Three Steps to a Winning Consumer Loyalty Strategydocs.media.bitpipe.com/io_13x/io_132815/item_1381787/... · 2016-07-20 · Three Steps to a Winning Consumer Loyalty Strategy 2 Table

Three Steps to a Winning Consumer Loyalty Strategy 1

Three Steps to a Winning Consumer Loyalty Strategy


Table of Contents

1. Understanding Customer Loyalty

2. The Customer Loyalty Imperative

3. How to Get More Loyal Customers—and Get More from Them

4. Conclusion: The Best Customers Are the Ones That Last a Lifetime

Retaining customers by driving loyalty is the

primary goal of customer-centric marketing.

But what is customer loyalty exactly? This

definition, provided by PR Loyalty Solutions,

offers a perspective:

“Customer loyalty is both an attitudinal and

behavioral tendency to favor one brand over all

others, whether due to satisfaction with the product

or service, its convenience or performance, or

simply familiarity and comfort with the brand.

Customer loyalty encourages consumers to shop

more consistently, spend a greater share of wallet,

and feel positive about a shopping experience,

helping attract consumers to familiar brands in the

face of a competitive environment.”

So what does it take to earn that loyalty? Loyalty

isn’t won in a single transaction or with a loyalty

card program. It’s won over time as companies

build relationships with their customers by

delivering on brand promises and providing

amazing service and experiences. In the end,

loyalty is the sum of the marketing tactics and

campaigns that aim to sustain it; married with a

lifestyle that every brand should live.

This ebook will explore why customer loyalty

is critical for every marketer to foster and then

how marketers can engage loyal customers as

well as identify and engage non-loyal customers

strategically to build loyalty.

Understanding Customer Loyalty

Customer Loyalty

Feedback

Reward

Satisfaction Service

Quality Support


Your company can benefit from loyal customers

in multiple ways. The first step toward building a

band of loyal customers is retaining your existing

customers. Additionally, increased customer

retention optimizes the cost-effectiveness of

your marketing campaigns. According to Bain &

Company, it costs between six and seven times

more to acquire a new customer than to retain

ones you’ve already got.

The repercussions of losing a customer should

not be downplayed:

► For every customer experience failure,

brands lose an average of 65% of the

revenue they would have earned from the

affected customer during the following year,

based on a “Avoiding CX Failure Fallout”

report by SDL.

► Repeat customers generate more revenue for

consumer companies, spending as much as

67% more, based on Bain & Company data.

► According to the White House of Consumer

Affairs, retained customers are more profitable

than new customers, have a higher lifetime

value and spend more per purchase. In fact,

the organization says that loyal customers

are worth up to 10 times as much as the

value of their first purchase.

Customers today (and your prospects) are more

likely than ever to defect. They are inundated by

marketing messages and do plenty of research

online before they engage in conversation with

you. In fact, according to Accenture, there is $1.6

trillion in potential revenue up for grabs due to

changes in consumer spending and switching

among brands and providers. Understanding this

environment means that losing a customer is

a real reason for marketers to worry. And that’s

why customer retention, loyalty, and ultimately

advocacy, should be every marketer’s biggest focus.

Consider the revenue or growth that customer

loyalty is bringing to Amazon. According to

a report by Consumer Intelligence Research

Partners, the members of Amazon Prime, the

company’s flagship loyalty program, spend $1,500

per year on average, compared with the $625 per

year spent by Amazon customers not belonging

to the Prime program.

When you gain the loyalty of current customers,

you don’t just reap the rewards of continued

purchases (and revenue) from them. You also gain:

► Important insights that help better engage

these customers and keep them happy.

► A deeper understanding of the attributes,

characteristics, and behaviors of loyal

customers, which enables marketers to

develop campaigns to cultivate those same

behaviors in other, less loyal, customers.

► Their vocal advocacy as they endorse your

brand to their peers and social networks.

The Customer Loyalty Imperative

The impact of customer advocates cannot be

overstated. Every “Like” and share you get on

Facebook is potentially viewed by that person’s

entire social network, acting as a digital stamp

of approval. If you want your customers to stay

happy with your brand, reward them simply for

being customers. The goal is to deliver such an

exceptional experience that your customers are

motivated to tell their story and show their love

via social sharing, reviews, and word of mouth.

