Danica Allen, Ph.D., Global Director of Customer Satisfaction & Experience, GfK Global, will be the featured speaker in 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.

Allen participated in a Q&A with Loyalty360 and offered insights related to her session titled, “New Frontiers in Relationship Loyalty Research.”

Loyalty Expo, an expansive and exclusive loyalty event geared toward building successful and lasting customer relationships, includes three jam-packed days of networking, interactive sessions, and workshops led by several of today’s elite marketing minds. Attendees will meet their peers to discuss pressing marketing challenges, opportunities, and solutions.

Q: What is your definition of customer loyalty and has it changed in recent years?

Our definition of loyalty has evolved over the past 20 years. The paradigm shift that resulted from the recognition that overall satisfaction wasn’t necessarily a good predictor of future relationship success and that behavioral ‘loyalty’ could be artifactual−repeat purchase behavior based solely on proximity for example−produced a variety of multi-item indices spanning emotional and rational bonds that are more complicated, but to this day are some of our strongest predictors of business outcomes. The success of simpler, more parsimonious measures like the Net Promoter Score led us to consider metrics that may be even more meaningful than willingness to recommend.  Our most recent R&D initiative, which spans five countries and three industries, investigates the engagement metrics as well as behavioral metrics including word-of-mouth volumetrics and switching propensity. In effect, we’re testing our ability to meet the need of some companies for a direct link from service/product quality to customer behaviors.

Q: Can you talk a bit about the paradigm shift related to a customer’s past, present, and future?

We believe that loyalty programs have been somewhat short-sighted with respect to the broader consumer journey. Customer satisfaction and loyalty consultancies have paid little attention to where customers are coming from and where they may be going. We are beginning to embrace the notion that there may be a natural ebb and flow of customers−those that leave and then later come back may actually have higher lifetime values than those who stay, but do not fully commit to the relationship.

Our newest thinking places greater importance on this dynamic, explicitly capturing information about where customers have been and where they might go, if they leave. Of course, it is the objective of almost any service/product quality management program to retain customers and we continue to place substantial importance on this. The difference is that our perspective of customers is more holistic and helps companies manage an extended customer lifecycle because it recognizes they may switch in and out of the relationship before settling permanently.

Q: What are some innovative tactics brands can use now to enhance customer relationships?

The most powerful tactics today focus on creating a differentiated experience.  Depending on the company, that experience can range from a product's box opening and first use to a guest’s visit in a luxury store or hotel.

Companies are following the customer’s journey more closely than ever before to understand where in the journey to focus investments as well as the differentiators that delight customers at different points along the journey, and to uncover and avoid the disasters that make customers remember and avoid your brand. Indeed, from a behavioral economics perspective, it is the memorable service and product quality experiences that most directly affect our future purchase patterns–far more than the routine humdrum experience that make up most transactions.

Q: Can you explain to our audience about simultaneous measures of quality and memorability?

Quality and memorability are not synonymous. Why? A company can produce flawless service or product quality that is not memorable. In order to be memorable, an experience must be very differentiated and ideally coupled with an emotional imprint. Thus, two banking experiences could be identical with respect to top-notch service delivery, but the one that involves memorability will have much greater impact on future behavior (e.g., cross-sell, repeat purchase, positive word of mouth, and so on). There are a variety of things companies can do to enhance the memorability of a service or product quality experience. Our presentation will discuss these and provide concrete examples of how they can be successfully implemented.

Q: If customer loyalty is based on a behavior, as we believe, how do you think that behavior has changed?

Increasingly, customers have become very focused on the concrete dimensions of value. There is still a segment that we trained during the recession to respond to discounts, but there is a growing segment that values a superior product or service and is willing to pay for it. It is especially apparent among more discriminating customers who have the ability to spend freely when they think it is worth it. In many cases, they are buying memorable experiences. These customers are too savvy to be persuaded by simple gimmicks. They are looking for features and benefits that they can’t get elsewhere and when they find them they are willing to spend. That’s a big contrast with a few years ago, when rewards programs were a little less pervasive and discounts were king.

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