In my prior life, I spent a good deal of time speaking and writing about customer loyalty and engagement, and how marketers needed to adapt to support customers’ changing needs.
Marketers have traditionally viewed customers in groups – segments – who exhibit common purchasing, engagement, or other behaviors. But with the increase in data companies can gather about their customers, together with the wealth of interaction data customers generate almost constantly, marketing stakes are higher today than ever before. Traditional segments are now too wide.
I regularly spoke about individualization – the practice of observing customers’ behavior, interactions, and needs, and delivering an experience relevant to a segment of one. I thought today would be fitting to share some of my thoughts on this subject with this audience of IT pros, many of whom help marketers and the businesses they support, address the challenges of the Age of the Customer. Though I would typically write for marketers regarding their customers in the B2C sense, IT pros perhaps understand these experience expectations even better than their marketing peers, complete with quick complaints and rare compliments.
If you don’t like change, you’re going to like irrelevance even less.
- General Eric Shinseki, U.S. Army, Ret., Former Secretary Veterans Affairs
Customers are evolving, as is the technology they rely on, meaning marketers have to adjust their sails and navigate the winds of change. These changes provide us with the opportunity to transform our businesses for the better, provided that we embrace it. As General Shinseki alluded to in his quote above, you become rigid at your own peril.
What’s at the heart of all this change? Technology. The ever-increasing velocity of digital technology has accelerated what Forrester calls “The Age of the Customer.” We know how easy it is to pull out a smartphone or tablet and find out virtually anything – and that’s exactly what today’s consumer does. They can research and buy whatever they need – whether a product, service, or experience – with just a click, wielding tremendous, instantaneous control.
Of course, for marketers, this customer-driven dynamic can be maddening! Speed and control have transformed buying behaviors – customers expect to access what they want, when they want it, wherever they are... instantly. When they can’t find exactly what they want, they move on with just a click. That leaves little room for error, and no room for irrelevance.
In addition, the velocity of digital technology has created a cacophony of marketing noise and color, an onslaught of marketing madness competing to be noticed. As a result, details often get missed, and many marketers settle for “close enough.” But “close enough” means profiling audiences instead of building relationships with individuals.
Customers are flooded by marketing – it’s like living in Times Square 24/7. It’s a spectacle to behold, but it’s impossible to have a meaningful conversation in that environment. This intense availability of options makes it incredibly easy for a customer to try something new – especially when the cost to switch is practically non-existent. Without relevance, relationships are short, and attention wanders.
In spite of the noise in the market, customers are creating relationships with brands to get more value from the business they provide – COLLOQUY has seen loyalty program memberships more than triple over the past 15 years. That’s because customers are willing to create relationships with brands – if those relationships deliver value. And that value can flow both ways.
Rich insights come from a relationship where the customer receives a true value for the information they share – and that, in turn, empowers brands to improve profitability and increase engagement with their highest-value customers.
In fact, small shifts in loyal customer behavior drive huge rewards. Bain & Company has found that increasing customer retention by 5% increases profits by 25-95%. That’s why loyalty remains a powerful strategy for companies seeking a deeper understanding of their best customers and improved ability to retain, grow, and acquire more high-value customers.
So, if loyal customer behavior offers such tremendous advantages, why are so many companies struggling with their loyalty programs? According to COLLOQUY, it’s because even though overall membership shows growth, loyalty program engagement has decelerated. For example, while the average U.S. household holds memberships in 29 loyalty programs, that same household is only active in 12.
As consumers, we establish relationships with brands to get something of value from the exchange. But when that value exchange doesn’t meet our needs, we split our share of wallet with another brand. Because let’s face it – customers aren’t interested in a company’s org charts and system integrations. When individual understanding is left out of their experience, customers feel betrayed. Their brand loyalty is ignored.
And all too often, they move on.
For decades, many brands have built a wall between their loyalty and engagement initiatives and the entirety of their customer experience, and that’s what’s driving the decelerating engagement. COLLOQUY advises marketers to leverage loyalty learnings across the organization, and ramp up integration of all channels to improve relevance and increase engagement with members. Rosetta Consulting’s 2014 Customer Engagement Survey finds that customers switch platforms up to 27 times an hour, yet they demand relevance and coherence in every interaction with the brand.
