Is loyalty dead—or just different?
Now that we’re a few weeks into 2021, you’ve probably had your fill of predictions from marketing experts, consultants, and agencies. I’ll confess I enjoy these posts—they often succinctly capture the views of leading thinkers on what’s happened in the recent past and what will happen in the year ahead.
However, without fail, each year, I’m guaranteed to encounter a version of the same prediction in which a marketing “expert” proclaims “loyalty is dead.” And every year, the prediction, while provocative, ends up wrong.
Current issues with “traditional” loyalty
To be fair, there are some kernels of truth generally captured in this prediction. For example:
- Consumers belong to more loyalty programs than they can count. Some of these programs effectively draw the customer into an ongoing relationship and capture an overwhelming share-of-wallet with members. But many do not.
- Consumers increasingly have access to greater information, convenience, and variety thanks to digital delivery and contactless purchasing options. Even more so this year.
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Disruptions due to the COVID-19 pandemic have sparked massive changes to consumer buying habits and purchases. Many customer relationships have been artificially put on pause.
In essence, today’s consumer has a plethora of product choices, information, and ways to get new products or services. But the coup de grâce for these predictions is that points are a bad value proposition for both parties because they’re expensive for the brand and offer little to no value to the consumer to drive behavior change.
The importance of participation
What these predictions often fail to grasp is that brands winning in the marketplace today are those that are able to drive meaningful, active, and reciprocal relationships with their customers—something we call participation.
Old-school loyalty programs, the ones that the predictions in question portend to be “dead,” often focus on driving affinity, an early step along the Participation Curve (see illustration below). They “buy” the customer’s business by offering them additional value through points in return for the transaction at hand.
More progressive brands drive engagement by powering nascent personalization and offering management to tailor the proposition and timing to connect with individual members more deeply. The reality of the points proposition is that it’s one avenue by which brands can “buy” the right to the member’s transactional, profile, and preference data. In most cases, it’s simply the cost of entry for a brand to initiate an ongoing dialogue with its member.
But the marketers that will win in 2021 will be the ones (with traditional loyalty “programs” or without) who use zero-, first-, and third-party data to power the analytics needed to drive rich personalization; the kind of communications and offers that are truly assembled and delivered on a one-to-one basis. Marketing efforts like these focus deeply on hydrating data that informs their customer touch points across the entirety of the customer lifecycle and inherently drive engagement and Loyalty (i.e. customers who will repeatedly choose your brand over other comparable options).
When coupled with the right strategy, customer experience, creative, and communications, these efforts can propel advocacy (customers who are ambassadors for the brand with the people who matter to them) and identity (that the brand is a part of who they are) to optimize the highest level of participation.
Participation during a pandemic
That’s some pretty high-minded stuff, so let me break it down into ways that brands who have built this volume of customer knowledge are going to make actionable. Participation is essentially the loyal brand-customer relationship that isn’t going to be “dead” in 2021. In fact, it’s going to be the key driver of business recovery from the COVID-19 pandemic.
These relationships:
- Allow you to grow business with existing customers. The trusted marketing adage argues that it costs significantly more to win a new customer than it does to get more business from an existing one. And due to COVID-19, your business may not be in a position to spend a lot on customer acquisition right now anyway. The good news is that brands that have built a strong data foundation will be able to focus their promotional efforts and offers on customers who are known quantities and are primed to return to pre-pandemic behaviors. In fact, with a deeper commitment to personalization and investing in the right customer segments, many brands may get more business from these customers than they did before the pandemic.
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Allow you to place smart bets. Thanks to a strong data foundation, these brands know what their best customers look like in finely grained detail. But thanks to developments like the integration between our loyalty platform and Adobe’s AEP, brands are increasingly able to micro-target non-customers who look like their best customers based on profiles and online behaviors. The results? Highly efficient digital media spend that directly drives immediate revenue and sustainable, long-term customer relationships.
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Make it easy to love your customers back. Many brands that have built a robust data-infused marketing strategy are using declared data (a.k.a. zero-party data) as a key foundational element of their customer data strategy. This data allows marketers to develop customer understanding far beyond that which can be gleaned from profiles and transactional information. In essence, these brands know who their customers are and why they love the brand. By acting on these insights, brands can make relationships two-way, creating resonant experiences and benefits for customers that show you know them and appreciate their needs. These brands can empower frontline employees with customer insights and data or deliver personalized offers and benefits that drive engagement behavior across digital and physical channels.
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Turn loyal customers into micro-influencers. In an era of eroding trust in institutions, media, businesses, and government, one of the most trusted figures is “a person like me.” Simply put, your most loyal customers each know a whole host of people like them. By creating tools and opportunities for your loyal members to activate their advocacy (one of the key stages of Participation), you can turn your members into powerful micro-influencers. This can include opportunities for your members to invite their friends to unique offers or experiences, or to bestow on them tier status and benefits that have previously been inaccessible. Brands should also consider ways to allow their loyalists to make their love publicly visible and easy to share across their social networks.
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Embrace that your brand doesn’t have to be “cool” to be part of who your customer is. Where and how customers buy brands’ products and services says a lot about their values as an individual, and your brand doesn’t have to be “cool” or a status symbol for it to convey a meaningful message about what it stands for and, in turn, your customers’ Identity (the final stage of Participation). Brands that win and excel in 2021 will find ways for their customers to make their affiliation with the brand known by connecting with shared values and their status as a part of customers’ identity.
So, no, loyalty isn’t dead this year. It’s actually evolving into being a part of something bigger.
