From commitment to co-creation, to loyal customers.
Customer loyalty: How to turn satisfied customers into brand ambassadors
Customer loyalty does not arise when a product or service meets the customer’s expectations, but when they clearly exceed them. Many companies continue to invest millions in customer loyalty measures and offer so-called “loyalty” or “bonus” programs. But do these really help to make customers more loyal? To find exciting added value, a) customer needs must be known, and b) the company's efforts, its products and services, must be geared towards these needs. Excitement is the elixir that builds loyalty.
Customer loyalty in the digitization age
Deepening the customer relationship to the point of loyalty is particularly challenging for companies today. The technological developments of recent decades have led to dramatically increasing customer demands. New services make the quality and price of products more transparent, while also making them more interchangeable. Customers also leap from one channel and touchpoint to another in the search for optimal added value, both offline and online. In the process, they prefer those companies that simplify their journey with intelligent services and turn it into an experience.
How customer expectations arise
The evaluation of a customer experience is essentially based on the expectations that customers bring with them. Customer expectations are shaped by several factors: earlier interactions with the company, word-of-mouth, as well as promises made by the company’s own marketing and sales. What a company promises essentially impacts how customers evaluate an experience. Ideally, what is promised is also what can be delivered, or even a bit less than that, to leave room for the surprise effect. Expectation management is thus an essential component of customer loyalty management.
Impress customers, don't bind them.
Besides discount cards, customer cards or coupons, bonus programs are another measure companies choose to retain customers. However, take care: Customers should not be bound, but should feel connected. Customers reach this feeling of connectedness and conviction when they are led by relationship-oriented measures – and not tempted by discount battles. Enthusiasm arises when the customer's expectations are not merely met, but are exceeded and characterized by a “moment of surprise”. But take care: Enthusiasm factors quickly become basic factors! Companies must remain creative.
“Bound customers remain out of compulsion, connected customers out of conviction.”
Claude SchulerAuthor of the Customer Loyalty Study 2017
Why satisfied customers are not necessarily loyal customers
It is no longer enough these days to keep customers satisfied. Actually, quite the opposite is true: Satisfied customers are nearly as fickle as customers who are not. They, too, are “variety seekers”, looking for something new. However, only until a customer relationship emerges. A relationship means that the focus is on the customer, not the product or service. But even this is not enough to ensure long-term loyalty. Targeted customer loyalty measures are needed to accomplish this. This investment is worth it. An increase in customer loyalty of one percent should ultimately increase goodwill by five percent (Bruhn, 2016 “Kundenorientierung”).
The bonus program must be relationship-oriented
Customers’ wallets are overflowing with plastic cards form various companies. However, not even half of these loyalty cards are actively used because the customer loyalty programs behind them are constructed incorrectly. Such programs are often too strongly based on the exchanging of points for discounts and take too little account of real customer demands. Bonus programs must offer real added value for customers, be simple and offer attractive benefits.
From co-creation to commitment to customer loyalty
There is no customer loyalty without commitment. Great commitment by the customers arises when they are actively involved in the company all along the value creation chain. When customers are invited to co-write a company’s stories, when their ideas, experiences and opinions matter.
“Loyal customers love your company; fickle customers love its bonus program."
Claude SchulerAuthor of the Customer Loyalty Study 2017
Prosumers and loyal customers
Motivated customers want to be involved; they become prosumers, a combination of producer and consumer. Online communities offer an ideal opportunity for this. They provide a platform for co-creation and the opportunity for further recommendations. Customers who recommend our products are worth six times more than customers who are “just” loyal. (Schüller & Fuchs, 2013, “Loyalty Value”)
How to achieve customer loyalty?
The best bonus program is ineffective if it is irrelevant to customers. Services should be targeted to individual customer segments. To be able to depict customer profiles and identify customer wishes and needs, the bonus program must be connected to the CRM. This enables companies to orient their services to customer types, and to avoid using the expensive, yet inefficient, “watering can principle”.
The three phases of customer loyalty
Customers must go through three phases before loyalty arises. Real loyalty only emerges when customers are themselves convinced and enthusiastic. Then they not only contribute more to the company, but also regularly recommend it as brand ambassadors.
- The customer relationship begins with interest in a product or service.
- Customer satisfaction can be chalked up if expectations are met after purchase.
- With clever measures, companies can animate customers to make additional purchases and continue to impress and excite them again and again.
Six customer loyalty fields of action
- From shackling attachment to voluntary commitment: focus services on relationship-oriented measures.
- From monetary satisfaction to emotional excitement: continuously seek out new excitement factors and do not reveal all the surprises.
- From silent customer to loud community: build your own community.
- From broad distribution to targeted relevance: target services to customer segments and types and connect the bonus program with the CRM.
- From banal bonus program points to creative services: offer surprising, data-based additional services that differentiate and cannot be copied.
- From analog purchase to digital experience: digitize offline channels and bring the bonus program to customers' smartphones.
Customer loyalty through intelligent customer journeys
Customers are especially impressed by services that are offered beyond the obvious service spectrum; services that save customers time and which simplify their customer journey. Bringing the bonus program to the smartphone, for example with an app, is one such service. In this way, customers always have the digital customer card with them. Coupons can be saved, the profile edited and recommendations and target marketing activities displayed. Customers can access the webshop through the app and pay easily.
At the same time, the physical stores can be upgraded through the use of digital offers such as wearables, augmented reality offers or location-based services, which in turn also impress customers. Central is that all employees – on the sales floor and in customer services – have uniform and complete pictures of customers and can recognize and seamlessly serve them at all touchpoints.
Would you like to see more facts & figures?
Then we have a reading recommendation for you: The relevant factors responsible for the creation of customer loyalty are researched in the “Treue Kunden lieben Ihre Marke, untreue Ihr Bonusprogramm” (Loyal customers love your brand, fickle customers love your bonus program) study. It provides companies with action recommendations for designing their bonus program.
From service to loyalty champions
Good examples are Globus, the Swiss department store, which also recruits staff for the contact center from the sales floor. Depending on the contact volume and peak hours in the stores, employees can help one another. They access the same system both in customer service and on the sales floor, can view the bonus program, customer history and recommendations. In this way, Globus increases its flexibility and optimizes the customer experience. The traditional Confiserie Sprüngli in Zurich has launched a loyalty program called “Petits Plaisirs” in which it delights customers with selected birthday gifts, personal invitations and individual offers. A central CRM serves as the basis, which combines data maintenance, contact and campaign management as well as personal customer service across all channels.
Customer loyalty and retention
Central to retention marketing is relationship management for existing customers. This is a matter that should be of major concern to companies. If companies neglect their existing customers in the pursuit of new customers, then they become unfaithful or leave. New customer acquisition and existing customer care may not compete with each other. Even existing, long-term customers need attention and a reward, a sign of appreciation or a surprise now and then.