Reviving Consumer Loyalty in 2014

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Reviving Consumer Loyalty in 2014
Reviving Consumer Loyalty in 2014

For many consumers this most recent holiday season can be best described as an overload. In addition to lots of parties and an abundance of food and drink, they were also exposed to more brands and holiday offers than usual—and many consumers were tempted to “cheat” on their usual loyalties. They descended upon stores looking for the best deals, and, more often than not, put aside their brand expectations until after the holidays. In fact, we could call the holiday shopping period “a celebration of the distracted customer.”

But the holidays also proved that shoppers aren't just distracted, they're also impatient.

According to a 2013 LivePerson study, online shoppers will give brands no more than 76 seconds of their time if their needs aren't met. Wow, a whole 76 seconds. How can brands possibly reverse this trend?

The short answer is: With difficulty. That's because lackluster customer loyalty isn't confined to the holidays; its increasing prevalence stems from a variety of factors. Today, customer loyalty depends on several dominant but overlapping motivations—technology, omnichannel engagement, and the economy—all of which will figure prominently in 2014.

Technology and omnichannel marketing go hand in hand as innovation gives rise to new channels. This is a function of technology and culture, where ubiquitous mobile Internet access has greatly enhanced shoppers' deal-hunting abilities. It's also the best way marketers can engage their customers. Smartphones and tablets enable consumers to shop, redeem rewards, and browse the Web, while social media has given brands an open window into customers' lifestyles, providing insights into what (beyond discounts or competitive rewards) motivates their loyalty.

Customer data analysis makes for improved loyalty programs—but technology and ever-present engagement can disrupt loyalty as much as it enables it. Too much multichannel marketing can become a bombardment.

The economic downturn has also had a profound impact on customer loyalty. Global disposable incomes have fallen and luxury purchases have become less common as consumers restrict spending. That said penny pinching has to some extent been a boon for loyalty programs. Used properly, loyalty programs provide customers with considerable value and, over time, significant savings.

Brand loyalty actions steps

As evidenced by the above examples, each loyalty challenge is also part of the solution. Reviving customer loyalty in 2014 rests on leveraging these advantages. Take showrooming, for instance. At times retailers have feared it, with critics saying such practices undercut brick-and-mortar sales. But showrooming fears are fading as smartphone ubiquity becomes a fact of life and brands can increasingly turn it into an in-store advantage.

A customer searching on his or her phone could be in need of in-repstore engagement. This is where genuine customer service, price flexibility, and price transparency are critical. A recent showrooming study found that if an in-store price was $5 or more above Amazon's price, 63% would purchase online. The lesson is simple. Retailers must mind their prices, and, if possible, keep in range of online competitors.

But prices aren't everything. Quality customer service with helpful, friendly, and knowledgeable staff goes a long way in combating showrooming. And if high-value customers are near the threshold of a higher loyalty tier, sometimes the loyalty rules can be bent in their favor. This is a level of attentiveness online shopping has yet to master, but it's something brick-and-mortar stores are very good at and they need to do more of to revive their customers' loyalty in 2014.

Big Data to the loyalty rescue

One of the most critical ways technology is helping to revive customer loyalty is through the accumulation, analysis, and action of Big Data. Retailers collect terabytes of data from customers' daily behaviors and include everything from basket size to in-store visit frequency to their level of program and social media engagement. Sophisticated software analytics can evaluate this data and derive customer insights that marketers can use to improve brands' loyalty programs and the quality of their CRM programs.

Traditionally, brands have thought about loyalty in terms of single-merchant plastic cards complete with “buy one get one free” (BOGO) deals or apps that mimic coupon clipping. Now, however, brands and their loyalty program providers are focusing on creating platforms that adapt to existing ecosystems and enable marketing automation. This in turn enables loyalty managers to extend to all potential points of consumer engagement.

Giving customers true value—and greater incentives to instill brand loyalty

I often describe consumers as “brand-fickle and loyalty-suspect.” This means that today's consumers have powerful research tools at their fingertips and are extremely intelligent and skeptical of brand promises. The same goes for loyalty program members. If offers are irrelevant, retailers will risk program membership and engagement.

Brands, marketers, and retailers must do what they're supposed to: Attend to customer wants and needs on those customers' preferred channels. Moreover, they need customer insights that go beyond the sale, revealing how other aspects of their lives influence their brand loyalty. Big Data metrics help drive a more personalized customer experience—and drive rewards.

Keeping customers loyal isn't easy. Tech-savvy and time-strapped consumers crave instant rewards and genuine brand relationships cultivated across multiple channels. Sometimes those two needs yield contradictory results. But, as the above makes clear, each of today's loyalty challenges also contains part of the solution. The key is recognizing when customers' loyalty has gone astray and using the latest customer engagement technology to repair those fault lines before they widen irreparably.

As we welcome in a New Year, let's commit ourselves (and our loyalty programs) to be proactive rather than reactive. Research and investment in new technologies that help programs grow can make all the difference between a program that satisfies customers' demands and one that drives them away.

Here's to reviving loyalty from our customers in 2014.

Michael Hemsey is president of Kobie Marketing.

DMNotes is DMN's around-the-clock blog. Yes, a blog in 2016.

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