Loyalty is so fleeting, so misunderstood and, because of mobile, so important yet just so out of reach for some. It has become an enigma, a term used in excess to describe a tenuous relationship between consumer and company. In short, it has become a commodity. So how do we do a reset in this, the era of the powerful consumer?
That’s what this episode is all about. Mobile has brought the ability to connect with consumers in a way and place that marketers have been dreaming of forever – always and wherever. The mobile device is the panacea of direct, personal and relevant marketing. So why is it in jeopardy of being hindered by the very thing that marketers have been waiting for?
In the mobile era, loyalty is fleeting. As consumers we now have access to the biggest database of opinions, prices and inventory from stores around the corner or spanning the globe. Companies that haven’t invested in knowing and understanding their customers are quickly becoming display rooms for the companies that are doing it right so how does your business shift the focus away from price (a commodity) and back to longevity and relationship and connection? Back to, what Gary Vaynerchuk calls, small town rules?
To explore the concept of loyalty and give us a roadmap to build upon I’ve called on Rick Ferguson, VP Knowledge Development at Aimia – the company you’ve never heard of but the company that manages loyalty programs for some of the largest brands on the planet including Aeroplanm Nectar and Air Miles in the Middle East. The advice is free and comes fast in this episode but one thing I should warn you up front about and that is, don’t take this thing called “loyalty” lightly. Embrace it the way Rick suggests and it will be your best friend. Ignore it or keep calling what you are doing “loyalty” and you risk your livelihood.
Here is a quick reference of what we covered in the show. Click on the link and the video will take you to that clip
1. What is Aimia 1:40
2. What are marketers most guilty of in the past 10 years 6:30
3. What makes a customer loyal 7:35
4. What can a loyalty marketing do 8:35
5. What do you need to encourage a customer relationship 9:30
6. How can you create true loyalty with the sheer volume of customers 11:42
7. Case study: A small Ohio grocery store chain 16:15
8. Is their a risk that loyalty becomes an ignored term 19:40
9. Ron Johnson, JCPenny and the “simple” pricing paradox (that didn’t work) 23:25
10. What are the key differences that mobile brings to loyalty 26:00
11. What is the impact of the speed of change in the mobile industry on loyalty 30:30
12. Why won’t loyalty just become dial tone? 32:30
13. Why technology is a means to an end but not customer loyalty 35:30
14. Is generation Y ready for mobile wallet and loyalty? 37:20
15. What is the impact of loyalty on price of goods? 39:00
16. What metrics should the focus be on to gauge loyalty 43:30
17. Current customers vs high potential customers 46:00
18. Tips on where/how to start in loyalty 48:25
19. Summary: Don’t be lazy, you will damage your brand 52:00
My key takeaways
Loyalty is not set and forget
Would you feed your dog once and consider it set for life? No? Well, that’s what many companies are doing with their loyalty strategy right now. Forgot in all this hoopla of mobile everywhere and location based marketing and push messaging and mobile ads is the simple fact that loyalty is earned. It is not earned through broadcasting or coercion or discounts, it is earned by creating continuous value over a sustained period of time – and that sustained period of time is the life of the customer (or as long as you’d like them to be a customer that is). This is business basics and something that mobile will not erase. Satisfy a customer’s needs and they will remain true – even pay more for your products and be more patient when things go wrong.
Do not spend your money building an arsenal of names. Instead, build a militia of advocates that are loyal through and through.
Loyalty is not the same for all your customers
I get a version of this email every Wednesday morning from Banana Republic. I’ve been getting it since, well, forever. You are probably getting the same thing or one from Gap or Old Navy – right? You are probably getting the same discount, the same photo, the same everything right? In fact, I received an email from them this week with the latest fall line of clothing…for WOMEN! Last I checked…
I’ll take these emails – I’ll use these emails. In fact, I don’t shop at these stores unless I have these emails. Am I a loyal customer? Nope. I don’t give a shit about this brand other than I can get a discount on some clothes. I used to care – really – but Banana Republic changed my opinion of them very quickly with these “loyalty” emails. Now, I shop there because they are cheap. I shop there because they discount their products. I shop there because I want to save money. Loyalty has been eroded.