Yet, Forrester found that only 34% of loyalty marketers feel their internal systems (such as their loyalty and campaign management platforms) are integrated enough to leverage the insights they need to connect with customers. Forrester says “marketers need to step up their technology execution and analytical prowess to act on the useful customer insights they create.” Without doing so, marketers neglect to recognize their most valued customers wherever and whenever they engage with the brand.
As Fara Howard, global VP of Marketing for Vans, said at the 2015 Gartner Digital Marketing Conference, when marketers fail to use the insights they’ve gained, the customer is left in the cold, saying, “I love you, and you don’t even know my name.”
I love you, and you don’t even know my name.
- Fara Howard, VP of Global Marketing for Vans
Now, organizations are racing to connect digital touchpoints in a loosely woven fabric of point solutions, and they’re attempting to collect – but not always integrate – information through every channel. But that often leaves loyalty and engagement siloed off to the side.
Steve Dennis of Sageberry Consulting described it this way: “The battle between what your customer wants, needs and expects, and that which your various silo chieftains and defenders of the status quo try to hold onto, is intensifying.”
For Emily Collins of Forrester, the relationships companies have with their customers and the loyalty they demonstrate to those companies trump traditional competitive advantages. Loyalty is mission critical, she says.
In too many cases, the recognition we enjoy as loyalty members is disconnected from our experience elsewhere with the brand. We expect that a brand with whom we have a relationship should know us and recognize us everywhere we go – we’re part of the tribe. And yet, when we’re treated like strangers instead of family? It’s damaging to say the least, and regularly ends the relationship.
The speed at which always-on customers move today, the breadth of options available to them, and the constant hail of marketing messages they’re pelted with all work to erode the customer relationship – and can keep it from even getting started. Without properly onboarding new customer relationships, or bolstering the one-to-one connection with high-value customers, those relationships wither away, if they ever take hold in the first place. It sends you scrambling to find more customers to fill the gap, requiring 6-7x more resources to acquire new customers to replace existing customers.
But it doesn’t have to be that way.
Futurist Jason Silva, host of NatGeo’s Brain Games, sees the vast oceans of data our customers generate as an opportunity for brands to connect with empowered individuals in a more meaningful way. “We move into a world of engineered serendipity,” he says.
We move into a world of engineered serendipity.
- Jason Silva
The word “serendipity” means a “pleasant surprise.” When brands create relationships that please the individual by consistently delivering convenience, unique rewards, engaging moments, and a true value exchange for the information they share – it may be a surprise for the customer, but it’s the product of considerable engineering by the marketer.
By unifying a brand’s disparate understandings of individual customers, they can clearly see the highest-value among them, those that have high potential, and get a better view of where they should be focusing acquisition efforts in the future. Then, by leveraging those insights through an integrated technology platform – they can engage your best of the best, surprise and delight them, and deliver value worthy of both the business they give the brand and the information they share.
That’s exactly the opportunity businesses have today. They can create an experience that captures the moment with the customer and holds them rapt, and experience that makes them deeply loyal and incredibly engaged with the brand.
Every new insight creates the chance for companies to engineer a little serendipity, by connecting in right-time relevant ways, by surprising and delighting their customers, and by rewarding their relationship and engagement with the brand through an experience that keeps them coming back. Because engagement that cuts through the noise and truly connects with the customer as an individual, is the new loyalty.
There are as many tools in the loyalty toolbox as there are brands looking to use them. Creating the right experience for your customers is about listening to the information they provide – and answering with the most relevant approach for their needs. Relevance is what cuts through the clutter, connects with the individual, and keeps them from clicking away. Intimate relevance – driven by individualized insights – elevates the loyalty programs of the past to the engagement of the future. Because it’s all about the individual. Individualized engagement – fully-integrated into your enterprise and your customer experience – enables brands to use deep insights to connect in a vibrantly relevant way, and deepen engagement with individuals in a more rewarding manner – ultimately driving customer loyalty.
By centralizing the customer view to include the traditional behavioral data together with emotional insights, marketers crystallize their understanding of who their best customers are, what they need and want from their brands. They shift from just addressing audience segments to co-creating value exchanges with individual customers. And that experience touches every point of interaction with the customer – online, offline, wherever she is and whenever she is ready to interact.
