Is Traditional Customer Loyalty Dead?

An older version of customer loyalty is dead, according to Emily Collins, Analyst, Forrester Research.

During her session, “Leverage Loyalty Beyond the Program,” at Forrester’s Forum for Customer Experience Professionals East last month in New York City, Collins espoused that theory.

“Loyalty owned and ruled by points and discounts is dead,” Collins said. “Long live elevated loyalty strategies that focus on creating great relationships with customers through things like recognition, relevancy, emotion, and engagement.”

Collins offered three crucial elements for any marketer considering a loyalty program, or revising a current one:

  • Loyalty matters more in the age of the customer. It’s mission critical.
  • Collecting and analyzing customer data is the foundation of success. It’s the first thing you need to start doing.
  • Elevated loyalty strategies transform customer experiences.

Loyalty programs provide a mutually beneficial framework for collecting customer insight and rewarding customers, Collins said. But customer loyalty extends beyond the rational and in some cases beyond what a loyalty program can even offer.

Collins stressed that an integrated loyalty strategy that crosses all departments in a company is the only way to achieve a high degree of success.

“Your customers have fewer reasons to be loyal than ever before and are really less loyal than they’ve ever been before,” she said. “This is because empowered customers are now in control. They want control over the interactions they have with brands. They have a voice that’s loud and far reaching and they have heightened expectations for the way companies interact with and serve them.”

Unprecedented customer access to information signals companies to differentiate in a crowded marketplace through unique and memorable experiences. Collecting and analyzing data is the path toward personalization, increased engagement, and differentiation.

“Loyalty insights unite marketing,” Collins said. “Companies that have an elevated loyalty strategy are able to know, recognize, and be relevant to their customers wherever they choose to interact across the organization, not just within marketing. “And empowers companies to deliver better service and product features, to achieve greater cross-sell and upsell, to improve the efficiency of their communication and promotion, and to foster higher engagement and bring advocacy across the board.”

Collins described brand marketing and customer marketing as follows:

“Brand marketing loves them and leaves them and customer marketing kind of picks up the pieces after the purchase,” she explained. “Loyalty is the link that brings these two pieces together. The insights you collect from your customers … helps you bridge the gap between your customer and your brand marketing efforts. Insights make a difference. Loyalty is your company’s informant. It helps guide interactions.”

Collins said customers have fewer reasons to be loyal than ever because empowered customers are now in control.

“They want control over the interactions they have with brands,” she said. “They have a voice that’s loud and far reaching and they have heightened expectations for the way companies interact with and serve them.”

Loyalty, Collins added, is the phoenix that rose from CRM ashes.

“Demonstrate value through the test and learn phase,” she said. “Demonstrate by doing as opposed to telling them it’s going to work.”

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