When it comes to earning and maintaining brand loyalty, there’s no one right strategy–grocery stores have loyalty cards, airlines have frequent flyer miles, some online retailers offer free shipping, while others award exclusive member discounts. But marketers need to understand that loyalty is not just a program, it’s a long-term business goal. Loyalty programs should focus on two things–engagement and building lasting relationships with customers. With the help of social media, it is now easier for marketers to inspire brand loyalty because there are more touch points than ever before. You can build brand loyalty, even in a crowded marketplace, by following a few basic rules.
1. Meet customer needs
Customer loyalty centers around the perceived value of your brand. Good marketing involves identifying the needs and wants of customers and offering products and services that satisfy these needs and wants. Consider Zipcar. Zipcar identified a customer segment living in densely populated areas who wanted the convenience of private transportation without the hassles and cost of owning a car. Zipcar now enjoys the support of more than 400,000 loyal users.
Good user research is not just about finding out what customers want, but to develop empathy. Costco CEO Jim Sinegal walks the aisles every week to feel what their customers feel. Without that level of empathy, a lot of Costco’s innovations wouldn’t have come about–like their “14% rule” that limits the markup on every item in their store. It may not make sense to a shareholder, but to the shopper on the floor, it stands for value and fairness, which makes Costco shoppers some of North America’s most loyal customers. The snowboarding company Burton provides another great example of customer empathy. A designer walked in one day with a photo of a snowboarder’s calf, covered in bruises from a long day on the slopes. “Fix this!” he demanded, and the team immediately knew that this was a problem worth solving and began looking for a solution.
2. Customer satisfaction
Harris Interactive reports that even in a negative economy, customer experience is a high priority for consumers, with 60% often or always paying more for a better experience. A dissatisfied consumer will tell between 9 and 15 people about their experience and about 13% of dissatisfied customers tell more than 20 people, according to a Consumer Affairs report. On the other hand, happy customers who get their issue resolved tell about 4 to 6 people. With social networking sites like Facebook and Twitter, it is now faster and easier for people to share their experiences with their friends, so companies need to keep their customers happy and give them a good reason to talk about them.
With more than 25 million members, Netflix believes that honesty and an apology go a long way in building customer loyalty. On August 31, 2009, they emailed a large number of their subscribers to apologize for a streaming outage that occurred the day before and offered everyone, even users who were not affected by the outage, a refund. As a result of actions like this, Netflix gets more than 70 percent of its new customers from referrals.
3. Give valuable rewards
Whether it be coupons, discounts, giveaways or other gifts, a reward is only good if it means something to the customer receiving it. Imagine getting socks for your birthday when you wanted something else–that’s not going to inspire any kind of loyalty. Today’s customers want loyalty programs to be “about me” — individual, relevant and meaningful. Personally relevant deals are the second most frequently chosen reason for spending more with a company, mentioned by 48% of people, according to new research by Ipsos Mori and The Logic Group. Data collection and usage is extremely important in building relevancy. Brands need to use the information they collect strategically to show customers they’re listening and give them what they’re asking for.
4. Engage and be human
Marketers now realize that although spend and number of transactions are important, the real goal of customer loyalty initiatives is to engage customers. Because with engagement comes loyalty, advocacy and trust. According to Gallup research, organizations that have optimized engagement have outperformed their competitors by 26% in gross margin and 85% in sales growth. Their customers buy more, spend more, return more often, and stay longer. Companies can use social media to provide useful and engaging content and give their fans a reason to visit their site regularly.
One way to engage customers is to show that your company is human. For example, Lands’ End tells customers upfront that the people, not machines, who make their clothing sometimes make mistakes. It’s a proactive olive branch that if you buy from Lands’ End and receive something that is not up to their usual standards, they will take care of you. It humanizes the company and strengthens the connection between Lands’ End and their customers, thereby building a lasting loyalty.