To what extent are loyal consumers acting

as advocates? A full 61% of consumers say

they would tell friends and family about

their good experiences.

Members’ Attitudes About U.S. Loyalty Program - April 2015

Data Source: Bond Brand Loyalty

Programs are definitely worth

the effort

86%

80%

Programs are part of my

relationships with the brands

76%

71%

Programs make me more likely to

continue doing business with

certain companies

83%

79%

I modify when and where I make purchases in order

to maximize the benefits I receive

70%

64%

I modify what brands I

purchase in order to maximize the

benefits I receive

64%

55%

Tap Into the Power of Advocacy


When you understand what motivates your loyal

customers, you can harness them to great effect.

That’s just how Coca-Cola’s “Share a Coke”

sparked a summer 2014 revenue boost and long-

term growth in the company’s social reach.

Loyal customers took to the “Share a Coke”

campaign by purchasing personalized sodas

for friends and family and sharing their thoughts

about the campaign via social media.

The results were impressive:

► Sales jumped from 1.7 to 1.9 billion

servings per day

► More than 500,000 photos were shared

using the #shareacoke hashtag

► Consumers created and shared more

than 6 million virtual Coke bottles by

September 2014

► Coca-Cola gained 25 million Facebook

followers as a result of the campaign

Coca-Cola Harnesses Customer Advocates to Drive SalesThe “Share a Coke” campaign spurs a burst of Instagram activity

7 Videos Posted

9 Videos Posted

15 Videos Posted

13 Videos Posted

4 Photos Posted

Viewed by 30K People



Viewed by

175K People

7 Photos Posted

10 Photos Posted

9 Photos PostedAugust

2014

July

2014

June

2014

May

2014

The “Share a Coke” campaign spurs a burst of Instagram activity

The Advantages of Customer Loyalty Programs

Increased Customer Satisfaction

Increased Revenue

AdvocacyGarnering Insights

Customer Retention

+ + + +

Another benefit to cultivating advocacy is the

willingness of these customers to stay loyal.

According to data from “The Strategic Marketing

Case for Customer Advocacy Measurement”

by CustomerThink, advocates are 3.5 times

more likely than “normal” customers to forgive

letdowns and stay with a brand.

Simply put, customer loyalty programs drive

customer retention, higher customer satisfaction,

deeper customer insights, and revenue growth.

Tap Into the Power of Advocacy (continued)


To understand how your company rates against

competitors and industry leaders when it comes

to consumer loyalty, you can benchmark your

own loyalty data against others using tools like

The Temkin Loyalty Index. Published annually

by the Temkin Group, a customer experience

research and consulting firm, the index is

created by evaluating the loyalty of 10,000 U.S.

consumers to hundreds of companies across

20 industries. It is based on the likelihood of

customers doing any of the following:

► Repurchasing from the company

►Recommending the company to others

►Forgiving the company if it makes a mistake

►Trusting the company

►Trying the company’s new offerings

Of course, to perform such benchmarks, your

brand needs to know and understand its own

customers well.

How Do You Stack Up?


How to Get More Loyal Customers—and Get More from Them

Establishing long-term, meaningful customer

relationships is key to the success of a loyalty

strategy. You need to identify your loyal

customers and engage with them based on

who they are and what they’ve done. We call

this engagement marketing, which we define

as the shift away from talking at people and

focusing on transactions to engaging with

people–building meaningful, lifelong, and

personal relationships.

But how do you know who your loyal customers

are, find more of them, and get more from each?

We break it down into three simple steps:

1. Identify and segment your most

loyal customers

2. Build more loyal customers through

insights gained

3. Communicate based on who they are

and what they do

How Loyalty Boosts EngagementHow frequently loyal customers interact

with the brand:

Daily

87%

Weekly

64%

Monthly

49%

Minimally,

few times/year

33%

What Do You Know About Your Customers?

