Big brands thought they had customer loyalty figured out. Consumers would walk around with a wallet bulging with rewards cards, drink the same beer as their fathers drank. Air-miles would determine what credit card a family used, or where they shopped for groceries. You’d get your card punched, and the 10th coffee would be free. But businesses have recently had a rude awakening. The digital age has brought with it a massive shift in the very nature of brand loyalty.
Here’s how, and why your brand should care…
A shifting brand loyalty landscape
A 2017 report by Accenture found that 83% of consumers were retreating from loyalty programs, and that only a third of those surveyed felt that what made them loyal to brands today were the same factors from three years ago. Most analysts feel that Millenials are more fickle towards brands than previous generations had been. Why? A recent investigation by Inc. found that while changes in price and financial situations were the most cited reasons for switching brands, Millenials were also motivated to try other products based on personal recommendations or finding that their brand of choice had bad business practices.
The Value of Values
While brands are eager to build relationships with consumers, their customers like to keep them at arm’s length. A study by the Harvard Business Review found that only 23% of consumers felt that they had relationships with brands. When asked why they didn’t have or want a relationship, a typical response was “it’s just a brand, not a member of my family.” One way to entice consumers is to reach them through digital assistants. Recent studies have shown that young people tend to view these devices as members of their families. Smart brands should try to leverage the intimacy of these relationships by building campaigns through digital assistants.
The Harvard study did unearth one bright spot for companies looking for love: shared values. According to the authors, "of the consumers in our study who said they have a brand relationship, 64% cited shared values as the primary reason.”
The most successful brands at building relationships based on values have demonstrated a commitment to environmental and social causes. Leaders in this field are companies like TOMS shoes, which gives away a pair to the needy with every purchase and Patagonia, which is deeply committed to sustainability. In the FMCG sphere, brands that are committed to using organic products, treating animals humanely, and reducing waste in manufacturing and packaging are gaining the affection and trust of their customers.
Another way to build identity and loyalty is to establish an enemy. Most people feel far more strongly about their choice of cola than they do with orange juice or coffee, thanks to decades of Coke vs. Pepsi ads. Apple has carved out a brand identity by attacking Microsoft as the choice of mindless office drones, while other phone companies have tried to turn the tables and paint Apple users as brain-dead hipsters. Nike’s recent decision to use controversial NFL player Colin Kaepernick as the face of a new campaign, with the company positioning itself against Trumpism and racial inequality is evidence of this tactic in action.
It’s important to let your customers know what you believe in, and show them how your principles guide your policies. It’s also important not to over-share. The Harvard study found that only 13% of respondents cited frequent interactions with a brand as a reason for having a relationship.
Relationships Based on Trust
More and more customers have come to expect free and fast shipping when buying online, and no questions asked return policies are becoming more common. One strategy that online retailers have begun to embrace is “try before you buy.” The UK clothing brand ASOS launched this service just before Christmas last year, and consumers responded as the company’s sales grew by 23% in the last four months of 2017. Lingerie brand La Perla launched a similar service shortly thereafter. As explained by econsultancy, such a strategy “lets customers know that they are trusted, which in turn helps to create a cycle of confidence in the brand and its service. In FMCG, building trust with consumers is crucial, particularly when selling perishable goods. Convincing your customers that they can be assured of receiving fresh, high-quality food is a must, and a generous returns policy will help bring them around.
Experience Over Money
Rachel Barton, managing director for advanced customer strategy at Accenture, is highly skeptical of traditional points-based reward programs. In a recent interview with the Daily Telegraph, she claims that “Customer loyalty as we know it today is dead. Traditionally, the drivers of customer loyalty were product, price, and service. But they are no longer differentiators in our fast-moving digital world. Consumers are moving away from transactional-based reward schemes to a much more experiential type of loyalty.”
According to Accenture, 54% of UK consumers felt loyalty towards brands that presented them with personalized gifts, offers, and gift cards, 44% said they gravitate towards brands that reached out through their preferred mode of communication, 37% claimed loyalty to brands that offered them a chance to design products and services, and 34% were loyal to brands that let them personalize products.
Let’s Get Personal
Offering customers a product or service specifically designed to fit their wants and needs will become essential to creating loyalty. In FMCG this could lend itself to personalized meal plans, targeted free gifts, samples that would appeal to a specific palette, recipes involving ingredients a consumer has purchased, and allowing consumers to see the grocery lists and meal plans of friends or favourite celebrities. As more consumer data becomes available, forward-thinking brands can focus on delivering convenience, and discovering new ways to anticipate the desires of their customers. Who wouldn’t be grateful for an easier way to get their shopping done?
When personalizing, companies should be very concerned with respecting the privacy of the consumer. Brands that are found to use personal information irresponsibly or inappropriately are sure to be rejected by consumers. As Ms. Barton notes, “Brands capture a lot of personal information and consumers care about what brands do with that data. They want it to be safeguarded, they want it to be private and they only want it used in situations where it is in their own best interests.”
What You Need to Do
Consumers are no longer willing to stick with a brand for life, even if they’re offered a quality product at a reasonable price. The good news is that this doesn't mean that the concept of brand loyalty is dead, only that it has shifted. Consumers are looking for brands that understand them, respect them, give them gifts that make them feel appreciated, and provide a convenient journey to purchase. They want to share their lives with companies that reflect their values and deserve their trust. The data available through eCommerce can let you know who your customers are. To gain their loyalty, you need to use it to make their lives more pleasant and convenient.