In the realm of multichannel customer communications, email is still king. It’s the easiest to send, it’s inexpensive and it’s the channel on which most marketers rely to connect with all kinds of customers. Email marketing is ingrained and inexpensive, but as a result, many marketers abuse it, defaulting to a routine batch-and-blast approach. In 2015 alone, U.S. online users received 3.7 trillion emails. Today’s email practices fail loyal customers because they treat everyone the same way and struggle to deliver basic relevance.
Over-emailing is a persistent problem, and marketers face cultural inertia trying to get over the notion that if they email enough, the customer will eventually take action. One incremental email for a thousand customers may only cost you a single dollar, but the emotional value given up from an annoyed customer will cost you in future purchases and in investment needed to rebuild a loyal customer relationship from scratch. In essence, the long-term investment in building a relationship with loyal customers is compromised because of a short-sighted push for conversion.
Marketers can’t afford to alienate loyal customers. After all, those customers are the ones who want to engage with you in the first place. According to Forrester’s Consumer Technographics data, 58% of loyalty program members subscribe to a brand’s email list, compared with just 28% of consumers overall. It’s time for a reboot.
If you follow my blog regularly, you already know that I love to travel. And while I’ve had my fair share of travel hiccups (missed flight connections, last-minute assignments to the dreaded middle seat, lost luggage – you name it), I’ve always glossed over these snafus and accepted the fact that traveling inevitably comes with a few small challenges.
Until this year, when I hit executive traveler status on a major airline thanks to the loyalty points I amassed during my trips. Suddenly, my tolerable travel experiences became overwhelmingly enjoyable ones, and I quickly came to love (a word I don’t use loosely!) flying with this airline because of the VIP treatment. My reaction isn’t unique. In fact, it’s characteristic of my generation: Forrester’s Consumer Technographics® data shows that Millennials highly value loyalty programs that reward customers with enhanced customer service and special status, as Millennials cherish this sense of validation and exclusivity.
Specifically, our data shows that the loyalty program reward tactics that work for middle-aged and older consumers are not enough to satisfy Millennials. While customers of every generation want discounts, Millennials also expect loyalty programs to offer a premium customer experience. And what’s more, younger consumers want the flexibility of applying loyalty points to a variety of benefits – from travel upgrades to digital media content to charitable donations – while their older counterparts are happy using their points to get cash back.
Valentine’s Day is just around the corner, but for marketing and insights professionals, the love between a customer and a brand should be present all year round. Today, building loyal customer relationships is increasingly challenging; it requires effort, patience, and empathy. “Love at first sight” may be a fairytale and few consumers commit to a brand until death do them part, but those companies that forge deeply emotional bonds and align with consumer values gain a competitive edge.
Therefore, professionals striving to foster customer love must understand consumers holistically by answering questions like “What are consumers naturally most passionate about?” “Where are consumers engaging when not with my brand?” and “How do current lifestyles create opportunities to connect with new customers?”
My latest report, which blends Forrester’s Consumer Technographics® survey, behavioral, qualitative, and social listening data, reveals that US consumers who prioritize their health have a distinct attitude that sparks broader lifestyle choices. “Health-conscious” is not just a descriptor; it is also a driver, as consumer commitment to health stems from a deep need for self-improvement.
In May, American Express launched Plenti, a U.S.-based coalition loyalty program with eight partners, including Macy's, AT&T, Exxon Mobil and Rite Aid. These types of programs, which let consumers earn and redeem a single currency across multiple partners, are popular in other areas of the world, but coalitions have historically failed to gain traction in the United States.
Plenti's initial progress indicates that it might buck the trend: It signed up more than 20 million members in its first two months reaching around 16% US household penetration. For reference, established coalitions such as AIR MILES, Nectar and FlyBuys have household penetration rates of more than 50%.
But any decent loyalty marketer knows enrollment doesn’t tell the whole story. Three things, in particular, give coalition in the U.S. a fighting chance:
The loyalty program landscape is crowded. Plenti entered the market at a time when companies across industries – from retail to travel/hospitality to automotive – invest in loyalty programs to drive retention, engagement and loyalty. According to Forrester’s Consumer Technographics data, consumers belong to an average of nine loyalty programs. The proliferation of branded programs makes it hard to stand out, and it shows: 58% of loyalty marketers that Forrester surveyed in 2015 indicated they were dissatisfied with their loyalty strategy. Coalition programs offer a differentiated value proposition: members shopping across partners experience an increased earning velocity and wider choices for redemption, which boost the utility and perceived value of the program.
After almost every loyalty-related speech I give, I get some variation of the following question: "How does this apply to B2B?" Sure, customer loyalty programs are most frequently associated with consumer-facing rewards schemes, but earning customer loyalty is very important for B2B companies too. After all, loyal and satisfied B2B customers provide testimonials, case studies, and referrals that result in a fuller and more qualified pipeline of new business. It can be easy for B2B marketers to dismiss consumer loyalty models as inapplicable to their complex business relationships, but there's a lot more to consumer loyalty than points and discounts.