Age Trips/yearTravelIncome Career

Kristen

Jenny

Brian

Professional

Professional

Professional

$$$

$$

$$

35

35

35

- Adventure- Last-Minute Deals

- Kid-Friendly- Planned Trips

- Guided Tours- Low-Hassle Trips

0

3

1

5-7

0-1

2

Kids

You need to know which customers are loyal

and which are not, because you will treat

them differently in your campaigns. Through a

customer engagement platform—the technology

foundation of engagement marketing—you can

capture information to build rich profiles about

your customers, segment loyal from non-loyal

customers, and map the customer journey of

loyal customers.

To truly get to know your customer base,

pinpoint your audience’s preferences, habits,

and interests. Pair this with an understanding

of what works in terms of communications.

You can do this both by looking at your existing

data on a customer—their patterns of purchase,

usage, and engagement and by establishing a

preference center on your website that allows

customers to indicate how they want to receive

communications by channel and frequency.

Drive Loyalty With a Customer Engagement Platform

A customer engagement platform manages and reports on all interactions with customers,

whether they occur on the web, via mobile apps, phones, or in person. By capturing insights

into customers’ initial interactions with your brand, the platform can automate and refine

future engagements based on their interests, preferences, and ongoing behaviors. That

translates into delivering a consistent, personalized, and differentiated customer experience

that gives customers more reasons to remain loyal.

Identify and Segment Your Most Loyal Customers

Step 1:

Grocery Stores

Bookstores

Credit Cards

Airlines

Electronics

Retail Stores

Rental Cars

By granularly segmenting your loyal customers,

you can ensure a higher degree of campaign

relevance and engagement. With that in mind,

assign different metrics to define early-stage

loyalty versus later-stage loyalty. Early-stage

loyalty success metrics could include

the following:

► Email Subscriptions

► Open Rates and Click-Through Rates (CTR)

► Mobile Alert & Notification Responses

► Challenge Completions

► Social Engagement—Following, Likes, Shares

► Surveys and Feedback

Later-stage loyalty metrics could include:

► Customer Spend

► Purchase Frequency

► Customer Satisfaction

► Upsell/Cross-Sell Purchases

► Advocacy via Testimonials/Reviews/Referrals

► Customer Lifetime Value (CLTV)

By measuring each customer against these

metrics within your engagement platform, you

can easily segment your customer base between

loyal and non-loyal customers. Once you’ve

segmented your customers accordingly, include

them in relevant campaigns that feature the right

tone, frequency, and benefits.

Who Participates in Loyalty ProgramsThere are plenty of consumers for brands to engage: a global survey of over 18,000 consumers by

Verint Systems, Inc. found that 27% would sign up for a company’s loyalty program.

Step 1: Identify and Segment Your Most Loyal Customers

Credit: Gallup


Here’s how Generations Federal Credit Union

(GFCU) used a customer engagement to great

effect. Credit unions are high on the list of

companies with the most loyal customers, and

GFCU is a perfect case of why this is so.

GFCU has fully embraced the philosophy of

developing relationships that last a lifetime.

To build those relationships, GFCU needed

to engage nearly 50,000 GFCU members

in individualized conversations; coordinate

communications across direct mail, email,

social, and in-person channels; and deliver a

delightful user experience every time.

Using a customer engagement platform, GFCU

was able to welcome new members to the credit

union through a 90-day cross-channel nurture.

Sales reps reached out to new members via

email and phone calls. The credit union used the

information captured during these interactions

to target product and service promotions to the

member’s needs and preferences. “We’re seeing

a 38% open rate which exceeds the standard for

financial services (22%) in these emails,”

said Content Manager, Megan Dahle. “This

program is allowing us to deepen relationships

with new members and establish loyalty from

the very beginning.”

In the end, the campaigns created by the

GFCU marketing team tripled email open rates,

increased click-throughs tenfold, and more than

doubled conversions.

Customer Engagement in Action: Generations Federal Credit Union


By continuing to engage customers frequently,

you can constantly build customer loyalty. This

supplementary loyalty comes in two forms:

► Higher rates of purchasing and advocacy

from your already-loyal customers

► Additions to the ranks of customers

you consider loyal

To achieve both of these, you need to leverage

your customer engagement platform to paint a

complete picture of what you know about your

loyal customers. This includes criteria such as their

preferences and interests, their purchase behavior

and frequency, order details, and more. As you

deepen your relationship with these customers,

you can grow your knowledge via different

information tangents. Perhaps a campaign enables

you to gather more information about their

hobbies and interests or reasons for purchasing

a certain product.

