The Changing Face of Loyalty

There was an interesting article written by Mila D'Antonio in the August edition of
1to1 Magazine. The article posits the notion that customer loyalty is evolving. I agree! A brief look back in time brings to mind the memory of S&H Green Stamps that my mother diligently collected. That process is the first loyalty program that I can remember The second one that comes to mind is the American Airlines AAdvantage program of which I am still a member. But business is not the same as it was 40 years ago or even 10 years ago.

The appearance of the Internet and all the accompanying social media has changed the face of business. Some of the statistics that tells the story include the fact that 75% of consumers today are enrolled in at least one loyalty program and more than33% are enrolled in 2 or more programs. The Internet has helped the consumer to be well-informed. With all the information that is available, the consumer can use the Internet to get product and service information as well as reading reviews from other shoppers.

In January, 2010 the CMO Council reported that 60% of marketers say that loyalty program participants are the best and most profitable customers,only about 15% believe they have been highly effective in leveraging loyalty among its customers and 20% don't even employ a customer loyalty strategy.

What has changed is that customers now have many channels of information to access when making a decision for product purchases or services. Companies are now being forced to manage all the channels so that there is a consistent message. The social media, while new, brings as much, if not more, value to the customer that the traditional methods. Social media has and will continue to significantly impact customer loyalty. In fact, it appears that the social media may become one of the ways to establish emotional attachment to companies. Kevin Knowles, VP of merchant loyalty at First Data notes that "if you don't have a centralized model you run the risk of having your customer data fragmented."

This evolution of information availability has led a number of companies to evolve their loyalty programs to include managing social media, providing proactive customer service, and establishing ongoing programs to maintain contact with their customers. Some of the newer programs include including Twitter and chat capabilities with the company.

The bottom line is customer loyalty requires a long term relationship with customers. That relationship must be built on the episodes that occur during the customer's life cycle with the company. Therefore, companies must think of approaches that continuously build and strengthen the customer relationship. The connection between company and customer must proactive, NOT reactive.

As I have said to many clients, every time you touch a customer you will either add a strand to the bond of your customer relationship or will be break a strand of that bond. This includes every customer contact whether it is with someone from sales, customer service, accounts payable (the cashier), or any aspect of your social media. The stronger the bond the less likely the customer look for an alternative supplier.