Consumers are only loyal to themselves!
Every time I receive an invitation to a meeting with a client that wants to establish/update their loyalty system, I shudder inwardly. In the ten years FrodX has been in business, I don’t recall a single case in which the starting points offered to us for consideration really thrilled me. Often quite the opposite.
It seems to me that one of the greatest myths marketers take as holy truth is that there is such a thing as loyalty to a brand. This belief makes me think that they’re treating their customers as though they are stupid. Or that they don’t think a whole lot about their customers...
Your customers are quite a bit better-informed about the products available to them than you are about your customers.
I’m convinced that customers have changed quite a bit due to greater access to information, greater variety on the market, and more frequent, multichannel communication on all levels, including among ourselves. I believe that there may be experiences that customers fall in love with and want to repeat over and over. Thus, first and foremost I see developing loyalty systems as the provider’s ability to recognize and repeat these experiences.
Unfortunately, the situation is such that most companies don’t actually know precisely why their customers, or individual groups of customers, love them. Well, at least empirically, they don’t (yet) know how to measure this in such a way that experience data (X) can be connected to objective data (O), which would allow them to learn how to proactively manage the experiences they offer, and later use this to establish personalization and use technology to build a one-on-one relationship with each customer.
If you compete for customer loyalty with discounts, it’s just a matter of time before they catch you on the wrong foot.
Recently I asked twelve experienced marketers what their first association with a “loyalty system” is. In a torrent, they all gave me practically identical answers: collecting loyalty points, discounts for loyal customers, and purchases of selected items under better conditions for loyal customers. I pretty much expected these kinds of answers, too.
Before I went about clarifying why I am loyal to some providers, I asked each of them two more questions, so they could more easily explain to me why they thought this way.
- What will happen to your loyalty system when your customers figure out that they can get a better price for a product that they “earned” by being loyal to you?
- How will customers see your loyalty awards when they calculate how much the actual value of a loyalty point they collect with each purchase is?
There’s probably no point in mentioning that they all answered that they need to update their loyalty systems...
As a consumer, I’m loyal to providers because of myself, not because of them. Here are my three examples.
I’m firmly convinced that consumers (including B2B customers) get attached to particular providers primarily because of the experiences we have with them. In my opinion, this is what best solidifies our loyalty.
So, like in my case, I always fill up at Petrol whenever I can, because it’s currently the only provider that offers me the experience of paying with a mobile app. I’m not enticed by fuel that’s a couple cents cheaper at other providers, or how close some other stations might be. I changed my purchasing habits when I first experienced paying for fuel without walking up to the cash register and waiting in line, and this was quite a while before the era of masks in public places. 😉 Until Petrol’s other competitors offer me similar experiences, I’m really not interested in their other efforts to promote customer loyalty.
Similarly, I’ve become a loyal customer of a particular clothing and shoe retailer in Great Britain. As a retailer, there is really nothing special about their product range. Well, they do have some things even in my size. Mostly, though, they have a much more elaborate feel for personalization and messaging relevance than all the other providers. After I happened to make my first purchase from them, they remembered my size and the type or category of clothing that I like very well. The one thing they do differently from all the other retailers I’ve dealt with throughout Europe is that their web store always displays to me only products that they have in my size. But they’ve even gone another step further. For some products, they even advise me to size up or size down depending on how the product’s measurements differ from my reference size based on products purchased in the past. Also, all the marketing communications and newsletters that they regularly send me are customized so that they only highlight products that would be the right fit for me and those that I’ve already shown some interest in by clicking through their website, but haven’t purchased yet. They understand that it doesn’t make sense to bother me with shoes that don’t exist in size 48. Just like Petrol: I like them because they value my time! They only show me things that they can actually sell to me. When I need a new polo shirt, button-down shirt, or shoes, I always look on their site first.
Just like with these other two examples, I’ve also changed my grocery-buying habits. Despite bad online experiences with Mercator (they’re always out of a bunch of things you click on), I checked out Tuš’s “Quick Buy” on a friend’s recommendation. Since then, it’s never even occurred to me to do my shopping anywhere else. The experience they offer through their “click and collect” service is so great that even when we don’t have to wear masks anymore, I won’t even think about heading out to shop with my wife’s list and then having to handle the items five times to get them from the store to my kitchen. When you experience how much time you save and how Tuš also knows how to do more than Mercator or Spar, you’ll see what I’m talking about.
What if customers don’t come to you because of the customer loyalty points system, but you don’t know that? And so you just have an unnecessary expense with them?
I’m not insisting that all customers are looking for experiences that save them time and make shopping easier. I do insist, though, that if other conditions are similar (like price), experience is the thing that makes a difference between providers. I believe that even those groups who are always looking for the lowest discount prices, or those for whom the origin of the product or organic production and processing counts the most, would be thrilled with a personalized experience that highlighted what means the most to them.
Only when we recognize what matters most to an individual customer, or group of customers, will we be able to begin to think about what our customers would perceive as a reward for their loyalty. What if it isn’t actually this or that point system that would make your customers come back to you?