Blending art and science: Personalized omnichannel marketing
Driving true customer loyalty isn't easy these days, even for the savviest marketers. Get strategies for delivering personalized CX that boosts loyalty and the bottom line.
With inflation rising and fears of a recession, 2023 has put customer loyalty to the test. In fact, as disposable incomes continue to take a hit and the cost of everyday living increases, consumers are increasingly inclined to abandon past ties in pursuit of the best deals.
According to Emarsys research, the 25% of Americans have switched from a favorite brand due to inflation, while (18%) believe that they can “no longer afford to be loyal.”
For marketers at leading brands like Puma, Gibson Brands and Reformation, there’s obvious motivation to put loyalty at the heart of campaigns – but it means far more than offering discounts to price-conscious consumers.
In reality, incentivized loyalty is only one cog in the purchasing machine. Brands aspiring to have truly loyal customers need to consider each of the various types of customer loyalty, all which impact how people engage with your brand.
Raise a glass!
What: Power to the Marketer
When: Always-on
Where: Everywhere – click HERE.
5 types of customer loyalty
The SAP Emarsys 2023 Customer Loyalty Index examines the motivations of more than 10,000 shoppers worldwide. This is the third year we’ve conducted research into the types of customer loyalty and how they’re changing:
- Incentivized loyalty based upon rewards, discounts, and other incentives
- Inherited loyalty built on a brand’s heritage
- Silent loyalty when consumers keep quiet about their purchases
- Ethical loyalty when a consumer identifies with a company’s values
- True loyalty based on genuine love and trust in a brand
Let’s look at each type of loyalty in turn, and see how brands can approach them as we head into 2024.
The diminishing power of customer loyalty rewards
Perhaps the easiest type of loyalty to quantify, incentivized loyalty is based on rewards. Emarsys research found that almost half (44%) of consumers surveyed only stay loyal to brands due to regular discounts, points, or incentives.
But while discounts are compelling, they’re also temporary. Loyalty based on offering the lowest price can only last until another brand goes lower, with customers that prioritize price bouncing from retailer to retailer in pursuit of the best possible deal.
Furthermore, the index suggests that the power of incentives to drive loyalty has fallen drastically in the US, from 76% in 2022 to just 49% in 2023. Despite financial pressures, discounts and incentives are a less effective motivator than before!
Still, incentivized loyalty offers a window of opportunity. When customers buy your product, they’re introduced to the qualities of your brand, and you have a chance to impress. This is where personalization plays a crucial role.
Tailored deals and offerings for each customer, combined with a fluid customer experience that builds upon that initial engagement, offer the best possible chance to keep incentive-driven customers for the long term and convert them into brand advocates.
A reliable type of customer loyalty
Inherited loyalty has remained a steady driver of customer loyalty in the US, with 27% of consumers in both the 2022 and 2023 Emarsys surveys citing a brand’s longstanding reputation as the reason for their loyalty.
This type of customer loyalty gives retailers that sell products from multiple brands a fantastic opportunity. Department stores are a familiar example, associating themselves with popular brands and effectively piggybacking on existing brand loyalty earned through the product and reputation of the brand in question.
With the right data fueling a campaign that builds upon the strengths of that brand, a retailer can remain as the “go-to” seller of a customers’ favorite brands despite heightened competition or economic conditions.
In doing so, they associate themselves with the strengths of the brands that work with them – and can benefit from that message in every channel they use.
When loyal customers keep a low profile
While some consumers are vocal about their favorite brands, others are more discreet. Silent loyalty is widespread; a majority of US shoppers (53%) are loyal to a brand that they wouldn’t want to openly promote.
This presents an interesting challenge to brands in 2024. Silently loyal customers are welcome if a brand doesn’t want to draw attention to itself, but for those looking to grow their customer base, the challenge is to convert quiet supporters into vocal advocates.
The answer is personalized experiences while engaging in a way that respects customer privacy and preferences. If you can meet the needs of a customer without their vocal engagement in your brand, you’re more likely to impress them and make them feel recognized as an individual – and more compelled to support your brand in return.
Customer loyalty programs: How brands can create a virtuous circle
What makes customer loyalty programs succeed? Create experiences that customers love by speaking to their heart, soul, and head.
Loyalty based on brand values is on the rise
Almost a third (32%) of US shoppers are loyal to a brand because of a strong emotional connection and shared values, up from 29% in 2022.
While there are some risks to this type of loyalty from a commercial standpoint, as moral debates can polarize consumers, brands can’t afford to abandon their values and disregard things like corporate social responsibility (CSR). They must be able to “walk the talk”; piety isn’t enough.
That means that even the most ethical brands must still invest in intelligent, personalized, and data-driven loyalty campaigns to ensure customer retention. With a news agenda that changes so rapidly and with so much noise to cut through on channels like social media, brands have to be able to hone in on digital signals that paint a picture of consumers’ values, and then engage in a tasteful and measured way.
You really like me: True loyalty
Thirty-nine percent of consumers attest to genuinely “loving” their favorite brands, claiming that they would never switch or shop around. This is true loyalty: 37% of shoppers surveyed expressed true loyalty in 2022, dipping only slightly from 39% in 2021.
True loyalty is what all marketers aspire to — it keeps customers coming back throughout the year and requires little maintenance. It also goes a long way towards reducing costs, especially for brands keen to prioritize retention given the much higher cost of acquisition in the current cost-of-living crisis.
While true loyalty isn’t easy to achieve or measure, brands that succeed will get a real return on investment. In fact, almost one in five consumers (18%) claim they would never switch from their favorite brands, even if cheaper alternatives came along.
It’s possible to foster such loyalty with regular sales, but it also requires a year-round omnichannel marketing approach. Recent research from Forrester found 62% of marketers say their company’s omnichannel strategy has yielded higher margins for them.
The future of customer loyalty
As we look ahead to 2024, there are so many factors that contribute to the creation of authentic loyalty. Most will have several competing motivations that can change over time, which makes getting to know your customers on a 1:1 level incredibly important.
A 360-degree understanding of a customer, fueled by data, allows you to personalize product recommendations and provide the service they expect. Brands need to be able to convince shoppers to share that data if they’re going to convert them into true loyalists long-term.
Once you have that data, you need AI to be able to apply and scale the insights to meet or predict consumers expectations. But according to recent SAP Emarsys research, almost a quarter of consumers think that AI provides a negative retail experience. At the same time, 66% say they’re more likely to shop with brands that offer personalization. In other words, consumers can be reluctant to share personal data without understanding what AI can actually deliver.
A priority for 2024, then, is establishing what we call a “value exchange”: an experience that customers benefit from to such an extent that they’re happy to share their data.
That means using every touchpoint to build genuine bonds with shoppers by delivering consistent, personalized experiences throughout the sales and customer service journeys.
By taking customer-centricity to the point of customer obsession, brands drive true loyalty. While discounts and incentives can open the door or start a conversation, it’s the total prioritization of the customer that inspires brand advocates for the long term.
