At Loyalty360, we’ve observed in recent years that a customer renaissance is in our midst. New technologies and customer data are showing companies the possibilities of building personal relationships with customers, knowing the customer intimately, and being present--anyplace, anytime. Companies are promised that these new technologies make it possible to effectively break down silos within the organization, offer seamless customer experiences across channels, and connect with customers in a personal way in real-time. What’s more, customers are coming to expect the benefits of this renaissance from brands. When a brand delivers powerful customer experience consistently, customer loyalty is born.
This relationship is demonstrated in two 2014 Loyalty360 State of the Industry studies. Together, our Loyalty Landscape (published in March 2014) and Customer Experience (CX) Landscape (published in November 2014) surveyed more than 450 professionals, representing companies of various sizes in a broad spectrum of industries.
The key findings of both reports in tandem highlight the intertwined relationship of customer experience and loyalty, and – more importantly – the findings underscore the importance of making both elements essential to each other in regards to definition, strategy and execution. In other words, customer loyalty should not be defined without customer experience and the definition of customer experience must include customer loyalty as an outcome.
Our CX Landscape study found that 26% of companies say the desired outcome of CX is customer loyalty. Almost two-thirds of companies say CX occurs throughout the entire lifecycle. These companies tell us that customer journey-mapping is critical, as is holding employees accountable for customer experience across all departments and levels of the organization.
Brands are striving to act as tour guides on the customer journey, from awareness, through purchase, to loyalty and advocacy. Intimately knowing the customer, by tapping into new technologies and customer data, allows the brand to orchestrate each touch point along the journey.
The studies found that companies are striving to lead customers down the path to loyalty, and they see customer experience as integral to that journey. Yet, they struggle to move beyond the traditional definitions of experience and loyalty to truly build relationships with customers. Adopting new technology doesn’t immediately absolve deep-rooted challenges of silos within organizations:
- Empowering and holding front-line employees accountable
- Differentiating from the competition
- Determining the most meaningful metrics to track
Yet, many companies become frustrated when they try to tap into the promise of technology and customer data to build customer loyalty. And the 
customer renaissance is causing most brands to struggle with the challenges, not just the laggards. Metrics and benchmarks are the biggest knowledge gaps for customer experience and loyalty. When asked what question they would like to ask of competitors regarding their customer experience strategy, many respondents said they want to know what specific metrics are used or how customer experience is measured. When asked the same question regarding loyalty strategies, the most common answer is “How are you performing on key success metrics?” The lack of confidence in defining and approaching both CX and customer loyalty is causing many brands to wonder how they stack up to the competition, if they are using the right tools, techniques and tactics and if they are focusing on the right outcomes.
Winners of both the Loyalty360 Awards and Loyalty360 CX Awards are using more metrics, including more long-term and complex metrics like ROI, customer loyalty and profitability. Winning companies in the CX Awards track 1.7 times more metrics than the market at large. Loyalty winners are using 3 times more metrics than the market at large. These winning companies have simplified the complexity of customer experience and loyalty without diminishing the returns. They are vested in the outcomes and therefore, see enhanced success.
The conclusion? Brands, especially those that excel at customer experience and loyalty (such as the winners of the Loyalty360 Awards and Loyalty360 CX Awards) are starting to define both in a more complex and inclusive way. Customer experience no longer focuses on a single customer interaction and its outcome. Building customer loyalty is not as simple as offering a program. A program may be one component of the loyalty strategy, but that strategy also includes customer experience and customer engagement, which are far-reaching and complex disciplines. Customer loyalty strategies are no longer narrowly defined as an exchange of points, perks, or a discount for a purchase. Successful brands concentrate on the customer relationship, rather than on a narrowly defined program or an initiative owned by a single department.
The customer renaissance is leading many brands to see customer experience and loyalty as processes (that include multiple functions) for building customer relationships. Customer experience includes any and all interactions and touch points a customer has had with your brand. It happens anytime and anyplace. The cumulative outcome--satisfaction, perception, transaction, recommendation, and more – can lead to customer loyalty.
For more insights and analysis, including a view of how the winners of the Loyalty360 Awards and Loyalty360 CX Awards are setting themselves apart, purchase your copies of the 2014 Loyalty Landscape: The State of the Industry and the 2014 CX Landscape: The State of the Industry reports today.
Join your peers in defining the state of the loyalty marketing industry: Loyalty360 is currently conducting research for the 2015 Loyalty Landscape report. In exchange for your opinion and expertise, you’ll receive a free summary copy of the report when it’s published in April. Take the survey today.