Loyalty vs. Customer experience

01 July 2013

It is commonly appreciated that customer loyalty is not the same thing as the customer experience.   Customer loyalty is all about the relationship; it is the consumer's actions and behaviour that reveals their loyalty and provides commercial value for the brand. But the customer experience is made up of every brand interaction, provides the opportunity to reinforce the proposition and develop a deeper relationship with the customer. So what can you do to increase your numbers of advocates and loyal customers, and to focus your efforts in areas that will bring greater customer loyalty and business growth?  

Amazon is a great example of an e-commerce specialist that is renowned for providing a consistently fantastic user experience that customers both value and want to be a part of. The company's intelligent use of data and content allows it to deliver relevant, dynamic content based on customer profiles and behaviours, but the genius lies in presenting that insight as tailored and relevant content: 'frequently bought together', 'people who bought this also bought', 'what customers buy after viewing this item', customer reviews, more buying choices from other suppliers, and so on. This degree of cross-selling, up-selling and recommendation is crucial to providing the customer with all the information they need to make a purchase decision, either now or in the future. Amazon has built a trusted brand by providing an efficient and effective shopping experience, and used the trust it has built up in its brand to incorporate more suppliers and buying options, giving the customer even more choice about who they want to buy from. This marketplace model connects Amazon customers to many other sellers - and vice versa - but still within the original Amazon shopping experience.

In other words, experience is not the same as a relationship, and loyalty can be more than the sum of the customer’s experiences. A brand experience can be quick and transitional such as viewing a brand's Facebook page to something more multi-dimensional such as a visit to a physical store, but the overall customer experience is only as strong as its weakest link.

Customers think about each brand interaction in combination with the ones that came before it, comparing it with their expectations and possible alternatives (see diagram, below). A   strong   of good experiences will lead to a greater willingness to recommend the brand, but one negative interaction can turn an advocate into an antagonist if it isn't recognised and addressed effectively. Customers become advocates when all the most important brand interactions - at every touch point - leave them with an overall positive feeling, compared to what they've experienced elsewhere.

All of this suggests that brands must start not only to identify their key touch points and determine how strong they are, but also identify the weaker ones to minimise the impact of dissatisfaction and the actions of those described by NPS as detractors.

How do your touch points stack up?

One of the key issues affecting the customer experience - and how useful it will ultimately be in building more loyal customer relationships - is to find out which are the key touch points, and how strong or weak they are. For example, in-store experiences have a great potential for personal relationships, relying heavily on staff as brand advocates who bring the brand and products to life. But is that enough? Today's smarter consumers are increasingly 'showrooming' - using stores for product advice and research before buying from the cheapest source online. Brands are being forced to react or risk not being part of the decision journey and the UK department store, John Lewis, now offers wifi in all of its stores. However this combined with its 'Never Knowingly Undersold' and price guarantee proposition not only embraces the showrooming trend but builds trust and gives the consumer the confidence to feel good about purchasing in-store without the need to price compare.

With consumers being bombarded and overloaded with digital messages, particularly emails and daily deal offerings, perhaps one of the most critical of all touch points will be your marketing communications. Many are designed to result in more transactional and tactical consumer action and whilst this may meet needs for more immediate gratification and generate revenue, it is not going to fuel long term consumer relationship and business growth from a valued relationship.  Brands must therefore address the twin issues of frequency and relevance to differentiate the interaction and relationship: every message must be relevant, personalised, and generate trust.

Maximising advocates and loyal customers
Perhaps the most obvious way of creating new advocates is to encourage existing customers to spread the word about their good experiences, and even their passion for the brand, by providing not only the technology but also a continuous parade of opportunities to spread the kind of goodwill that comes word of mouth and member-get-member campaigns. However a note of caution should be raised given their increasing transparency and the credibility considerations associated with these initiatives. Furthermore consumers are becoming increasingly savvy in differentiating between where their peers are genuinely advocating brands and where it is conducted because something is being offered in return.  

At the same time, better customer understanding will identify what could be changed or done to improve the customer experience so much that it helps generate a whole new wave of advocates. Finding out more about them - whether that's done through social, mobile, digital or offline channels - and then profiling them intelligently is what will drive the kind of personalisation that maximises the brand experience and drives loyalty and advocacy. Again, the customer experience provides a platform on which a more loyal relationship can be built.

Loyalty across the board
Brands that can leverage all their touch points to develop positive relationships, and that seek to engender loyalty, are effectively building out the kind of customer-centricity needed to take loyalty seriously. This allows them to look at the whole customer experience, enterprise-wide, to drive both loyalty and business growth. What is really needed is for customer loyalty to creep and be accepted into all corners of the organisation: this is true enterprise loyalty.

While many companies employ and focus on customer loyalty to differing degrees and too often the perception of loyalty is immediately connected to a loyalty programme. Many brands have used it successfully as an element of their loyalty strategy but ultimately a programme is a very proven and successful mechanism to gain data, enhance customer understanding and use it to engage and reward customers for displaying certain behaviours. Looking beyond the programme, surprisingly few companies have truly embraced loyalty across the whole organisation where it is thought of as an enterprise-wide initiative and the collective all look for opportunities to forge customer relationships, create brand advocates, increase customer retention and business growth. Throughout and to support this approach, it is unsurprising that the customer experience must remain strong, consistent, and helpful. According to recent research by Colloquy, companies that practice Enterprise Loyalty can see their revenue increase by as much as 20%. But doing so requires a new mind-set, away from the idea that loyalty data is a marketing tool, toward the idea that all departments can benefit from its insights because it shows what is actually relevant to the customer.

What can you do?
Even if the company is not ready for this kind of enterprise-wide loyalty, there are still areas that can be focused upon to maximise brand advocates and loyal customers.

Customer relationship and loyalty strategies provide the ability to provide a better customer experience, which results in greater loyalty, and a better customer experience can only enhance that aim. A greater focus on improving the customer experience should have the ultimate aim of driving loyalty, while a focus on loyalty should produce a better customer experience. Both aspects must be tightly aligned and integrated - which is often beyond the remit of the marketing department.

The first step, therefore, is to develop a clear understanding of the economics of customer loyalty as it relates to your brand and your customers. Consistently delivering an outstanding customer experience will create advocates and recommendations, which can be more valuable than all other customers - unless they are not a transacting customer meaning their commercial value could be significantly less. And, in building more trust-based relationships with customers, it is imperative to give them considerably more control over the information you hold on them in order to improve the personalisation and messaging of communication.  In addition, those that have a voice, will need to know that they will be heard - not only by the brand but by other consumers like them.
Remember that the customer's expectations will continue to change and evolve - sometimes rapidly - so we must continually monitor and evaluate those expectations, and evolve and adjust our own processes and metrics alongside them. So focus on knowing what the customer wants, needs and expects, build a continuously great experience for your most valuable customers and your promoters - will be vital in differentiating your brand experience and, most importantly, driving new business value and growth.

 

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