In my latest report, "B2B Loyalty, The B2C Way," I explore how B2B companies can use consumer loyalty principles to deepen their business relationships. Looking past rewards, they specifically stand to benefit from three core tenets of loyalty embraced by successful B2C loyalty marketers:
A deep understanding of customer needs and motivations. B2B companies are not immune to the age of the customer, and in order to increase their customer obsession, they must continue to grow their knowledge about the customer. Building this knowledge-base from sources like satisfaction surveys, digital interactions, and customer success management systems is especially important given the complexity of B2B purchase decisions.
Consistent customer interactions across organizational silos. Business customers interact with many parts of the organization including marketing, sales, service, and support. Reaching across the aisle to teams that interface most frequently with customers, resellers, and end users leads to more productive customer outcomes.
A version of this post originally appeared on AdAge.
It's harder than ever to earn your customers' loyalty. They are "always on," have instant access to myriad choices, and can easily find the cheapest prices from any supplier. Many companies think they've solved this with a loyalty program, but the competition is stiff there, too. On average, consumers belong to eight loyalty programs -- the majority of which are ruled by points, discounts and financial rewards. And let's face it: These transactional benefits are more about increasing frequency and spend than influencing emotional loyalty and devotion to a company.
The bad news? Traditional approaches to loyalty don't cut it anymore.
The good news? I'm not going to tell you to scrap your loyalty program. But, in my new report on customer loyalty, I am going to tell you to reframe how you think about your program. It should be treated as one of several tools -- alongside customer experience, brand and customer service -- that helps foster customer loyalty wherever customers interact.
Be A Loyalty Company, Not Just A Company With A Loyalty Program
Truly great loyalty strategies create a meaningful exchange of value between the company and the customer. This exchange encourages customers to share all kinds of profile, preference and behavioral data. And the insights derived from that customer knowledge have broad applications for all customer-facing strategies, and should radiate out across the enterprise to do the following:
2014 wasn’t a good year to be average. Since 2007, the average customer experience in the industries that Forrester tracks has gone up across the board, and the number of truly awful experiences has dropped like a rock. So if your CX is average, it’s just not good enough to win, serve and retain customers. And it won’t get any easier next year: With companies investing more than ever to differentiate their customer experience, your average offering will soon be considered poor.
In 2015, the race from good to great CX will hit the gas pedal. Smart CX teams will increasingly use customer data from diverse sources like social listening platforms, campaign management platforms, mobile apps and loyalty programs – to personalize and tailor experiences in real time so that they inherently adapt to the needs, wants, and behaviors of individual customers. And as companies strive to break from the pack and gain a competitive edge through the quality of the CX they provide, we’ll see the battleground shift to new areas like emotional experiences and extended CX ecosystems, and into laggard industries like health insurance and TV service providers, and even the Federal government.
As we do every year, we’ve just published our Predictions report for CX. I want to share a couple of those predictions with you:
Blogged in collaboration with Samantha Ngo, Senior Research Associate, serving Customer Insights professionals.
Even if you have a clear idea of where you want to end up, the route you take to customer loyalty isn't always straightforward. Outlining a strategic plan helps you understand what you need to do, but a roadmap identifies how, when and with what resources you should tackle each step. Forrester believes there are six components to designing an effective loyalty roadmap:
Time frame: The expected completion of tasks and delivery of results.
Desired outcomes: Key performance indicators (KPIs)that help you benchmark the performance of your advancing strategy based on your maturity.
Strategic themes: A summary of the objectives an organization needs to advance its strategy.
Key steps: The specific tasks — pulled straight from the strategic plan — which an organization must complete to graduate to the next maturity level.
Dependencies: The people, process, and technology required to execute the key steps. Changes to the current approach may require acquiring new team members, implementing formal processes, or buying loyalty technology.
Investment level: Where and when the allocated loyalty budget will be spent.
Blogged in collaboration with Samantha Ngo, Senior Research Associate, serving Customer Insights professionals.
As a kid, I loved going back to school. The beginning of September always meant new classes, new classmates, and of course new notebooks, pens, and pencils. And even though I’m not in school anymore, I still see September as an opportunity to turn over a new leaf, and approach things — both personally and professionally — with a fresh perspective. So, in honor of the first few weeks of Fall, let’s all take some time to study the loyalty basics. Process, while not the most exciting aspect of loyalty marketing, is necessary for building a sound foundation. Without processes, your ability to execute on your loyalty strategy is shaky at best and sudden changes to the market or unforeseen obstacles may leave you in disarray.
To avoid loyalty strategy failure, you must streamline processes around these three objectives:
Building a deep understanding of customer needs and motivations. Loyalty starts with knowing your best customers and asking for their input. But, if gathering data from your customers, make sure you use it. They will expect it.
Preparing for relentless adjustment. Digital business is booming, and loyalty can’t miss out on opportunities to innovate. Test and learn new customer engagement tactics on a small scale. Don’t be complacent with your strategy, but don’t over spend on improvements that won’t last.
Establishing enterprise wide alignment. Do you know who your key internal stakeholders are? Identify them then build teams and processes to help create seamless customer experience.