In a recent Econsultancy report, marketers rated ‘increased customer lifetime value and loyalty’ as the most important benefit derived from understanding the customer journey.
But how does this work in practice? What are brands doing in the real world to increase customer loyalty?
To find out, Econsultancy invited dozens of client-side marketers in Shanghai to discuss this and other customer experience (CX) topics over roundtable discussions.
The roundtables were moderated by volunteer client-side marketers and subject matter experts from Econsultancy and our event sponsor Epsilon.
Below is a summary of what was said throughout the day at the table entitled: Cultivating Loyalty – When Experiences Develop Advocacy.
Customer loyalty vs. advocacy
The table first tackled the difference between customer loyalty and advocacy.
Whereas a customer can be loyal through repeatedly purchasing products, there is no guarantee that they will become an advocate.
Additionally, you can cultivate advocacy from customers who may not be considered ‘loyal’ by any other measure.
Participants agreed, though, that a well-designed loyalty programme will encourage advocacy too, so most of the remaining discussions were about the things companies do to increase customer loyalty.
Steps to increasing customer loyalty
1. Collect data
Attendees noted that in order to have an effective loyalty programme, it is necessary to collect customer data.
One brand marketer said that simply finding out a customer’s birthday and sending them a ‘happy birthday’ email is a great way to start building longer term loyalty.
Another participant said that marketers should try hard to get the ‘right’ data. Mobile phone numbers, for example, are among the most important customer data points.
Your customers’ email addresses change periodically, but many people use the same mobile number for many years.
Marketers also need strategies for getting customers to hand over their data.
One attendee advised that ecommerce sites should not make ‘guest checkout’ too easy. Encouraging customer to register when purchasing something is the perfect opportunity for brands to get the data needed for an effective loyalty programme.
Customer surveys can also help in this area, especially for companies who don’t have ready access to customer data, such as B2B companies who use distributors to reach consumers.
2. Understand customer journey and lifecycle
Participants also agreed that in order to encourage loyalty, marketers need to understand the customer journey.
Knowing the steps that their customers take to purchase helps marketers find new opportunities to encourage existing customers to buy again, say with offers or other incentives.
One attendee noted that marketers should also know the customer ‘lifecycle’ as well. That is, someone who buys a beauty product may become a repeat customer within weeks, whereas someone who buys a car will not be in the market again for three years.
Understanding the lifecycles across different products and markets can also help marketers find opportunities to encourage customer loyalty.
3. Collaborate for insights
In addition to collecting the right customer data and understanding the customer journey and lifecycle, marketers must also collaborate with other teams in order to gain insights.
Delegates reported that working with customer relationship managment (CRM) specialists, business intelligence (BI) specialists, and sales people has helped them improve their understanding of their customers to a great extent.
Working on a common project, such as mapping the customer journey, is a great way to start this collaboration, according to one participant.
4. Plan loyalty programmes
Once the loyalty project team is assembled, the data collected, and the customer journey is understood, planning the loyalty programme is the next step.
Attendees came up with three main loyalty strategies:
- Special offers
One of the easiest ways to encourage loyalty is to offer your existing customers something in return for repeat business. These offers do not always have to be discounts, either.
Companies can also offer more efficient service or an improved ‘VIP’ experience. Offers should, however, be targeted at particular audience segments to be more effective.
- Loyalty card
Another way many brands encourage loyalty is by having some sort of loyalty point programme. One participant from a large retailer said that its points programme had been very effective.
The delegate also noted that making it paperless and fast to activate was key to success.
Another attendee pointed out that such schemes only work when customers buy from you frequently, otherwise consumers forget the programme and the effort is wasted.
Another attendee pointed out that a continuous delivery of material which will educate your existing customers is key.
Additionally, a regular flow of interesting information will keep your brand at top-of-mind and encourage future loyalty.
Apart from any specific strategy, though, participants said that making small efforts to increase customer loyalty make a big difference.
Loyalty programmes should also be easy, fast and fun. Customers will make an effort to follow programmes if the reward is high enough (e.g. collect air miles), but if the programme has side benefits than the monetary reward does not need to be quite as high.
Finally, the loyalty programme should offer something that customers cannot get elsewhere.
One example given was Amazon’s Dash device which allows customers to re-order products with the click of a button.
Such convenience is not available from any of its competitors, and so customer loyalty comes naturally.
5. Measure success
Even the most successful programme, advised one delegate, will be hard to sustain unless marketers measure and report successful numbers upwards.
What this means is that before launching a loyalty programme, marketers should agree on key performance indicators (KPIs) with senior management.
Then once the programme is under way, marketers know what they should be working on to improve on and management will understand improvements.
One participant noted that KPIs for loyalty can be completely different from those used for digital marketing.
Instead of click-through rates (CTRs) and cost-per-acquisition (CPA), loyalty programme KPIs can be metrics such as ‘points accumulated’ or ‘redemption rate’ or even ‘net promoter score’ (NPS) depending on the programme.
Regardless of what you use, ensure that what is being measured indicates that you will have more repeat business.
There is no point in improving customer loyalty unless it ultimately improves the bottom line, one attendee pointed out.
A word of thanks
Econsultancy would like to thank the client-side marketers who participated on the day and our sponsor for the event, Epsilon.
We would like to extend a special thanks to our moderator for the Cultivating Loyalty table, Cedric Delzenne, Director at Founder Institute.
We truly appreciate all of the effort participants put into making this an educational day for everyone and we hope to see you at future Econsultancy events!