Customer loyalty is very much alive


Through a special arrangement, presented here for discussion is a summary of a current article from the rDialogue blog.
The future of loyalty marketing starts with brands being loyal to customers, going beyond rewarding customers for their "loyalty."
Consumer expectations continue to be unmet, leading to a bigger question of whether true customer loyalty is dying or even dead. Customer loyalty for RadioShack died last century. RadioShack used to boast that it had a store within ten minutes of 90 percent of the U.S. population and a database to match. Among other flaws, it suffered from lost relevance and an aging, no longer addressable, customer base.
Even brands where customer loyalty is still alive face epidemics of discounting, which when used en masse effectively kills customer loyalty. When an industry, brand and loyalty leader like Nordstrom capitulates and moves from semi-annual to seven sale periods a year, they become "just like all the other stores."
This lack of differentiation, exacerbated by merchandise commoditization, supports what a legendary retail CEO shared with us last week: namely, that he is not sure there is much, if any, loyalty left.
Yet in spite (and perhaps because) of such evidence, our view is that customer loyalty is very much alive.
The new loyalty leaders pursue strategies that align with the heart of our definition of loyalty marketing: that loyalty comes from paying attention to customers and acting accordingly.
These principles are reflected in some of the newest programs from favorite brands of ours like Kimpton Hotels & Restaurants and the Pittsburgh Steelers.
These brands, partners of rDialogue, are flipping the dated loyalty models from the 1980s toward today, where customers are challenged to be loyal to brands and be rewarded in return. The new loyalty leaders do just the opposite: they demonstrate loyalty to those customers who are, and will be, most deserving.
What brands do you feel are loyal to you? For me, here are three:
- Delta Air Lines, who thanks me for being a Diamond Medallion Million Miler by occasionally picking me up at the jet way in a Porsche, and always offers a great experience in-flight.
- Kimpton is a friend who welcomes me back, knows it’s my tenth stay at a property, and has a nice Scotch waiting for me when I arrive.
- American Express makes sure I remember my Card benefits and offers based on where I am, so that I take advantage of them.
They make my travel better, remind me of benefits and offers, and genuinely act as though they know I’m a valuable customer.
- Customer Loyalty is Very Much Alive – rDialogue
- Loyalty Marketing is at the Forefront – rDialogue
- Brands Fail To Keep Up With Rising Expectations – MediaPost
- Nordstrom Is Getting Rid Of Its Big Semi-Annual Sales – Huffington Post
- Kimpton Karma Rewards – Kimpton Hotels
- Get Connected. Get Recognized. Unite! – Pittsburgh Steelers
Which retailers do you think have the most progressive and effective loyalty programs today? Are any retailers particularly successful with driving customer loyalty to sell goods without discounts?
Join the Discussion!
15 Comments on "Customer loyalty is very much alive"
You must be logged in to post a comment.
You must be logged in to post a comment.
The people at American Express were helpful and pleasant with a recent credit card breach issue. Their ability to work with me and take care of the problems so efficiently went a long way to foster loyalty, especially when I did not expect it. Selling goods without a discount means that you understand your consumers so well that you can personalize products, service and experiences for them. Very few companies do that well. Some companies are working on the process but there is a long way to go. Personalizing coupons for me is nice and can foster return business, but that is not the same as loyalty. What makes me want to shop at the retailer or buy that brand’s products above and beyond a discount? That can foster loyalty rather than return business. Return business keeps me coming back until I see a better deal. Loyalty keeps me coming back even if I see a better deal somewhere else.
Without naming names, I think we can all name the retailers and CPG brands that drive real loyalty, creating a certain level of “brand enthusiasts.” The winners in the marketplace will embrace the brand enthusiasts faster than the competition.
Companies need to continuously stimulate this population through a strong combination of both reach and engagement strategies. Take advantage of their openness and willingness to share data by experimenting with new systems of engagement. Involve consumers directly in discovery and development activities for new campaigns. And with the future growth expected in digital channels, gain “mind share” by adopting two-way dialog with consumers.
“Brand enthusiasts” represent the next generation of power consumers growing up in a digital, omni-channel world and they have new expectations. Leverage the insights they are willing to share otherwise, these innovation-craving consumers will go elsewhere. Still, traditional communication strategies will not likely work on this new consumer base. They are writing new rules of engagement. Once this process matures, fewer discounts will be required to retain these loyal “brand enthusiasts.”
Loyalty is not a program, it’s a mindset and action framework the retailer needs to have about how they engage and treat their customers.
All that they do needs to be done with me, the customer, in mind. Make my life simpler and my experience with your brand enjoyable. Offer me value the way I define and desire it. Remember me if I give you permission, respect my time, and be consistent.
Do those things and you’ll not only build trust but will have my business.
Amazon with Prime. While not a typical loyalty program, it absolutely ties people to Amazon and they spend two times or more as much as non-Prime members.
Best-in-class loyalty programs are creative, personalized and loyal to the customer. Hard to do, but leveraging shopper data is the key. Such programs result in trust which leads to loyalty which leads to repeat business.
Aside from the major airlines, and hotels, there are no retailers which come to mind that have a loyalty program that is very strong. Certainly there are no retailers that are strong enough to drive customer loyalty without discounts. The real question seems to be, what are customer loyalty programs for?
Trader Joe’s, for having checkers at the ready to speed me through. (The grocery store nearest me is always surprised—shocked!—that customers have arrived.)
Chipotle, for letting me choose every aspect of my meal.
Sephora, for unlimited sampling.
New York & Company, for catering to those of us who are unusual sizes.
Thank you!
If customers were polled, their greatest need would not be fancy perks, but superior customer experience both in and outside the store. Customers want their needs anticipated and met, whether those needs include a transaction or not. When retailers only reward transactions, they are saying that all they care about is the $, not the customer.
The most effective retailers at loyalty are Apple and Amazon, who have very strong service focus. They don’t need loyalty programs (although you might argue that Prime is one); they need customers to feel cared for.