Definition of LoyaltyEarly last year we presented the idea of the five C’s of loyalty: collaboration, content, community, commitment, and commerce. Loyalty as an idea and a discipline has evolved a great deal over the past several years and the pace of change will only accelerate in 2014 and beyond.

The financials are clear and we are all cognizant of them: It is much easier and profitable to keep the “right” customer than to search for the “right” customer. Most brands are more conscious of this today than ever before. They realize that loyalty is something that should be valued with “most” -- if not all – customers. For most brands we speak with regularly, the challenge of creating an environment involving employees -- coupled with a senior-level commitment to programs, analytics, and processes that drive behavioral-based loyalty -- still remains.

There are a select and growing few who are doing good job of creating unique dialogue with customers based on their ability to listen (in an active manner), identify, and create a mutually beneficial/reciprocal relationship with a group of “right” customers.

Many of the concepts and precepts connected to the five C’s are fairly simple, yet the complexity of the marketing environment that most brands find themselves imbued in has created heretofore unseen perplexities and challenges. The operational vicissitudes of truly “understanding” a customer are more complex today than ever; obtaining disparate data points and creating that multichannel/omnichannel view of the customer is becoming more of a challenge; yet the import and impact of the ability to execute on such a paradigm is more tantamount than ever before.

As I discussed in my 2014 trends piece, simplicity is something brands will focus on sharply. The ecosphere that brands find themselves in is one that is very complex and growing moreso as it relates to data and technology systems. How one understands and executes against the disparate, new, and rapidly changing technologies they find themselves presented with will  determine how successful they will be.

Step One: Content. Content has become one of the buzzwords of 2013. “Content” (as defined by Loyalty 360) can be a product, a service, a technical offering, informational insight, a service, or pure content. The definition of content is quite expansive -- it’s anything that the brand uses to engage with its community. Brands are looking to create content (circa 2013) around the “content” they have -- so the “content” as we spoke of it earlier could be a product now and is now understood to be a story from a customer or the brand, a marketing or PR outreach; ostensible as a way to show unique interests, yet it has also challenged perceived authenticity and has been “gamed.”

The challenge? Everyone thinks he or she is a “content” and content expert. I recently read numerous articles authored by content (circa 2013) “visionaries” so we’ve taken another marketing term and created a challenge with regard to the connotative and denotative meaning of the word; thereby, increasing complexity of the word insomuch that brands do not know how to effectively proceed; obfuscation!

Step Two: Community. The idea of community still remains the same -- brands should be able to engage with their audiences whether they are small or large. There is sublime power in the ability to execute the “voice of the community” and leverage its insights; yet brands struggle in their ability to actively “listen.” They need to be able to understand the unique needs of their audiences, and as much as possible, be able to create relevant marketing messages with the proper cadence and timeliness.

The challenge is the disparate expectations of a wide array of constituents make it costly and more challenging to effectively address pertinent requirements of the community. Typically, this is allayed by the precept that the “CMO knows best” and brands will proceed with that mantra in addressing their communities.

So the goal is to create as much relevance and responsiveness within the community to address as many of those constituents as possible – simple, yet challenging. Creating unique responsive marketing protocols for each and every individual is not usually technologically or organizationally (lack of sufficiently knowledgeable FTE’s) possible and also  may not be profitable.

Brands have to understand that they will not be able to respond to all individuals in a manner they “expect”, but they need to identify the “right” customers who offer value and engagement potential and respond to them realistically (in their ability to execute in a timely manner) as they can. Consequently, brands will see increased customer loyalty. Yet for those that they cannot address -- or the demands do not line up prudently with how they can or should respond -- it is imperative that they let them know that they will not be able to respond in the manner as the situation does not allow. Yet much prescience should be used in this process, it should not be arbitrary or capricious.

Step Three: Collaboration. Collaboration is very challenging for many brands we speak with on a daily basis. Traditionally, Chief Marketing Officers (CMOs) have been empowered to create the products, services, and content for their audiences. Yet, marketing for product development and also feedback processes have been very top-down. Collaboration requires a change in the archaic and traditionally stoic internal structures that precludes the empowerment of the new paradigm. Brands need to empower, and therefore allow a unique, reciprocal -- if not equal -- relationship with the consumer.

What a brand thinks the individuals may want of them in each unique instance can be quite disparate if one has the ability to look at stated interests and actual behaviors; i.e. the irrational responses we see from individuals as we know can and usually are quite different. For collaboration to be successful in 2014, brands need to be able to truly listen, effectively communicate with relevance, and set reasonable expectations within their communities.

The old top-down approach whereby brands directed their “content” (Loyalty 360 definition) to their constituents no longer works. The need to open up and have a more responsive system will be obligatory in 2014.

Step Four: Commitment. When we originally wrote the four C’s of loyalty, commitment did not make the initial list. Yet upon further review, we realized that commitment is an indispensable and necessary piece of the loyalty equation.

As we know, many brands have paid lip service to listening when creating the product, service, or content that the community may actually want. But at the end of the day, that can vanish. We also know that the journey to customer-centricity and loyalty is an arduous one that requires said commitment, especially when quarterly or year-end financial concerns come into play.

Is it easier to resort to the old processes of discounting, sending additional communications (email/direct mail/social) to an audience that may have requested not to receive them? Retrenchment to the old manners of engagement -- although not prudent for the longer term customer loyalty measurements – has a unique and known ability to drive financial results. Plaudits go to those who stay committed as any backtrack will undo all gains of trust, commitment, and reciprocity. One should remember that customer loyalty is closer to the New York City Marathon than it is to a 50-yard dash on the local elementary school playground.

We all have heard the stories of coupons, discounting, and the attendant impacts they have on company financials. You need only look at the change back to the discounting model employed at embattled J.C. Penney to see that commitment is something hard for brands to adhere to, as the visceral impacts can be bountiful.

Step Five: Commerce! The most important, known, and necessary facet of Loyalty!

About the Author: Mark Johnson

Mark is CEO & CMO of Loyalty 360. He has significant experience in selling, designing and administering prepaid, loyalty/CRM programs, as well as data-driven marketing communication programs.

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