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In a recent breakfast seminar hosted by Collinson, marketers gathered from all over the world to discuss the current landscape of customer loyalty. While a variety of different viewpoints and opinions were expressed, one theme remained consistent: customer loyalty is changing, and businesses must adapt their strategies or risk becoming obsolete.
Businesses must have a long-term plan to create and maintain customer loyalty. In an experience-based economy and an environment of technological disruption, customer expectations are higher than ever. Brands cannot focus only on customer acquisition. They must turn their gaze towards customer retention and satisfaction.
“Once you acquire customers, you have to start retaining them,” says Mary English, Executive Vice President, APAC, Collinson. “The two key objectives are enriching and improving customer experience and relationships. The outcomes of your objectives are acquisition, retention, and advocacy.”
Customer loyalty started in the airline industry as a traditional, transaction-based upgrade model. Customers would receive perks, such as a free upgrades, based on how many miles they had flown with a given airline. However, nowadays there is a shift to emotionally driven experiential customer engagement.
“A loyalty program doesn’t equal a reward program. They are actually slightly different,” says Paul Smitton, CEO of Asia Miles. “A loyalty program is about how we understand our customers, how to engage with them in a holistic way, through the CRM. The reward program is just a mechanic, perks on hook that make customers want to make a relationship with you.”
English adds, “Consumers value experiences over material goods. Brands need to provide wider experiential redemption opportunities and ensure customers can drive additional value by accessing their own data.”
Companies are now starting to go beyond product offerings. Olivia Kosasih, Head of Customer Engagement for Bluebell Group, says ordinary rewards like VIP access are no longer effective at engaging with reserved members. These channels are unable to make them feel specially treated.
Therefore, Bluebell Group launched It Just For You engagement program, offering exclusive tailor-made treatment for the top-tier VIP members. “For top-tier customers, we reward them with experience that money cannot buy,” says Kosasih. “For example, a trip to Milan with shopping spending, so they can choose their own wardrobe.”
Kosasih has helped to bring up a point that many marketers agree with: a mass reward, cookie-cutter approach towards customers rewards is no longer effective for maintaining customer loyalty. The key to maintaining customer loyalty is knowing your customer and tailoring offerings that give them value and a unique customer experience.
But what effect does emerging technology have on customer loyalty? Marketers believe that it has guided a shift in customer decision-making. Before purchasing, customers now have the ability to do research on a variety of sites, read customer reviews, and run price comparisons with competitors. As such, brands have to leverage data analytics and look for the patterns behind the data to find out the implications on potential solutions and values. They then must use these insights to better anticipate customer needs and personalize their experiences.
Many believe that the future of customer loyalty lies with paid membership programs. Amazon Prime is the most prevalent example with this. 60 percent of US customers enroll in Amazon prime, with 96 percent likely to renew.
“Customers are happy to pay more for better service, benefits, and experiences,” says Christopher Evans, CEO of Collinson. “In addition, brands are able to collect higher quality data both at joining and point of purchase as the customer is investing in the brand. More data leads to deeper analysis opportunities, which in turn leads to better and more relevant communications, benefits, and rewards.”
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