Anthony Aguiar, Loyalty Strategist, IC Group will be one of the featured speakers during a session at the 7th Annual Loyalty Expo, presented by Loyalty360 – The Loyalty Marketer’s Association. The event will be held March 17-19, 2014, at the Hyatt Regency Grand Cypress in Orlando, Florida.
Aguiar participated in a Q&A with Loyalty360 and offered insights related to his session titled, “Evolving a Loyalty Program.”
Q: How can brands better connect with customers today?
Brands need to understand that the marketplace has evolved so dramatically and customers’ demands and expectations have changed along with that. Having a customer purchase and use or consume your product is no longer good enough today. You need to connect with them on an emotional level and truly understand how to build loyalty with your target audience. IC Group has found that the happiest loyal customers are ones who have a deeper relationship with the brand because the brand has taken the time to get to know them. Everything we help brands do revolves around recruiting customers into the brand’s CRM communication stream, engaging them with relevant targeted content and communications, driving purchase and trial, and rewarding them along the way. This is key−customers want more from a brand. And balancing the cost of rewards is integral.
Q: Why is customer loyalty a crucial differentiator for today’s companies?
Customers have such a vast amount of choices in the marketplace that loyalty is critical in order to prevent them from switching. Customers are more informed−we are generally a smarter society of purchasers with information at our fingertips and don’t trust brands as much as previous generations. We are more apt to buy a competitor’s product; whether due to price, quality, features, referral from our family, friends, and social network; or even feeling that the competitor brand understands and cares about us more. So loyalty is essential and those brands that do a good job of driving loyalty through connection tend to retain customers for longer periods of time. Not only that, loyal customers statistically spend more money annually on a brand, are more likely to be advocates for a brand, and can even forgive more in times of issues. All these factors mean that brands that create loyalty−often using a loyalty program as one aspect of their customer engagement−are going to be stronger in the market.
Q: What is the role of mobile in today’s customer loyalty programs and how do you see that role changing in the future?
Mobile is no longer something that should be considered as an after-thought. Brands need to start with a mobile-first strategy because customers are here. It’s not a fad. It's no longer slow-moving. The stats we’ve seen at IC Group over the last 12-18 months in our promotions, loyalty programs, and CRM communications to brands’ customers are staggering. Over 50% of emails delivered from brands to customers are being opened on mobile and we expect this to grow to over 70% within only a few more years. And over 30% of customers are accessing some of the promotions and loyalty programs from their mobile device. So if a consumer can’t access a brand’s loyalty program through mobile, the brand is making it harder for the consumer, and the consumer is not getting the experience they anticipate. This means that the brand is not delivering to the expectations of the customer. In terms of the future, I see customer loyalty programs being more integrated with mobile payment, retailer loyalty programs, immediate perks and rewards for shopping (whether online or in store), and more location-based communications.
Q: Is it more important to focus on your best and most loyal customers or try to acquire new ones?
It depends on the category, the competition, and a brand’s place in the market. For established brands that have strong market penetration, focusing on loyal customers makes more sense because recruitment investments will only yield smaller ROI. For brands that are growing or aren't at the top of the marketplace, they need to invest in recruitment to get their message out to more potential customers and grow their reach. But even in these cases, it’s critical for brands to invest in their loyal customers. It costs less to keep a loyal customer than it does to create one. And as I mentioned earlier, loyal customers spend more money on average and are more likely to advocate for the brand. So creating a strong relationship with loyalists strengthens a brand's ability to weather good times and bad. In fact, I’ve seen brands that have had issues in the marketplace and have had to pull products of the shelf temporarily−their loyalists came back strong after that pause, which helped the brand rebound strongly. If they hadn’t invested in those loyal customers over the years, there’s no telling how much their sales and SOR could have dipped.
Q: What is your definition of customer loyalty and has it changed in recent years?
Customer loyalty is creating a relationship in which the customer feels a stronger emotional bond with a brand to the point where he/she feels that it is a mutually beneficial relationship. A loyal customer, to me, is one who won’t purchase a competitor’s product nine times out of 10 … one who almost feels an obligation to the brand … one who understands the brand and would be likely to advocate and recommend the brand to others in their network … one who believes the brand is investing in him/her and has a vested interest in their well-being. It may seem like a stretch, but this is how I feel about the definition. If you go back 20 years ago … maybe even 10 years ago … a loyal customer was often only defined by sales. Now it reaches far deeper into an emotional bond of value reciprocity.