that they are inclined to shop around, rather than stick to a preferred brand. This indicates that the average consumer in the digital age is becoming more fickle as they find themselves surrounded by near endless choices – accessible from their smartphones in a few clicks.
So the game has changed.
Priorities lie in keeping customers happy, rather than finding new ones. Once a customer comes on board, you need to do everything possible to keep them. This is why loyalty programmes are so essential and why every business seems to have one.
Standing out from the crowd
91% of companies have loyalty programmes in place today, according to a study by Experian. But in a world where a loyalty programme has become the baseline, these schemes have lost their status as a differentiator. Consumers now find them – usually based on collecting points in return for financial rewards – as mundane and unexceptional.
What it means is that you should not be measuring loyalty against your competitors’ programmes – because they are all the same. Instead, you need to think differently about what customer loyalty is, what drives it and the transformation it has undergone.
According to research carried out by Deloitte, businesses need to offer “a mix of personalisation, relevance, exclusivity and engagement” to win and retain customers. This is what drives loyalty in the 21st century.
How to win the race
The key to winning the customer loyalty race is to create benefits for customers at each and every customer touchpoint. In particular, consumers want experiences rather than just transactions, they want brands to understand them, and they want their intentions to be anticipated. Let’s look at these more closely:
· Focus on experiences rather than transactions
Companies like Uber, Airbnb and Netflix disrupted their respective industries to become the dominant force. They achieved this by providing more than a service or a product, but a digital experience that was superior to what had been the standard before. Convenience is a key driving factor to increased mobile use today. Now you can order a taxi, a room, or a movie to your phone in seconds. Customers now expect quick, seamless experiences that save them time and make their lives as easy as possible.
· Know your customers better
Consumers not only expect convenience, but they expect personalisation. In many ways, the two come hand in hand. Spotify has developed such an accurate recommendation engine that users no longer need to look for new music themselves. Instead, Spotify saves them time by suggesting songs that they would like to hear. A Wunderman study found that “56% of respondents said they feel more loyal to brands who “get me” and show a deep understanding of their priorities and preferences”. The key here is to leverage the power of customer data to gain powerful insights about them so that you can provide personalised experiences based on their lifestyle, interests and future intentions.
· Anticipate the future
Anticipating events and being proactive is key to providing the kind of experiences that consumers want. Artificial intelligence (AI) plays an important role here. AI can sift through large datasets and dig out insights that humans simply would never be able to do. This way you can predict users’ buying habits, identify trends, and provide actions that help customers get more from your app.
Gain a competitive advantage with Pixoneye
Pixoneye lets businesses harness the power of on-device photo analysis to help them gain a more thorough user understanding. By knowing your customers’ lifestyles, interests and future needs, you can deliver hyper-personalised experiences that enrich their lives and generate long-lasting loyalty. Now that’s a great way to win the customer loyalty race!
To find out more about how Pixoneye can help you win the customer loyalty race, get in touch with us today.
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