Mastering Customer Loyalty: Simplifying the Basics

By Charlie Glenister

3 mins


Mastering Customer Loyalty: Simplifying the Basics

By Charlie Glenister

3 mins


The loyalty cat is well and truly out of the bag.

 

With the cost of customer acquisition now sitting at 5 times higher than the cost of retention on average, it’s perhaps surprising it has taken so long for brands to recognise the central role loyalty should play in their success. After all, more than six in ten consumers are now willing to shell out extra cash to patronise the brands they hold dear. Getting it right then can be highly lucrative, with those able to capitalise poised to benefit in two ways, namely, increased revenue opportunities among existing customers and reduced pressure to acquire new ones. 

 

However, competition has never been more fierce – 39% of consumers are more likely to engage in a loyalty program of some kind this year compared to last, leaving many scrambling to update and optimise what programmes they have in place already. But the one-size-fits-all points and prizes approach of traditional loyalty schemes is increasingly coming under scrutiny.

 

So, you think your customers are loyal?

 

Despite buying from the same brands regularly, when asked, a whopping 68% of consumers say they don’t actually feel loyal. This is important – whilst on paper, these customers are categorised as higher value loyal customers, what they’re really doing is just going through the motions.

 

Picture this. 

 

You’re a big Cafe Nero fan. You venture out, excited, every morning to get your caffeine fix, not only for the coffee itself but because the discounts they give you for your loyal customers help to justify the expense. A new, independent coffee shop opens up nearer to where you live, serving the same broad range but with higher quality, better service, and earlier opening hours, so you switch.

 

 

What many brands fail to recognise is that lots of consumer purchasing behaviours are still very delicate, leaving the existing very functional approach to loyalty poorly positioned to build genuine connection (i.e. a more emotional relationship built on deeper feelings like trust, joy, excitement and reliability).

 

Introducing the loyalty blueprint

 

We’re not saying traditional loyalty schemes don’t have a role to play, far from it. But at Manifesto, we believe that understanding your different customer groups and building true emotional loyalty is what really matters, with many focusing on the former at the expense of the latter.

 

But what does that really mean?

 

 

 

 

 

To effectively grow loyalty, businesses need a laser focus on delivering outcomes for 3 customer groups:

 

  1. Giving occasional customers a reason to come back
  2. Recognising engaged customers and delivering them a differentiated proposition
  3. Building enhanced relationships and experiences for the top 10% ‘crown jewel’ customers

 

We think loyalty doesn’t have to be difficult, and we’re going to focus this article on how you can deliver an experience for occasional customers that goes a long way in underpinning your loyalty strategy. Crucially, you don’t need an all-singing, all-dancing loyalty scheme to do it well, either.

 

Nailing the basics

 

Points and prizes are important, but they’re not everything, especially to occasional, semi-regular customers. If brands want to draw people into their world and drive genuine loyalty, it’s absolutely essential to nail the basics (speed, transparency, ease of use, simplicity).So many B2C customer journeys are rich with opportunities for interaction, so it’s a virtuous circle if you can get it right. A fantastic experience with a store colleague, a personalised, content rich email newsletter, a free gift at checkout – these small moments along a customer journey are not difficult to implement but can make all the difference in whether they choose to come back (and become a loyal customer for life).

 

In Marigold’s recent report on consumer trends, more than 70% of consumers cite the following as either important or critically important to creating a sense of / maintaining their loyalty: customer service/support, surprise rewards, data privacy policies, product/service quality, availability, consistency of experience, and a proactive effort to deepen the relationship.

 

Brands that are getting all of these elements right are a great representation of relationship marketing in practice – a commitment to cultivating genuine connections, carried out by consistent, personalised messaging that makes any customer feel like a VIP.

 

It isn’t rocket science – all it takes is a bit of planning and thought and when the end result is genuinely loyal customers who will pay more to shop with you (on an ongoing basis), it’s a total no brainer.

 

Simply optimising your messaging to ensure your audience receives up-to-date, personalised information can check many of the boxes pivotal to customer loyalty. Think triggered messages for product availability, personalised offers and promotions based on previous activity, and transparent explanations for how data is being used – all easy messaging implementations that can dramatically improve customer perception of your brand.

 

So – as we move into the future, full blown loyalty programmes will likely continue to hog the spotlight when it comes to the broader discussion on loyalty and the benefits a well curated scheme can bring. But speaking from our experience, brands should remember one thing – long term success in any endeavour always starts with nailing the basics.

 

How Manifesto can help

 

At Manifesto, we are experts in business models that grow customer engagement and value over time, through membership, subscription, loyalty and D2C. We specialise in helping global leaders in Retail, Leisure, Media, CPG and Financial Services pivot their businesses to focus on deepening customer relationships.

 

If you want to learn more about how to win at loyalty, you can read our full report, ‘Beyond Points: The Loyalty Blueprint’, here. The report delves deeper into the key things you need to get right, what happens if you get them wrong, the commercial objectives you should have front of mind, as well as examples of the brands that are getting it right (and wrong!).


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