Accelerating customer loyalty: leveraging trust, technology and data

Although advancements in technology and data analytics have allowed both B2B and B2C companies to create highly customized loyalty programs, many companies are finding it difficult to provide real value to their customers, as well as to their overall organization.

What’s causing the difficulty? It’s a two-part answer. 

First, companies are neglecting the broader customer relationship by focusing attention on the transaction. Consumers want deeper, personal relationships with brands. They want to be acknowledged as an individual first and a customer second, and know that their brand loyalty isn’t going unnoticed.

Second, companies are neglecting to use the power of their existing customer data or collect useful data that can provide an accurate picture of their customer to proactively identify opportunities for engagement, building trust and improving their overall loyalty program.

Simply put, fostering customer retention, acquiring new customers, and increasing customer and brand loyalty while maximizing revenue will require a shift from transaction-based loyalty programs to emotion-driven, experience-centric engagements. And technology is key, namely data and customer insight.

Cultivating customer loyalty

Customer loyalty is a precious commodity and one of the most effective sales influencers. It’s an enduring, mutually beneficial relationship between your brand and your customers, and a necessity to stay competitive and propel growth – especially during periods of high inflation and uncertain economic climates.

When it comes to customers, loyalty is a byproduct of your company consistently providing exceptional, personalized customer experiences while satisfying customers’ wants, needs and desires.

According to Grand View Research,¹ loyal customers can yield conversion rates between 60% and 70%; new customer conversion rates are around 5% to 20%. This highlights the need to enhance and/or launch customer loyalty programs to improve your relationship with existing customers.

Fostering customer loyalty is indispensable as it has been shown that loyal customers:

• Become brand advocates, recommending your brand to others
• Make purchases more frequently, buying more over their lifetimes
• Interact with your brand through a variety of channels (social, email, mobile)
• Reduce the need for customer acquisition and strengthen customer retention
• Are willing to share opinions and feedback regarding their experience (surveys, polls, reviews)

Navigating the sea of loyalty programs

The consumer is changing, and earning customer loyalty is more challenging than ever before. Lingering disruptions from the pandemic, new economic concerns and a deeper focus on value have caused new shopping behaviors, but one thing remains consistent: consumers want what they want when and how they want it.

From the need for value and convenience to frictionless, personalized experiences at every touch point and knowing they’re being seen and heard, consumers are increasingly voting with their attention, engagement and dollars. If they don’t find these things with your brand, they will “jump ship.”

That said, brands should consider the following: start to view their company in a new light, as a loyalty leader, not just a company with a loyalty program.

Rather than silo loyalty programs in marketing, look at it as a collaborative, cross-functional effort. Besides marketing and sales, modern programs require other departments, such as finance and tax, digital and technology, business growth, and strategy and operations to be successful.

Whether maintaining an existing loyalty program or establishing a new one, it should be a heightened priority to be inclusive of all departments, as well as employees, in an effort to retain current customers, attract new ones, and meet and exceed increasing expectations.

Loyalty programs provide companies with a unique opportunity to have a direct relationship with consumers, moving them from share of wallet (transactional-focused) to share of heart (emotion-focused) through personalization, building trust and ties to community and purpose.

Building emotional connections for lasting engagement

Although the numbers speak for themselves, the following are a few common potential benefits of loyalty programs:

• They help to view program members as individuals, enabling better understanding and deeper personalization to meet their needs more accurately.
• They provide a streamlined way to collect and unify meaningful insights and build a member database, a valuable asset that is complementary to marketing.
  
• They significantly improve customer retention and lower churn rates, turning infrequent buyers into repeat customers. A popular coffeehouse chain does this well. Members earn stars for each purchase that are redeemable for free food and drinks – driving purchase frequency, improving retention and reducing churn. The chain has also embraced metaverse trends to implement gamification to enhance its program; members complete interactive games and collect Non-Fungible Tokens (NFTs) to unlock exclusive benefits, rewards, virtual events, etc.
  
• They increase the value of each purchase or average order value (AOV) by rewarding members based on their total spend, in turn amplifying CLV. Members will spend more, more frequently, and remain a customer longer. A well-known beauty and wellness company has mastered this within its “insider” program. Complementing its tiered membership, where points are redeemable for branded cash and rewards, members enjoy perks like free shipping, exclusive gifts, private events, first access to products and connecting with fellow beauty enthusiasts. This is a great blend of unique offers, events and a sense of community.

How to transform your loyalty program

Loyalty programs are a staple of business, an ideal strategy to reward brand-loyal customers and collect critical data to leverage personalization as a differentiator and enhance customer experiences at every touch point. Grand View Research⁵ expects that the US will see a 15.9% compound annual growth rate (CAGR) in the loyalty management market (2022-2030).

Vying for customers’ attention, trust and loyalty will continue to be competitive. The following are considerations to improve your current program or establish a new one: