Excelling at Engagement? Three Different Takes on Customer Loyalty

Feb 20, 2014

Scouring through the daily newsfeeds, it’s hard to miss the titles that include “loyalty.” The topic of experience and engagement, after all, is what we focus on at Kobie, day in, day out.  What struck me about the following three

articles is they all raise interesting questions about loyalty but each from a different angle.

1. “Fickle About Loyalty” in DMNews looks at some of the assumptions in loyalty – is loyalty different from habit, for example, and is loyalty about pricing or emotion?

2. “What Really Creates Customer Loyalty?” in CustomerThink examines an infographic about the central role customer service plays in building satisfaction and loyalty.

3. “Loyalty Programs-What Is The Point?” in The Age (an Australian daily newspaper) reports on British supermarket Waitrose rewarding its customers with a free cup of coffee on their way into the store and a free newspaper on their way out, a loyalty strategy designed to appeal to the modern consumer’s preference for instant gratification.


The common thread is that these stories all share how to achieve what is perhaps the most important goal in loyalty: engagement.Excelling at Engagement? Three Different Takes on Customer Loyalty

As loyalty marketers, we know that active U.S. loyalty program memberships have fallen 4.3% since 2010 (COLLOQUY) despite a rise in the

total number of program memberships. The reasons are many but here are a few: program clutter, little differentiation between programs and customer rewards that aren’t timely or relevant.

There’s also the challenge of seamless technology integration. Too often the data collected about customers, which can dramatically improve personalization, is siloed and housed in different data departments. The infographic I mentioned above reveals that more than a quarter of consumers complain about a bad customer experience through social media, but nearly 80% are ignored

As loyalty marketers, we also know that consumers crave genuine, personalized and experiential loyalty offerings. For example, NIKEiD allows you to personalize your brand experience through customized Nike gear. Personalization reflects a larger trend away from traditional loyalty programs where point accumulation or “buy X get Y free” offers dominate. While such programs still have merit, discounted meals at restaurants, subsidized airline tickets and free hotel stays aren’t enough to drive true loyalty anymore. This helps explain why loyalty churn rates in the airline and hotel industries remain high, because rewards have become commodities and not personal brand experiences.

Even though customer loyalty is less of a guarantee today than at any point in history, the tools are certainly there to help brands across all verticals regain what they’ve lost. It comes down to finding new ways to drive customer engagement – acquiring new members while retaining existing ones. But retention, too, is a growing challenge.

According to RSR’s benchmark report, 61% of retailers cite customer retention and loyalty as their main challenge, up from 51% in 2012. They also recognize that technology is central to reversing today’s engagement slide and creating marketing opportunities, including:

53% – more effective targeting by capturing more detailed customer preferences.

48% – greater focus on the customer experience.

44% – use of digital channels to drive in-store traffic.

While data privacy must be preserved and customer information must be used in an appropriate manner, that granular, personalized data can be the key that unlocks a variety of customer needs and preferences, helping providers better target offers to each customer on a personal level.

Ultimately, what we learn from these three articles is that true loyalty and engagement is about basic marketing values – customer service, customization, personality, rewards, etc. But the technology that powers loyalty programs goes a long way to achieving these values, whether that is through an online platform like NIKEiD or through simple experiences such as Waitrose’s cup of coffee, newspaper and a smile.