What Will Define the Future of Customer Loyalty?
“Loyalty has been part of the retail strategy for a long time,” states Insider Trends.
The company goes on to say that while the loyalty logic makes sense (returning customers=returning income, especially when incentivized to spend more), the tactics retailers use to try to win that loyalty aren’t very impressive.
It’s time to reevaluate loyalty with 3 facts business owners need to know in order to achieve customer allegiance in the future:
1. Consumers aren’t loyal to bad experiences
“Loyalty programs do not win loyalty,” says Insider Trends. In fact, a study by Accenture reveals that 77% of consumers are signed up for at least one retail loyalty program. And that means that every retailer has a segment of customers who do not take part in their loyalty scheme. So what’s bringing them back?
It’s not uncommon for consumers to buy something from a new company and sign up for their loyalty program as well. But when someone doesn’t sign-up for a retailer’s loyalty plan and still returns to that retailer, something else is drawing their loyalty, be it experience, quality, product assortment or price.
Subpar products or experiences aren’t going to bring shoppers back no matter how many points they’re offered. So if business owners want consumer loyalty, they need to focus on creating something worth being loyal to first. That’s what will encourage customers to fill out stamp cards or earn points—because it benefits them to do it, and they’re already coming to your brand anyway.
Don’t forget that humans are creatures of habit. And since a lot of brand loyalty is rooted in trust, people who had a good experience somewhere once, are more likely to go back there than risk trying an unknown brand. “Any perceived perks from a loyalty scheme come second to that,” points out Insider Trends.
Clearly, it pays to focus on getting the experience right first. Retailers only get one shot to make a good first impression–the same shot they have to initiate the loyalty building process.
2. Brand love is what builds loyalty
To understand how love builds loyalty, Retailers should consider the brands they love and why they love them. Is it because they offer something no other brand can? Is it because they’re easy to understand and relate to? Is there an emotional connection with the brand? Do they make life easier or better in some way? Do they share similar values?
These are the types of things that build loyalty. For example, a consumer that doesn’t share a brand’s values or whose lifestyle doesn’t align with theirs may feel that the company is of no use to them. On the other hand, a consumer that loves a brand and what they represent may want to keep going back to the place that “gets” them.
Handmade cosmetics company, Lush, has no loyalty program—no points card or club to sign-up to—but it has a huge army of loyal fans and some major brand love. Yes, this is, in part, achieved through its products and store experience. But more than that, it rewards customers with experiences and benefits—based on their shared values—that are attainable for everyone.
For instance, Lush has built its business on the idea of sustainability. It encourages customers to recycle the black pots some of its products are sold in by inviting them to bring five back to the store to get a free face mask. Additionally, to maintain brand love, it hosts huge events that anyone can attend and offers attendees a peek behind-the-scenes.
Well loved brands, such as Glossier, harness the online love consumers are showing through their social media posts, where they talk about their favorite products and make recommendations. The brand rewards them for their content by allowing them to earn commissions and visit the Glossier offices to test products early and offer their input.
These experiences are what keep customers and influencers in love with the brand, which results in them being more loyal to it.
3. Loyalty can’t be bought, but it can be sold
“They say you can’t buy loyalty but that’s exactly what retail has tried to do to date with its special discounts and points and offers and free gifts,” says Insider Trends. “It’s saying ‘please buy more stuff from us and we’ll throw you a bone’.”
But how well does that really work? How many loyalty programs actually entice shoppers to shun competitors? How often does a loyalty plan motivate consumers to shop in a particular place? How long does it take for customers to see any benefit from their points and stamps?
Consider what happens when customers pay to be part of a brand—it’s the perfect loyalty set up, right? A membership requests that customers become a member of a brand. It promises a fair exchange of money for exceptional value, service, and experience. The fee, itself, conveys an element of exclusivity.
Probably the most notable membership service is Amazon Prime. Customers pay a fee for fast delivery, along with access to exclusive video content, ebooks, music, discounts at Whole Foods and more. Interestingly, customers seem to love their Amazon perks so much they forget they’re paying for them.
According to Consumer Intelligence Research Partners, 73% of 30-day trial subscribers end up paying for the first full year of Amazon Prime. Furthermore, 91% of first-year paid subscribers renew for a second year, and 96% of second-year paid subscribers renew for a third year.
Talk about serious loyalty! But that’s not all. Prime members spend more with Amazon than non-Prime shoppers, which means they pay for the service to start with and are then compelled to spend even more because of the benefits it offers.
“Customers are the soul of any business and fulfilling their needs is imperative,” declares Insider Trends. While attracting new customers is necessary, companies must focus on keeping existing ones by building loyal relationships. Many retail brands have attempted to maintain customer loyalty through loyalty programs (including cards, points and rewards), but there are those who would argue that these schemes are starting to lose their impact.
“The saturation of the traditional loyalty programs requires brands to step up their game in order to sustain the relationship with their customers.”
Retailers must focus on more customer-centric strategies. They must offer something worth being loyal to. And they must provide customers with more personalized and memorable experiences that inspire brand love and sustain long-lasting loyalty.
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