The New Face of the Loyal Customer and What It Means for Marketers

The meaning of brand loyalty is changing and so are the strategies marketers use to retain customers. According to eMarketer, the majority of U.S. marketers intend to allocate more of their budgets to customer loyalty in 2016, and 13% anticipate significant increases in spending on loyalty programs.

And as they decide how to invest these additional dollars, it is crucial for marketers to understand that today, the meaning of loyalty is much different than it was a few years ago. This translates to heightened challenges for loyalty marketers working to keep their customers for the long haul in a cross-channel, digital-first world. So what do the loyal customers of today look like?

1. They’re Addressable 24/7

Two-thirds of U.S. online adults are always addressable, meaning they own multiple connected devices and use them to check email, tweet, text, browse, search and shop throughout the day, wherever they happen to be. And this has major implications for loyalty marketing because it creates almost limitless opportunities to connect with customers in meaningful ways. But to successfully engage the always-on customer, marketers need stop thinking in terms of campaigns and align directly to the experience each customer wants. That means finding a way to consistently recognize the customer as an individual as she hops between channels by stitching together cross-device data and identity.

2. They Prioritize Experiences over Things

Far too often, brands confuse customer enrollment in loyalty programs with actual loyalty. According to research from Bond Brand Loyalty and Visa, only 44% of enrolled consumers are satisfied with their loyalty experience. Additionally, Forrester found 71% of digital-first consumers feel negatively toward brands when they encounter inconsistencies during their shopper journeys. Today’s consumers value experiences over things, and brands should keep this in mind at every touch point, from loyalty programs to online shopping to in-store shopping to customer service interactions. Marketers should put the customer relationship first and treat it as more important than making a sale. And above all, create individualized, meaningful interactions with customers to drive deeper engagement and bond with them on an emotional rather than transaction level.

3. They’re Predominantly Gen-Y

Millennials are quickly becoming the most significant demographic to brands and the ticket to earning their loyalty is building trust. In the U.S. alone, this generation will overtake baby boomers by 2018 and will have a spending power of $8 trillion by 2025. According to Elite Daily, millennials are more devoted than any other generation, with 50% saying they are either extremely or quite loyal to their favorite brands. This generation is picky, however, and their loyalty requires much more than transactional awards. As CrowdTwist discovered, 62% of Gen Y consumers are more loyal to brands that engage with them directly on social media, and 50% demand good customer experiences, one-of-a-kind rewards and brands with a social conscience.

A New Age for Loyalty Marketing

It’s up to five times more cost-effective to retain a customer than to acquire a new one, and that’s an economic reality that is driving brands to shift their focus toward customer retention and loyalty strategies. But customer expectations are changing and loyalty marketers must keep up with the pace. Taking advantage of a brand’s first-party engagement data is the key to taking their customer relationships to the next level.

Originally published June 29, 2016

Kathy Menis

Kathy is an expert in technology marketing, with 20 years of experience creating and leading strategic, results-driven marketing programs. She was formerly the CMO at Signal.

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