This week, I’m going to ask you to forget everything I’ve previously said about loyalty.
By this, I mean ignore – for the moment – my previous blogs, such as how can you nurture customer loyalty in a disloyal world?
Why? Because I don’t want to talk about the fickle customers, who flit from retailer to retailer in search of the easiest, cheapest or quickest deal. I want to talk about the customers who are loyal to their favourite brands – and whether those retailers are paying them the same courtesy in return.
In today’s competitive marketplace, it’s easy to become lost in the fight for new business. Retailers are constantly trying to incentivise new customers to defect from rival brands, but they’re not always paying the same level of attention to regular shoppers.
It’s easy to assume that loyal customers will remain just that (loyal) with little nurturing. However, what happens when the bond begins to break between the retailer and that shopper?
It might be triggered suddenly, perhaps by a poor customer service experience or an unsatisfactory product; it could be a gradual erosion, as the shopper feels they’re not getting the best deals.
The fact of the matter is, for many organisations, once a customer brings in a steady revenue stream, their business value is ‘de-prioritised’. Communications will keep ticking over, while marketers go in search of fresh opportunities.
This is because marketing still tends to see customer value in terms of acquisition, and less so in terms of lifetime value. However, it’s the loyal shoppers that are far more likely to provide long-term return on investment, and marketing to this group involves less expense and effort than attracting new business.
What retailers need to be doing is changing their mind set: putting the same time, effort and budget into strengthening loyal customer relationships as chasing new ones. And this means updating their loyalty schemes.
Instead of issuing generic points cards, which often cannot process points gained online and in-store as a single figure, or giving out standard paper vouchers post-purchase, retailers should be creating a lifetime value scheme.
Digital passbooks are a powerful way of doing this. Not only do they hold rewards and incentives based on activity in all channels in a single application, they enable businesses to tailor promotions based on customer activity – so that frequent or high value shoppers are rewarded for their loyalty.
Considering 80% of adults in the developed world now own a smartphone, it seems absurd that mobile loyalty is not more widespread among the retail business community. However, the launch of Apple Pay in Europe may stimulate its popularity, as mobile moves ever closer to being the single, most important point of engagement with consumers.
As customers are presented with more devices, channels, choices and therefore competition in their retail experiences, the need for businesses to step up their loyalty game will reach mission critical status.
Smart retailers will act now to refocus their efforts foremost on customer retention, creating brand advocates that will support their outreach to potential acquisitions, by singing the praises of its lifetime value-focused loyalty schemes.