Brands want loyal customers. They buy more, pay more, and refer more. But research shows that loyalty is in decline. Consumers are considering more brands and switching providers more frequently than ever before.
So what can marketers do with their loyalty programs to earn greater trust, commitment and advocacy? The answer isn’t more sweepstakes, coupons, points, promotions or emails. It takes a rethinking of what loyalty really means in a digital age.
1. Loyalty needs to be reciprocal. Consumers today expect this allegiance to go in both directions. According to a study by Kitewheel, three-quarters of consumers believe loyalty programs are for brands to show their loyalty to consumers. But two-thirds of marketers think the reverse: that loyalty programs are a way for consumers to show their loyalty to brands.
You can see this disconnect in how brands talk about loyalty. The phrases “brand loyalty” and “customer loyalty” often mean the same thing. What would the world look like if brands were loyal to their customers? Credit card companies would waive late fees for customers who were on vacation when the payment was due. Retailers would reward shoppers who don’t spend a lot, but are active on social media as brand advocates. Airlines and hotels would renew status levels for customers who took a hiatus from traveling when they had a baby or were between jobs.
2. Loyalty is about emotion first, behavior second. For most brands, the measure of brand loyalty is repeat purchase behavior. This metric puts the cart before the horse. Loyalty is powered by emotion; repeat purchases are the result.
The increasing popularity of promotions shows this flawed thinking in action. Low prices may be a way to drive more transactions, but it doesn’t necessarily earn loyalty, at least not in an emotional sense. Ivan Wicksteed, CMO at Old Navy and architect of the brand’s recent transformation, has said, “It’s the emotional connections that a brand makes… that last the longest and go the deepest.”
Things get worse when carrots turn to sticks and brands start penalizing disloyal behavior. Consider Amazon’s recent announcement that it would stop selling products that aren’t compatible with its video streaming service. Like other Amazon customers, I question how this serve its mission to be “Earth’s most customer-centric company.” Or consider phone companies like Verizon and AT&T; that are always looking for ways to lock customers into another two-year contract.
3. Go for gratitude and loyalty will follow. How does one create a sense of loyalty that is reciprocal, authentic, and emotional? The answer is to focus on fostering the emotional response that is most likely to drive loyal behavior—gratitude. Read the entire story here