Driving Customer Loyalty

DRIVING CUSTOMER LOYALTY “Six Myths”

Though companies consider customer loyalty crucial to their marketing plans, they often focus on low-value measures that do not provide significant competitive advantage. Reality Facts Action Steps

Source: HT MINT

1. A satisfied customer is a loyal customer Most companies use the terms customer loyalty and satisfaction interchangeably. In reality, satisfaction is not the same as loyalty and focusing on drivers of satisfaction can be misleading for your loyalty plans Satisfied customers often switch when competitive offers emerge or switching costs decrease. Not surprising, given that satisfaction and loyalty show very little correlation.

First understand the drivers of loyalty, which could be very different from drivers of satisfaction. Loyalty is an attitude that leads a customer to consistently repurchase, increase spending and recommend your brand.

SATISFACTION VERSUS LOYALTY H

L

H Source : Marketing leadership council loyalty survey

2.Loyalty efforts help you retain business, not acquire new business Loyalty efforts can support revenue growth through their impact on portfolio penetration, new product adoption and share of wallet growth. This requires marketers to go beyond their preferred approach of merely eliminating issues that cause customer dissatisfaction. Nearly three-fourths of customer experience investments are skewed towards eliminating customer dissatisfiers as these are easier to identify, justify expense and act on. To leverage loyalty efforts for growth, you need to shift focus to increasing loyalty (and not just reducing disloyalty) by creating moments of delight in customer experience and working with the objective of increasing the likelihood of preference (instead of merely reducing rejecters).

Source : Marketing leadership council loyalty survey

3.Loyalty efforts should focus on the attributes that customers say are most important Customers usually consider the functional attributes of a product more important, but emotional attributes are much more important in driving loyalty. The ability of a brand to differentiate itself on emotional attributes can lead to a 60% greater impact on loyalty. High-loyalty brands deliberately over-invest in emotional attributes. To achieve emotional differentiation, high-loyalty brands identify those emotional attributes—"shared values"—they can own.

ACT OF FUNCTIONAL AND EMOTIONAL DIFFERENTIAT

Source : Marketing leadership council loyalty survey

4. Enrolling a customer in a loyalty programme will result in loyalty Improvements in loyalty from loyalty programmes are fleeting unless programmes can be made exclusive Marketeers can expect to see a 6% positive boost in loyalty from programme membership. However, the positive effects wear off as consumers join competitive programmes Rather than focus on programme penetration, lean towards programme exclusivity. Concentrate on acquiring category entrants and stealing—not sharing—programme members

IMPACT ON LOYALTY

Source : Marketing leadership council loyalty survey

5. Developing personal relationships with customers is the best way for sales to drive loyalty The true potential of sales interactions is in leading the customer to learn something new, as this has the greatest impact on customer loyalty. The traditional role of sales representatives—developing deeper relationships with customers and responding well to their requests—actually has very little impact on developing loyalty. These attributes contribute to just about 1% impact on loyalty. Teaching customers about the category has significantly higher impact (nearly 8% impact on loyalty). Do not underestimate the power of the sales interaction to drive customer loyalty. Equip your sales representative to teach customers and not just serve or sell to them.

Loyalty impact from different sales attributes

Source : Marketing leadership council loyalty survey

6. Employees who don’t face customers cannot affect customer loyalty Marketing usually sees itself as the sole guardian of loyalty initiatives and thus rarely involves other line functions in loyalty programmes. Involving other functions can not only drive loyalty, but also result in other benefits Empowering employees who don’t face customers not only improved loyalty scores but also enhanced employee satisfaction scores by 14 percentage points for a leading company. Marketers should view their role as “facilitators” of customer loyalty activities in the organization and equip colleagues from other functions to contribute to the process. Systematic customer immersion programmes that enable staff to gain first-hand knowledge of a customer’s experience can sensitize employees who don’t face customers to the impact on customer loyalty, enabling improvements in previously undervalued internal processes.

EMPLOYEE SATISFACTION SURVEY

Do you believe you are empowered to satisfy the customer?

Are you executing this to your satisfaction?

Source : Marketing leadership council loyalty survey