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.
Great post Matthew.
My personal feeling is that, especially in the digital space, loyalty is increased, not only by the things you mention, but also the ease of use of the website.
I buy a lot of things from Amazon, but I would not consider myself an Amazon brand advocate – they just happen to have all my payment and shipping details and allow me to one-click shop.
I don’t particularly like Paypal, but I like the convenience and security of not having to put my payment details into other website, so I use it.
I think loyalty has a broader definition than it ever did, and needs a number of elements to be aligned for a customer to ‘stick with a brand’.
I don’t think loyalty has gone at all, probably the opposite, that’s why Amazon do so well. It’s all very nice mining data and suggesting personalised products but the thing that gets people to shop again is convenience and good service.
You’ve got to pay a lot to get a new customer and persuade them to shop with you over everyone else, but once that customer has done their hard work and signed up, filled in all their details they don’t have to do it again, so if you offer the right products and have get them to the customer with no issues, quickly then that’s most of the battle won. Get them to shop a couple of times with no problem and you are on to a winner (assuming you sell the kind of product range/category that needs repeat purchases).
As Amazon sell so many products and tempt you in with ‘free shipping’ (which actually works out more expensive for the majority of customers) most people have shopped there once, so when they search on Google for a product they find it often cheaper from a smaller retailer but would rather pay a little more to buy through Amazon (which usually isn’t actually the cheapest) without having to sign up.
Amazon know this and have worked it to the max sadly.
Do all the personalisation/segmentation/loyalty emails/big data, but get your service, returns, convenience sorted first, that will get you more loyalty than anything a big data company can offer you.