If you live in a countryside village in the middle of nowhere, you’ll have maybe one or two choices. Loyalty and proximity were intertwined.
This was essentially the situation for most of us, before online shopping came along.
The pub paradigm
Now say you live in London. There are tons of pubs in London, ranging from centuries old, smoky bars to newly opened, hipster-y waterholes. And sure, you can try many of them, sometimes with colleagues, sometimes with friends or family, but some you always come back to. They are usually those where you felt most welcome, where the bar staff recognises you, smiles, asks you how you’re doing, and knows what you usually drink. It’s kind of a warm feeling and that’s what encourages you to come back. As the theme song to Cheers highlighted (and I realise that ages me), “Sometimes you want to go where everybody knows your name…”
An era of disloyalty?
It has been a recurring theme in the last decade that, no matter which marketing techniques are employed, there is too much choice to expect customers to be loyal to just one brand. Ecommerce is positioned as one of the culprits, the assumption being that – with the barriers to setting up an online store and selling to people worldwide becoming lower – it’s increasingly difficult to compete, especially on price. And with consumers having a world of options at their fingertips, how can you create or expect loyalty?
This position has some true elements and some fairly exaggerated ones. Yes, the internet has radically changed the way we shop, a shift that is often blamed for the decline of high street stores.
But has this also been the cause of customers becoming inherently disloyal? I don’t think so.
Customer behaviour might have changed, they might have more choice available to them but, in our experience at RedEye, they haven’t shown a lack of desire to be loyal, if brands behave in the right way. Our individual desire for recognition, feeling valued, getting ‘that personal touch’ – that is still deep in our psyche. We have data to back this up. So, now that we established customer loyalty is not dead, who is to blame when clients walk away?
Put frankly, it’s us.
That’s right, my friend. Marketers, sellers, owners. Instead of exclaiming loyalty is dead, we should look to ourselves as the ones to blame when customers are not loyal.
Customer loyalty has never disappeared
It seems to me that the presumed death of customer loyalty can be used as an excuse, hiding the fact that marketers haven’t established a deep enough understanding of their individual customers to allow for the personalised marketing that will create that loyalty. Instead of challenging our own strategy, we blame customers themselves. The problem is, this frame of mind can lead a business to focus on the constant acquisition of new customers, while disregarding existing ones. On the long run, it’s an enormous waste of both resources and the opportunity.
Research – and our first-hand experience – shows that retention is much more cost effective, and one of the best ways to induce revenue growth. You have all the information you need in your database. You just need to use it.
Data. Data everywhere.
There is nothing more precious than your customer database; that is a change, brought by the digital era, for which we marketers should truly be grateful. For the first time, we are actually able to understand our customers using hard evidence, instead of our gut feeling.
By studying your customer behaviour in various touch points – on your website, your social profiles, your high street stores – you can discover a staggering amount of useful information, from which landing page design engages your audience best, to building a complete profile of the single customers on all channels, so you can recognize them and welcome them back.
Collecting and analysing behavioural data from all available sources is essential since, by highlighting the points where customers engage with you, it is possible to start recognising certain patterns and acting upon them. For instance, is a customer who purchases a small amount more frequently more loyal than one who splurges every three months? Neither, really, but they’ll respond to different communications and incentives.
Let’s get back to the pub (I generally do). Bill, the lifelong regular who nurses a single pint of bitter five nights a week will keep coming back if every now and then one’s on the house. Victoria, who brings a dozen friends in for dinner four times a year, will appreciate being treated like a VIP by you and the staff. Both play an important role in your customer base.
The beauty of the online world is that you can be a landlord or landlady at massive scale. Treating every one of your customers as an individual, and building the long-term relationships that will deliver value over a lifetime. It’s not magic, it’s simply bringing to the digital environment a healthy, caring, traditional-pub-owner kind of attitude.