21 May 2014
Customers have become increasingly indifferent to where or from whom they are purchasing products and services. Think about your own buying patterns for a moment – are you still using the same phone, Internet, car insurance provider that you were 5 years ago? Chances are that somewhere along the line, you have switched, discovering a better deal or benefit that swayed your loyal stance. It is fair to say that customer loyalty is by no means what it used to be, and this means businesses need to educate themselves on how they can capture what was once the more committed customer.
The death of customer loyalty
Various publications over recent years have declared customer loyalty as ..well, dead. Citing reasons such as:
– Empowerment in decision making via the internet
– Product and service proliferation in every category = unlimited choice for buyers
– Advantage to compare competitive prices on mobile devices, at point of sale (e.g. Skyscanner and Checkthemarket.com)
– Powerful influencers on social media sites posting reviews; particularly if the experience was negative
The Internet, mobile devices and impressively designed websites that generate fast price comparisons, mean customers know that a better deal is always possible. Due to these instances the loyalty mindset has shifted quickly to value for money, and savings. Particularly in countries like Australia, where the purchasing power of the dollar is seemingly less and less.
Another contributing factor for diminishing loyalty lies in the cultural and behavioral differences between gen y and gen x (also known as millenials), and the previously – still somewhat – loyal baby boomer market. Branded as the nation’s golden generation, Baby Boomers have long been a well-known, understood population segment. However their relatively predictable patterns have began to change and shift, as they move towards retirement. In addition, they are increasingly mobile and tech savvy, which opens them to the aforementioned causes to losses in loyalty. Key customer loyalty drivers among the Generation Y segment are general brand popularity and word-of-mouth from friends and family. As a result, the decision-making process and loyalty of Gen Y members are more changeable than that of older generations.
Customer preference is loyalty revived
The other side of this argument, is while loyalty may look like it has ‘crossed over’, it forces businesses to get smart and look at things in a new light. Businesses need to identify a more effective way to convert prospects into repeat customers who will repurchase, advocate their business to associates, and provide invaluable referrals. There is some great material out there that focuses on the best times to target customers to encourage loyalty. The thinking here is based around generating “customer preference” as the definitive differentiator in the sale process. It’s acknowledging that customers may not necessarily care about where they buy, however they have developed a preference for a particular brand. Making that brand their likely number one choice.
“ I Prefer You! These three words will give you a potent advantage over your competitors”
Getting back to basics, it’s important that businesses reflect on why customers choose their brand, and take a look at segmentation schemes inplace. Operating in this ultra-segmented world means that bucketing customers into basic categories such as “newly acquired,” “repeat” and “lapsed” is not going to work. Instead it’s necessary to look at how customer behavior is tracked, market share, retention, selling price, and identify trends; both promoters and detractors via competition.
Found them! Now to keeping them ‘loyal’
There are a number of opportunities for businesses to encourage loyalty or, the preference buy vote from competitors. Developing customer preference does not necessarily require a complete rehash the greater business strategy. Here are some great examples:
1. Gain loyalty from the first interaction: 48% of consumers say that it’s when they make their first purchase or begin service is the most critical time to gain their loyalty (ClickFox 2012 Brand Loyalty Survey) – make it easy and pleasant
2. Let customers skip the line: speeding up the process for registered customers is appealing to one of their greater needs, to acquire what they want as fast a possible
3. Reward loyalty: this is a clear incentive for them to comeback. E.g. online fashion retailer boohoo provides 18% off a first purchase, and 16% of a customers’ second via a discount code
4. Create ambassadors: providing customers with discounts that they can share with other business teams or with family and friends is a great incentive
5. Seamless linkage between technology: If they are buying online, the process should be easy as well as provide seamless links to social media and sign-ups to e-marketing and newsletters
6. Personalise messaging: Use client information when they call, know their history to speed up the process, remember their regular order, implement a special welcome page and generally make them feel special and appreciated.
It’s imperative to look at how your business can encourage customers that it is in their best interest to buy from your brand. “If you don’t change and adapt to this new generation of empowered and aggressive customers, customer churn will destroy your profits.” – Robert Bloom – and no one wants to see that happen.