In the marketing world, we often talk nostalgically about the "corner store" as the epitome of customer loyalty. Think back to 1957: That's when Leave It to Beaver debuted on TV, Elvis Presley purchased Graceland—and when most people did their shopping at nearby convenience or department stores.
True, retail options were more limited then, and those stores had all we needed, but we also knew the family that owned the corner store, or we were friends with the manager and had built a relationship. Back then, the customer-business relationship was king: We wouldn't dare shop anywhere else.
Sixty years on, a lot has changed. Sure, Leave It to Beaver is still in reruns, and Graceland remains the top tourist attraction in Memphis. But the convenience or department store—and that Norman Rockwell vision of loyalty—is dead.
As technological innovations have brought us everything we need at the click of a mouse, they have also hollowed out the practice of building relationships with customers. We've made it easier to transact with them—and they, in turn, treat loyalty as something that can be bought, sold, and replaced. And guess what? Your "loyalty program"—trading dollars for points for dollars—isn't making things better: Your "best" customers (those in the top 20% of spenders) are spending their dollars far and wide, according to a 2014 study by McKinsey & Company.
Beyond employing smarter analytics and actually measuring loyalty—figuring out that all-important share of wallet stat—marketers need to get back to fundamentals. Here are three key ideas on how to do just that.
1. Reimagine your category—by putting customers in the driver's seat
No matter what industry you're in, it's been utterly and permanently transformed by technology over the past 60 years. And though technological innovation often has a negative impact on loyalty—the easier it is to get customers, the easier it is to lose them—some of the past decade's most notable business successes have put customers at the centre of their universe.
Whether it's Tesla, Airbnb, or Slack, entire categories have been reinvented with a model that speaks to these central questions: What does the customer really want? What are their aspirations, and what's in their best interest? Why do they do the things they do?
For any brand seeking loyalty, the answers to those questions should be their driving force.
2. Make it easy for a customer to leave you—and even easier to stay
If there's one thing customers don't lack, it's options. But companies can't win loyalty by making it difficult for customers to switch. Locking people with absurd fine prints and contracts, for instance, will only hurt your relationship with customers in the long term.
That sounds like heresy—discussing how a customer can leave you—but it's the oft-neglected flipside of the customer-retention question. Companies like Amazon and Apple have figured it out: Offering greater personalization that helps customers become a bigger part of their brand but in a less transactional way.
It's been said that Amazon, in the not-so-distant future, will send you two boxes every single week that you didn't order: The first box will be full of things that Amazon can predict you might want; the second box will be empty, to be used to send back the things you didn't actually want. As A.G. Lafley and Roger L. Martin argued in a recent issue of Harvard Business Review, a brand's long-term performance "is sustained not by offering customers the perfect choice but by offering them the easy one."
3. Make sure the right hand knows what the left is up to
Just about everyone agrees the future lies in data. According to some estimates, the Big Data analytics market will soon top $200 billion in worldwide revenues (by 2020)—at a compound annual growth rate of almost 12%. But to use that data effectively, companies need to get rid of the silos that put critical insight to waste. Think about it: Why is it that while you're complaining to the customer service department about one thing, that company's marketing team is trying to sell you another new service—in exactly the same way they would have if nothing was wrong?
Until you break down your company's internal walls, the external wall with customers will remain.
Five years ago, if somebody had said, "I want to connect transactional and behavioral data with attitudinal data, and try to collect a 360-degree view of that customer," people would have said, "Lofty idea, but that's impossible." Today, they'd say, "That's very difficult." With each passing year, it gets less difficult to realize the promise of a data-driven loyalty revolution. But to get there, we need to engage with customers on an ongoing basis and create a long-term relationship with them.
We may not be able to bring 1957 back, but we can use data, along with customer insight and other tools, to rebuild our relationship with customers—and get back some of that corner-store sensibility to how we do business.
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