Hitmetrix - User behavior analytics & recording

Are You Just a Habit Your Customers Can Break?

Behavioral loyalty is a nice-to-have. For some marketers, it’s good enough. “Who cares,” they say, “if customers ‘love’ us, as long as they buy from us?” The problem with behavioral loyalty is that it’s tenuous. If something better comes along customers will drop you like a bad habit.

Not so with emotional loyalty. Think about it: Would someone with a Harley-Davidson logo tattooed on his arm switch to a Ducati when shopping for a new motorcycle because the latest Ducati model is on sale? Not likely. Would someone (me) who packed enough Shout laundry stain remover to last a one-year stay in London (what if it’s not sold there?!) ever switch to Resolve or OxiClean—even if they cost less or are sold in more stores? No way. Shout has saved more clothes than I care to mention, and not even a big-money coupon would sway me to try a competitor. 

The attitudinal edge

One way many companies are endeavoring to foster emotional (i.e. attitudinal) loyalty among their customers is through their loyalty programs. A majority of these programs, however, are more about points accrual than customer experiences that lead to emotional loyalty, so they don’t do more than encourage behaviorally-driven repeat purchases. Admittedly, any purchase is a good one, but there should be more to these programs than accruing points. Fortunately, some companies realize the real power behind loyalty program transactions: customer data.

“Loyalty programs should inform the customer experience,” Bond Brand Loyalty President and CEO Bob Macdonald told me when we met to discuss the company’s latest study, “2015 Loyalty Report.” “These programs provide data that marketers need to get to know their customers personally.” Using that data at the point of sale is the ultimate one-to-one marketing, he said.

Currently, however, not enough marketers are thinking that way. “They need to move past discounts to areas that are both differentiating and less costly,” Sean Claessen, EVP, strategy and executive creative director of Bond Brand Loyalty, said during the discussion. Some of these areas are as simple as making a loyalty program easy to use, enjoyable to be a part of, and mobile friendly, according to the report. But, most important is the data. Claessen echoed Macdonald in saying, “Loyalty is about engagement, and program data helps marketers to connect behaviors, which allows them to better engage customers.”

And, based on the study’s findings, customer engagement is essential if loyalty programs are to help deliver loyalty, not habit. Here are stats from the report that stood out most to me.

Bad behaviors

Consumers are enrolled in more programs than ever: 13.3 this year, which is up from 10.9 in 2014. But they’re active in fewer programs than they were before—6.7 in 2015, as compared to 7.8 last year. This suggests that some consumers are joining programs not because it’s a preferred brand, but because if they happen to purchase from that brand they want to accrue the benefit. (Think about travelers who sign up for multiple airline loyalty programs.) In other words, program membership isn’t always a purchase driver. Nor is it always a loyalty driver: More than a third of those surveyed (37%) say that a program doesn’t make them more loyal to a brand, and 38% assert that the program doesn’t improve their brand experience.

Further, 34% of consumers polled say that they’re only loyal to those brands whose loyalty programs they’re members of because of the loyalty program—which means, frankly, that they’re not really loyal at all. A better program comes along and, whoosh, those customers will move on. Or, at the very least, will divide their “loyalty” between the old and new brands. But on the positive side, 62% of respondents agree that “the program makes my experience with the brand better,” and 63% say, “the program makes me more loyal to the brand.” In fact, 76% of respondents think that loyalty programs are part of their relationship with brands. And that’s where the real opportunity lies: in using those programs to build the relationship—that is, to help foster emotional loyalty.

The way to do that is to think beyond the points; to use the loyalty program data to inform and improve the whole customer experience. “It’s all about engagement,” Claessen asserted. He cited home automation company Nest as an example of a company that uses loyalty-program-like gamification to create emotional loyalty. Nest rewards positive behaviors (e.g. lowering the heat) with “Leafs,” which are what Claessen referred to as “emotional currency” because most Nest customers don’t accrue anything but feeling good about their choice to conserve energy. (In some locations customers are able to trade Leafs for rebates from their energy provider, he said.)

In fact, the Nest is one example of what MacDonald called a loyalty brand: one that weaves loyalty drivers throughout the customer experience, using program insight to help engage and captivate customers; to move past points and breakable habits to loyalty and advocacy; and to tattoo their brand, if not on customers’ bodies, then at least in their hearts.

“It’s time to be a loyalty brand,” he said, “not simply a brand with a loyalty program.” 

Charts courtesy of Bond Brand Loyalty

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