According to leading marketing and customer

experience strategist Don Peppers, loyalty

programs can impact strategy because they

provide the data that enables a better

understanding of individual customers. For

example, loyalty programs link a retail customer’s

identity from transaction to transaction. Or in the

case of an airline, they are the conduit for personal

data in exchange for points, awards, and mileage.

All of this information makes it easier to

accelerate purchase cycles, cross-sell, and

upsell. No wonder the probability of making an

additional sale or upselling to loyal customers is

60-70%, according to Marketing Profs.

Knowing the attributes of your loyal customers

makes life far easier when trying to find additional

prospects who could one day become loyal

customers. With these prospects, you are not

starting from scratch with “spray-and-pray”

campaigns. Instead, you pursue those that “look

like” your most loyal customers based on what

you’ve gleaned about loyal customers through

their engagement with your brand over time.

Harness Insights to Grow Loyalty

Step 2:


Let’s see this two-pronged approach in action

by looking at how Palace Sports & Entertainment

(PS&E) built deeper relationships and found

additional loyal customers.

PS&E is a sports and entertainment company

that owns numerous properties, including The

Detroit Pistons, The Palace of Auburn Hills

arena, and DTE Energy Music Theatre. It also

holds the operating contract for Meadow Brook

Music Festival. All told, the organization’s annual

schedule includes an 82-game basketball season

and more than 100 summer concert events.

PS&E wanted a solution to help it understand

consumers as individuals and tailor content

in ways that would allow it to build deeper

relationships with its fan base.

Using a customer engagement platform to

perform personalization at scale, PS&E can

cultivate relationships and learn more about

consumer behavior. For instance, the company’s

marketers can track individual fan patterns

closely, understanding which game tickets

consumers bought, which concerts they

attended—and even track views on the website.

They can also tailor future communications by

leveraging social networking data to identify a

fan’s favorite player or artist and invite the fan

to a specific game or concert. The customer

engagement platform has also empowered the

organization’s marketers to set up strategies,

such as automated birthday campaigns, that

help drive merchandise sales and enhance the

value of being a fan.

Using customer engagement to segment

communications to different fan lifestyles, PS&E

now has a way to engage more personally with

ticket holders at the right time. It can also easily

determine if a fan is a likely candidate to buy

season tickets.

PS&E uses its customer engagement platform

to nurture potential season ticket holders

before they’re ready to have a conversation

with PS&E’s sales team. It also automates timely

communications when plans are almost up for

renewal, and offers reward programs to ticket

holders, further personalizing and enriching the

experience for attendees.

The results tell the story: since moving to a

customer engagement platform, PS&E has racked

up a 132% increase in year-over-year e-marketing

revenue. As Mike Donnay, VP, Brand Networks

at Palace Sports and Entertainment explains,

“Over the past two seasons, we’ve exceeded 90%

renewal rate—the best, in terms of renewals, ever

in the history of Palace Sports & Entertainment.”

How PS&E Boosted Loyalty and Revenues

Step 2: Harness Insights to Grow Loyalty

As we noted in step one, getting into the heads

of individual customers is vital to engaging and

keeping them loyal. Don Peppers cites Tesco’s

Clubcard program, which launched way back in

1993, as a great example of why it pays to treat

individual customers differently.

Thanks to a mass of data on individual customers

and what they buy, Tesco has done numerous

things. For example, the Tesco Loves Baby

club represents three-quarters of pregnant

women in the UK and revolves around giving

them information based on the baby’s age and

development. These members buy millions of

pounds of baby products from Tesco, which

they could have bought at rival chains. Yet the

club isn’t designed to sell products, and there’s

no rewards structure. What Tesco offers to get a

customer’s data is information and help.

Communicate Based on Who Your Customers Are and What They Do

Step 3:


Customer Loyalty Stages

What about your non-loyal customers? Non-

loyal customers will take a different type of

engagement than your typical loyal customer.

