Customer Loyalty Study Delivers Surprising Results
Recently, Kobie conducted a 2022 Consumer Loyalty Research study to better understand consumer preferences around loyalty post-Covid. In an interview with Mark Johnson, CEO of Loyalty360, Dave Andreadakis, Kobie’s Chief Innovation Officer, discussed key findings from the study.
There were three main drivers of the study:
- Validate the areas where the team had already seen success
- Demonstrate proof points to clients on what drives customer loyalty (i.e., transactional vs. experiential rewards, etc.)
- Learn directly from customers what they are looking for in a loyalty program after Covid
The organization knew that consumer behavior had changed dramatically in the two years since the pandemic emerged. The old models were not working anymore, and they needed to take a fresh look from the consumers’ perspective.
More than anything, Kobie was searching for validation. The team had generated several hypotheses they anticipated proving; however, the results were surprising. These surprises fit into four categories:
What Customers Want
How customers want to be rewarded depends on their relationship with the brand. Habit-driven customers with a low emotional connection to a brand tend to prefer transactional rewards: earn points for taking a quiz, making a purchase, etc. Customers with a stronger emotional connection to a brand prefer non-tangible rewards: priority access, status, etc. These rewards bring a consumer closer to the brand and continue to build on the relationship.
What Value Means to Customers
Through the study, the Kobie team developed a new understanding of what value means to the customer. The initial thought was a value exchange: a customer would perform an action to receive a reward, and it was up to the brand to provide the desired reward. Most brands focused solely on the reward appealing to customers.
According to Kobie’s findings, there are three determinants that must be executed properly to achieve customer value. To recognize the entire customer value, brands must have a (1) desired reward (2) desired experience to earn the reward (3) desired loyalty options.
New Understanding of Pain and Forgiveness
Andreadakis explains, “We saw a lot of customers like you would see in an emotionally connected relationship, when something bad happened to them, they were really hurt.”
If a customer is emotionally connected to a brand, whether it is a status-driven or habit-driven emotional connection, and the brand does something bad, it hurts not only the customer but the brand as well. Where it differentiated, however, was in willingness to forgive. Status-driven and habit-driven customers were much less likely to forgive a brand after a negative interaction, regardless of spend.
What customers say about a brand does not necessarily reflect their actions. The net promoter score is not always an accurate depiction of consumer behavior, especially on its own.
Keep the Inertia Going
Customer expectations have changed dramatically, and brands are looking for ways to add unique reward opportunities and personalized promotions to engage customers more actively throughout the lifecycle. Gone are the days when a brand makes one grand gesture to push consumers to the end destination. Today’s brands need to work in smaller increments to nudge their customers along touchpoints on the journey. Says Andreadakis, “Brands are tired of working hard to not get results they want.” Today’s brands are looking for smaller wins and experiential wins with individual customers at individual points in time.
A study at the University of Oregon on customer inertia encourages businesses to get their customers into a perpetual state of activity without constant contact. Working with customers in small but frequent intervals keeps the inertia going much longer than one big push at the beginning. Andreadakis uses an analogy of spinning a basketball, keeping the momentum going by making precision hits, what matters to the customer, what incentivizes them and how best to deliver. If a brand can do this, they have a customer for life.
But there is a balance between using data to add complexity in driving personalized communications and the simplicity that consumers crave. In fact, hyper-personalizing communications past a certain point can actually have less of an impact.
To make an emotional connection, brands need to be on a personal level with their customers. Using data to create personalized emails is a starting point that many brands use, but the greatest impact comes with personal interactions. This is where Kobie stresses the importance of employee engagement efforts. Proper training with frontline employees is one of the most crucial steps in creating an emotional connection with the customer. When the employee is the steward of the customer relationship, it is up to the company to give them the tools to be successful.
“It’s about creating these small moments when you are empowering employees on the front line to have wins along the way,” explains Andreadakis. “It is just as important for the employee to feel the wins as it is the customer.”
Connecting with Customers Comes from the Frontline
Today’s brands have an increased thirst for gaining an understanding of how to connect with customers on an emotional level. Having in place data-driven marketing and strong CRM technology goes a long way in providing personalized content to the customer in a way that will help build stronger loyalty. However, Andreadakis again stresses the importance of employee advocacy.
In an example, he discusses a client who was shown the results of Kobie’s emotional loyalty scoring study on what motivated their customers. The client not only brought the marketing team on board with the new process but taught all their customer-facing employees how to put the new strategy into practice.
“Every single customer-facing group was represented in the meeting so they could understand how to change their world,” says Andreadakis, “because they knew that if they couldn’t get this to action, it was just a marketing study that made them feel good about knowing their customers a little better.”
Kobie’s strategic toolkit including Emotional Loyalty Scoring®, Loyalty Drivers, and Financial Modeling is positioned to directly address what these research findings mean for your brand and drive incremental value through your loyalty program. Contact our team to learn more!