What could they have done? Take Rick’s advice for one. All customers are not created equal. If I am not a loyal customer, why give me 30-40% off? Start small, customize that number based on the times I’ve bought and my interaction with the store. Also, perhaps realize that I am a man and may not be interested in women’s clothes…
Are you treating all customers the same? Then watch this part of the episode with Rick and understand the difference between current customers and high potential customers. They aren’t the same and shouldn’t be treated the same.
Loyalty is a science, treat it as such
It may not involve beakers and bunsen burners or chemicals or even lab coats but loyalty is a science. The essence of making loyalty work is testing a hypothesis against an expected outcome. Remember those science experiments you would do back in highschool? That’s what loyalty is. Come up with a desired outcome, add the right ingredients (or take some away), adjust the right variables and frequency and set it loose. Observe, collect the data, analyse the data against what it was supposed to do. Adjust the ingredients and variables and your expectations and try again. Rinse, repeat.
Loyalty is specific to your business – there is no cookie cutter, relationship making app you can buy that will work without testing.
Loyalty done wrong will harm your brand
How can customers shopping in your store as a result of your “loyalty” program harm your brand? Well, think about the example above with Banana Republic. It is very easy to mistake what you are doing – homogenous discounts, one-size-fits-all programs – as true loyalty. Watch this example of what loyalty means from a grocer Rick knows and compare that to what you are doing right now. Bringing people into your business – even buying from you once does not create the loyalty we are talking about. A lifelong customer is what you should be striving towards so start thinking the same way this little grocer thinks about the people that walk through his door.
Mobile brings data but focus on your key metrics
We can get lost in the sea of data that is being collected today. There is such a firehose that we often become paralyzed by it and the data sits and rots. Focus intensely on the data that will satisfy your hypothesis. Are you trying to bring more people in the door? If so, what is the one metric you can track that will show you what you are looking for. Hold that metric. Watch that metric. Pattern that metric. Then change the variables and see what that metric does. Only when you are satisfied (for now) that the metric is taken care of, go on to the next.
Do NOT overwhelm yourself by doing too much at one time. My brother used to drive me crazy when he would fix my computer. He would open up the box (back when I used a PC), remove everything from the RAM on up and start putting things back in, rebooting in between. This was a painful but methodical way of testing and he always found the problem because he limited the variables. Once you identify your metric, do the same. Focus on it until you are satisfied with the outcome.
This isn’t a one night stand
I think you get the point here. The goal of loyalty should be to create a long-term, lasting, two-way relationship with your customer. What we are seeing out there now is the equivalent to Match.com’s “short term relationships section” and not the “in it for the long haul” section. Build. Strengthen. Grow. Nourish. Those are the 4 words that should be evoked when thinking about how you can master the loyalty of your customers.
What do you think? Also, what do you think of the new format for the episodes? Do you like the chapters for quick reference? The takeaways? What else would you like to see. Leave a comment or two below or email me.
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About Rick Ferguson
Vice President, Knowledge Development for Aimia
As Vice President, Knowledge Development for Aimia, Rick has overall responsibility for the development and dissemination of loyalty-marketing thought leadership, research and best practices for a global audience of loyalty marketers.
An acknowledged expert in the theory and practice of loyalty marketing, Rick has published numerous articles and white papers describing the characteristics of marketing programs which seek to change customer behavior. He has consulted for Fortune 500 clients including American Express, Procter and Gamble and Visa Inc.
Rick is frequently called on by the media to comment or contribute to stories on the current state of and outlook for the loyalty industry. He has been quoted as a loyalty expert in various prominent publications, including the Wall Street Journal, New York Times, USA Today, MSNBC, the Globe and Mail, the UK Guardian, Fast Company, and Advertising Age. He has also served as a contributor to The Journal of Consumer Marketing and has written monthly columns for NACS magazine and Chief Marketer.
Rick has been a keynote or featured speaker at many industry conferences, including Card Forum, the DMA Annual, Eye for Travel, FTMA, Loyalty World, and NACS. He’s also delivered educational workshops and webinars on the principles, practices and technologies of loyalty marketing in Canada, China, Malaysia, Singapore, South Africa, the United Kingdom and the United States.