Look at the data that you have about loyal and

non-loyal customer behavior to determine

if there are behaviors or activities that differ

between the two groups. Additionally, identify any

commonalities amongst the groups that can help

you communicate with them in a more personal

way. Using this information, you can tailor your

communications to your non-loyal customers to

guide them toward the behaviors and activities

that build loyalty and help nudge them to the

next stage of their customer lifecycle. However,

there may be non-loyal customers that may not

engage with you at all anymore. In fact, they may

no longer be customers. The most recent Loyalty

Report states that 60% of consumers are willing

to switch brands if it means getting more benefits,

and this is especially true in consumer-packaged

goods, telecommunications, and entertainment.

In other words, those customers who have

churned away from your brand are probably

still available. To win them back, focus on re-

engaging them with relevant communications

based on what you’ve learned about them over

time. This includes insights you’ve gleaned

by “listening” on social channels and paying

attention to negative word of mouth, such

as from online review and complaint sites.

Even if they have gone quiet because of a bad

experience with your brand, according to data

from an SDL study, 30% of consumers say they

will go back to a brand after seeing how

business has improved.

Don’t Overlook the Value of Non-Loyal Customers

LoyalistNew Customer AdvocateNon-LoyalTrial Customer

Step 3: Communicate Based on Who Your Customers Are and What They Do


Consider that Amazon Prime is a wildly successful

loyalty program with tens of millions of members.

Still, knowing that some customers were staying

away from Prime membership based on its yearly

fee, Amazon offered a 25% discount for joining

Prime in January 2016. This type of course

correction with non-loyal customers can help

convert more of them into loyal customers. After

all, who doesn’t like a 25% discount followed by a

year of free shipping?

When attempting to re-engage non-loyal

customers, apply the same discipline in

engagement techniques as you do with regular

communications aimed at loyal customers.

Call upon what you know about them—

including their preferences, past purchases,

and buying behavior—to inform and make all

communications highly relevant. Remember,

Gen X and Millennial consumers in particular are

more likely to permanently disengage with brands

after receiving high volumes of mass generic

email communications, according to the AIMIA

Institute. So, analyze your data and stay relevant!

Avoid Angering Your Loyal FansAs marketers develop creative offers and campaigns to recruit and develop new loyal customers,

it’s critical that they consider the impact those campaigns and offers will have for their current

loyal customers. It’s vital that your loyal customers and advocates do not feel like their loyalty

isn’t important or reciprocated. While it’s natural that every business focuses on new customers

and growing new loyal customers, it’s critical that marketers strike a balance and continue to

acknowledge and include already-loyal customers.

Step 3: Communicate Based on

Who Your Customers Are and

What They Do

Conclusion: The Best Customers Are the Ones That Last a Lifetime

Too often, marketers invest their hard work and

precious dollars in campaigns and promotions

aimed at getting customers to make that first

purchase. But once those customers are in the

door, they’re left largely to their own devices.

Like most companies, yours likely finds that

the Pareto principle holds true and that 80% of

revenue comes from 20% of your customers.

By consistently engaging those customers over

time with relevant, appealing offers, you can

cultivate long-term loyalty that translates into

higher revenues and advocates who drive even

more business for you through powerful

word of mouth.


Marketo (NASDAQ: MKTO) provides the leading engagement marketing software

and solutions designed to help marketers develop long-term relationships with

their customers—from acquisition to advocacy. Marketo is built for marketers, by

marketers, and is setting the innovation agenda for marketing technology. Marketo

puts Marketing First. Headquartered in San Mateo, CA, with offices around the world,

Marketo serves as a strategic partner to large enterprise and fast-growing small

companies across a wide variety of industries.

To learn more about Marketo’s Engagement Marketing Platform, LaunchPoint® partner

ecosystem, and the vast community that is the Marketo Marketing Nation®,

visit www.marketo.com.

© 2016 Marketo, Inc. All Rights Reserved

Documents

Three Steps to a Winning Consumer Loyalty Strategydocs.media.bitpipe.com/io_13x/io_132815/item_1381787/... · 2016-07-20 · Three Steps to a Winning Consumer Loyalty Strategy 2 Table