Earning and maintaining customer loyalty has been a top priority for businesses since the beginning of time because loyalty marketing just makes financial sense. According to research from BIA/Kelsey and Manta, existing customers spend two-thirds more and cost 10 times less than new customers. Additionally, a five percent increase in customer retention can lead to a 25% to 100% increase in profit for the company.
However, brands today operate in a digital-first world of empowered consumers. Customers constantly hop between smartphones, tablets, laptops and stores to get what they want. This means the marketer’s entire approach to loyalty has to evolve as quickly as their customers are moving between channels, devices and brands.
The only option for brands today is to keep up or be left behind by consumers who have moved on to competitors that offer them the type of relevant, meaningful experiences they crave. So what are organizations doing wrong in the digital age? Here are six ways to lose a customer’s loyalty.
6 Customer Retention & Loyalty Marketing Mistakes
1. Confuse Loyalty with Loyalty Programs
Make no mistake: Customer enrollment in a brand’s loyalty program is not an indicator of actual loyalty. Even though 83% of consumers participate in a loyalty program, eMarketer found 44% of people say there is a lack of reward relevance, flexibility and value, and 33% are irked by the absence of a seamless multichannel experience. Traditional loyalty programs offer transactions rather than experiences. To earn consumers’ dedication, improving the customer experience has to remain top-of-mind. According to Forrester, 71% of digital-first consumers feel negatively toward brands when they encounter inconsistent experiences, and almost 10% say these inconsistencies will make them stop interacting with a brand altogether.
2. Inundate them with Generic or Irrelevant Messaging
Shopping experiences can make or break a customer’s devotion to a brand, but marketing plays a role, too. According to VentureBeat, 47% of U.S. and 44% of U.K consumers ignored future communications from companies that sent them irrelevant information or product recommendations. Additionally, Yahoo! found advertisers that personalize their ads based on the consumer’s past purchases see a 50% lift in overall favorability and a 39% lift in purchase intent. Rather than following shoppers around the Web with ads for items they’ve already purchased and clogging their inboxes with emails that are neither relevant nor timely, brands should focus more on addressability and personalization.
3. Make the Consumer’s Life Harder
Brands today are operating in the Age of the Experience. This in mind, another way to lose customer loyalty is to offer shopping experiences that are clunky, fragmented and inconvenient. As data from Accenture pointed out, 49% of consumers believe the best thing retailers can do to improve the shopping experience is to better integrate in-store, online and mobile shopping channels. Brands should work tirelessly to remove friction from the cross-channel shopping experience at every touch point: browsing, buying, returning items and engaging with customer service. And speaking of customer service, how brands address their shoppers’ needs can either bolster or destroy devotion: Parature found that 97% of global consumers say that customer service is very important or somewhat important in their choice of and loyalty to a brand.
4. Fail to Recognize Them
So how can brands provide meaningful experiences, relevant messaging and excellent cross-channel customer service? The answer is to recognize the customer. In a small, local brick-and-mortar store, associates have the opportunity to get to know their customers on one-to-one basis. But this is a significant challenge in today’s always-on environment, where consumers interact with large brands across multiple digital properties, devices and channels. That’s why, in the Age of Experience, marketers are increasingly deploying data and identity management solutions to ensure continuous customer recognition and provide personalized experiences.
5. Make them Wait
Consumers don’t just want their experiences with brands to be memorable, they want them to be instantaneous. On the one hand, this means brands have to instantly recognize customers across devices and channels and be ready to activate live behavior data. On the other, their loyalty programs should offer instant reward and value that is immediately recognizable. As eMarketer’s data revealed, redemption rates for real-time rewards can run as high as 70% to 80%, a figure that is dramatically lowered when customers are offered rewards in a follow-up email two hours later. The reality is, though, that many brands still make their customers wrack up points over an extended period of time before they see any real value from enrollment, which is counterproductive to reward program objectives.
6. Ignore their Values
Finally, brands that don’t connect with their customers’ values are doing the opposite of earning loyalty. Research from Gallup revealed that when consumers are aligned with a brand, they give it twice as much share of wallet as those who are not aligned with that same brand. Consider Whole Foods, for example. By understanding its target audience and adopting strong business values surrounding sustainability and ethical practices, the retailer has been able to cultivate a following of devoted shoppers. In the digital age, consumers’ voices and opinions are amplified, and they want to know what brands stand for.
The Path to Loyalty is People-Based Marketing
Earning and maintaining customer loyalty in the digital age requires an entirely new approach to marketing and customer relationships. People-based marketing enables brands to use their first-party customer data to actually recognize their consumers and create more engaging, relevant experiences across channels and devices.
If marketing were a ship, brand loyalty would be the captain and this is a reality brands have to continuously address as consumer expectations keep rising. Customers aren’t willing to give brands their allegiance simply because they offer seemingly catchy rewards programs that fail to deliver actual value. Instead, shoppers hold brands accountable for the experiences they provide, and one-to-one marketing is the best approach for delivering the types of experiences consumers will remember and want to come back to.