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Customer Loyalty: Past Forward

Back in the 80's when televisions were introduced to the households, the marketers made an easy entry inside our home and a new era of visually animated marketing begun. The trick was simple, "be visible be sold ". Suddenly TV took the centre stage for all the marketing and promotion. Every brand, premier or not, wanted to connect with its customers and engage them via attractive advertisements appealing to their physical or cognitive needs. Since we as customer were generally not informed about the market and its offerings, anyone who could educate us about our needs and show us an available product for it could successfully seal the deal. In short it was about educating -> engaging -> selling for a long time only till market was all levelled.


Every business is in a perpetual pursuit of "point of difference" vis-à-vis its competitors and when one succeeds; this ironically leads the whole market towards converting the "difference" into a "Point of parity". The market levels itself. So, what was next? yes, it moved away from just selling product to selling product +services. Services, which would include everything from convenience of purchasing to the convenience of purchasing everything at a single place. Yes, market moved from just product superiority to ease of availing it. This evolution brought the focus on retail outlets or in a broader sense what is known as "Customer touch point". Being a one stop shop for all the shopping needs; it used to engage the customer for a longer time in store which in turn increased the ticket size. Soon one stop shop was popular concept. Also, the conventional retailers made it sure that they provide more purchasing options. What next? Did the "difference" and "Parity" paradox follow? Just take a wild guess.

"People think of these eureka moments and my feeling is that they tend to be little things, a little realization and then a little realization built on that."
- Roger Penrose

The eureka - Can you recall the famous Indian detergent soap advertisement from late 80's in which shopkeeper provides a ready shopping basket to lady named "Deepika ji" as soon as she enters the store? It had a big hint to what was going to be the next thing in the market. Another conventional wisdom was to take the mainstream in the days to follow. The mantra was "know your customers", "know their basket" and additionally "Reward" them. Over all these years of evolution and amidst all kind of paradox one intent was common, that's nothing but "keep your customers engaged" some way or other. With the business readily embracing CRM as their front ending systems, business could collect all the customer relationship data it needed. It was now time to reward the customers for nurturing the relationship further, it was time to recognize "The Customer loyalty".

The cycle - loyalty programs were adopted and pioneered by many businesses leaders. Soon "points for purchase" was synonymous to the loyalty program. Customers were divided into reward "tiers" based on which their rewards were decided. This made customer delighted after purchase to such an extent that they would not stay back from spreading word of mouth. Result!!! More sales. Customer started to knot themselves to single seller to earn more points which he/she can redeem in later purchases. Outlets offering loyalty could easily differentiate themselves amongst the competitors who did not. This resulted in higher repeat purchase rate, more footfall, bigger ticket size, WOM publicity, also a strong control over the customer behavior therefore a higher percentage share of mind, pocket, wallet and what not. It was all going good till the prodigal partner of good times returned. It was the same old paradox and market were levelled.

"Our dilemma is that we hate change and love it at the same time; what we really want is for things to remain the same but get better."
- Sydney J. Harris

The dilemma - Today, we have come a long way from copper cables to DTH, dial-in to wi-fi and Tv to social media. A lot has changed not only in the ways products and services are sold but also the way customers buy things. The question is "have the loyalty programs changed?" Just when the loyalty programs were doing good, new dilemma struck the customers. With competitors copying the loyalty program, now every other outlet has a loyalty reward to offer. Also, the point redemption benefits are perceived not enough by the customers. On the seller's side, they are already being pressed heavily on margins due to competition, additionally the conventional loyalty reward takes another pie from its profit. Both above factors decrease value of loyalty activities for a business. While the reasons can be debated upon, it is for sure that customer would not exchange their loyalty Just for a few points or any kind of vouchers which they would never possibly redeem. Over the period, conventional loyalty programs if not refreshed might become just a "me too" attribute of retailer's value proposition.

The pug-mark - Thanks to rapid advancements in information technology, selling and buying has become much more convenient, transparent and quicker. Be it for buying something or tracking orders or getting queries resolved, customers can now interact with business 24*7 using mobile apps. The customer now faces no tangible risk of switching between the sellers (read loyalty). With every seller selling at almost same price, the products have almost become commodities and there is a lost differentiation between the sellers. Customer today need a smooth experience in its transactions with seller at every touch point. Also Growing inclination of customer towards social media and ocean of information available over internet, the buyer today is more informed, expressive and wants to create his/her own brand based on the choices made, places visited and of course the endorsements made in the social circle online or in person. Other than the conventional tangible befits like price, discounts, location customer would stick with a brand or seller only if it compliments his/her own brand that he/she has perceived in mind. Customer wants to feel more "belonging" in every engagement. Wait a minute, isn't it a clue for future of customer loyalty? Yes, it was always about that.

The union - Using IT solutions, sellers across the world are optimizing their processes and are greatly focusing on creating an impressive, smooth and consistent "Customer experience" across all the customer touch points. While a great deal of effort is invested to bring every customer facing channel in harmony, it is also important to integrate loyalty with the mainstream CRM system like marketing, sales, service, and not just ordering. Most importantly, using analytics; customer insights can be drawn which can be used for creating tailor made loyalty rewards. Without it the loyalty systems would be nothing but an expensive gadget and cost center to the business. Having said that, is there any new benefit other than points and discount vouchers that we can reward our loyal customer with? What if we integrated all the above systems but still award same points or vouchers, would this make any difference? Well then let's turn our focus inwards, understand what value do we provide to our customers and then give it a creative thought.

"Keep on the lookout for novel ideas that others have used successfully. Your idea has to be original only in its adaptation to the problem you're working on."
- Thomas A. Edison

The perpetual pursuit - While points/voucher/gifts are the known tangible reward options, let's think of playing loyalty game in the intangible spectrum. Let's bring a meaningful context to the reward which could strengthen the customer engagement with the brand. Thanks to the advancements in CRM and its capabilities to integrate with social media, online portal, analytics and web apps, brands can now gather not just personal data but also data about behavioral (beyond buying patterns), lifestyle and preferences. Using all the data and analytics; loyalty can do wonders. For example, how about using analytics on past purchase of a customer, coming up with a ready to checkout basket of products (remember the "Deepika ji advertisement?) and of course rewarding based on the purchase? How about informing a customer about new products available in the store based on his/her lifestyle (which can be determined via analytics and purchasing behavior)? How about rewarding a loyal customer for solving a query of another customer on social media? How about gamification of the customer interaction using chat boats, giving weekly or monthly missions, displaying the rank charts on social media and awarding  local or global winners? Not too far fetched though, but how about consolidating loyalty programs, creating a shared ledger of loyalty rewards (yes, I am referring to block-chain) and building whole shopping universe in coalition with meaningful partners in a complementary business (e.g. lifestyle product based alliances) so that customer can earn and redeem meaningful rewards at any outlet amongst this universe? The more we provide avenues to redeem rewards the more customer is willing to collect the rewards. Arguably, we might be able to reduce loyalty reward costs if the context is impactful. We can be as creative as we like, but the central idea now and onward should be to move beyond just "transnational loyalty" and try and build an "emotional loyalty" with the customer. Let's try to tap our "Share of emotion".

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