July 21, 2022
At the heart of any successful, long-term relationship are key pillars of respect and trust - all of which take time and energy to earn. Loyalty is no different, particularly when it comes to your customers. Driving loyalty is at the forefront of CX and requires a 'whole of business' approach.
Certainly, well executed loyalty programs are an effective way to capitalise on nurtured customer relationships and are often drivers of key brand outcomes, for example:
1. Driving brand selection and retention
When it comes to answering the question “Why should I choose you, over your competitor?”, if your program creates true value for your customers, it could also be the reason they choose to stay.
This is particularly important in industries like banking. Whilst it’s a highly loyal industry (71% of customers have been with their bank for over a decade1), 66% of customers are in fact multi-bank customers2. Loyalty programs are essential for driving everyday usage and helping brands secure ‘front of wallet’ status from these customers.
Loyalty programs can also be essential to keep customers and reduce customer churn - that’s because 62% of members say that a loyalty program stops them from going to a competitor1.
2. Driving increased revenue and growth
When 78% of loyalty program members are likely to spend more, and 63% are more likely to purchase more frequently from a business3, it's pretty clear - loyalty programs can help drive growth. Loyalty can also be used as an upsell and cross-sell tactic to give customers access to a broader range of products and services.
Businesses that create a loyalty program in isolation to help increase loyalty have missed the point. If you leave it all to a loyalty program that works in isolation, it’s very likely to disappoint you. Building customer loyalty requires a ‘whole of business’ contribution and support, for example:
1. Delivering an exceptional customer experience
32% of customers will leave a brand after just one negative experience6.
Businesses that proactively identify, understand and therefore mitigate those negative moments are able to further enhance their relationship with customers. The tactic is to turn these negative moments into positives that drive trust and, in turn, advocacy and long-term loyalty.
But businesses shouldn’t solely focus on negative moments. Identifying key moments in the customer journey - whether they be bad or good moments is critical to creating seamless and connected experiences that drive true loyalty. So developing tactics or triggers to either mitigate negatives or sensationalise positive moments is key.
According to the 2019 For Love or Money Report, ‘acknowledge and appreciate me’ was ranked 2nd as what customers value most3. Using surprise and delight tactics at these key customer experience moments is a great way to drive long-term loyalty and differentiate from competitors. Rational initiatives like point boosters, exclusive offers, discounts and competitions or more emotional tactics like simple ‘Thank you’ content are all ways to help amplify how much your customers mean to you at key moments in their relationship with you.
2. Leveraging the power of personalisation & data
We need to remember that loyalty is an output, not an input.
While these tactics above require real empathy and an understanding of how your customer feels at each stage of their journey with your brand, it can’t be done without leveraging your most valuable business asset - your data. When attributed and analysed correctly, your customer data is the best way to develop and refine these loyalty-driven strategies. It’s creating these personalised, meaningful and relevant experiences at every touchpoint that will help build deeper relationships with your customers to enable true loyalty.
By focusing on building deeper, more relevant customer relationships, brands are able to increase customer lifetime value (CLV) and reduce customer churn (and the associated costs). This has the potential to make a massive difference in sectors like banking, where it costs six times more to attract a new customer than it takes to retain an existing one4.
Additionally, loyal customers are your most effective acquisition tools. Your most valuable customers are usually established through ‘earned’ advocate referrals (approximately 25% of new joins3) rather than ones ‘bought’ through paid acquisition5.
Whether you’re looking to refine your customer experience to help drive loyalty every day or it’s time you build a program that helps you connect with your customers more effectively, Tortoise & Hare is here to help.
Building valuable customer relationships is a marathon - we are here to help you run it.
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