This two-way exchange establishes more lasting relationships, fuels engagement, and allows marketers not only to increase their share of wallet, but as Hal Brierley, founder of Brierley+Partners, says, grow “share of mind’ with their customers. Make no mistake. This ain’t your grandma’s loyalty program.
Borne out of a desire to remove friction and deliver a more magical Disney experience, the MagicBand is the key to providing a superior experience. RFID-enabled bands are individualized to each guest, and remove the need for paper tickets, FastPass+, and even your wallet. And it allows Disney to track your visit through its parks.
Imagine the look on your little princess’ face when Anna and Elsa greet her by name – and even know that she saw Mickey and Minnie at breakfast. Describing this individualized experience, Disney COO Tom Staggs quotes Arthur C. Clarke: “Any sufficiently advanced technology is indistinguishable from magic.”
By reducing even the friction of choice – what lines to wait in, where to hunt down Disney characters, even deciding what to eat – visitors free themselves up to experience more of the park – so they do more, create more memories, and ultimately, spend more. It’s this magic that shows how well brands can create opportunities for customers to clamor to share their information. As Cliff Kuang of WIRED wrote in his article about MagicBands, “No matter how often we say we’re creeped out by technology, we tend to acclimate quickly if it delivers what we want before we want it.”
No matter how often we say we’re creeped out by technology, we tend to acclimate quickly if it delivers what we want before we want it.
- Cliff Kuang, WIRED
Today’s loyalty members are leaving the plastic far behind, instead carrying their memberships with them via smartphone. The 2015 Bond Brand Loyalty Report called mobile the “strategic high ground in loyalty.” Combining communication, unique ID, and a payment vehicle, it adds utility to marketing by providing the customer with a link between online and the real world.
This trend prompted Starbucks to transition all of its Starbucks Rewards members from plastic cards to the Starbucks mobile app in 2016. After all, we’ve all stood in line at Starbucks, and as we waited, what did we have in our hands? Certainly a more reliable way of tracking payments than a gift card you might leave out of your wallet. In fact, Starbucks mobile app transactions accounted for 16% of total revenue, with 7 million transactions tracked per week, across the 13 million active app users – and over 9 million active My Starbucks Rewards members in 2015. By engaging loyal customers through mobile, Starbucks has embraced the digital experience as much as they have focused on the in-store “third place” experience. This clear, cohesive focus on their customer’s experience across all channels shows what loyalty can achieve when it is embedded throughout the connected experience.
If we think about the tens, hundreds of times per day we interact with different brands, the opportunity for any of them to resonate in a meaningful way is slight. The apps we interact with obsessively for a few weeks [remember Angry Birds? Words With Friends? Candy Crush?], the websites we visit, the emails we receive that go unread – we waste interactions without reservation. And yet, consumers are embracing entirely new channels through which we can connect with them.
The Apple Watch – and other connected wearables like it – provide a unique opportunity to individualize relevance in a truly intimate way. Gathering data and providing valuable information as American Airlines and its AAdvantage program is doing through its Watch app version – enables brands to connect directly with known individuals, with a right-time relevant value exchange so imperative to how we go about their day that a competing brand never has a chance to disrupt the relationship. Loyalty and engagement are changing – as all of marketing is. But though the mechanics are evolving, the power remains.
Building a relationship with a brand’s best customers provides proven results. Engaging customers to propel them forward outpaces acquisition every day of the week. Understanding customers more deeply as individuals empowers companies to create a differentiated customer experience that keeps their best customers coming back. By embracing real customer obsession, unifying loyalty and engagement and infusing it throughout the customer experience, brands communicate clearly the value they offer their customers, and give them a real reason to connect and engage with a company – and be loyal now, and in the future.
I believe in the power of the individual – and in rising above mere mass personalization to connect with the customer through a truly individualized experience. Loyalty has always been about engaging the individual – and this next evolution in individualized loyalty and engagement will enable marketers to harness that power to retain and grow their most profitable customers.
Rather than being classified into a segment, each customer should be seen as a “segment of one.”
- Jeff Berry, former COLLOQUY Research Director, now Senior Director, LoyaltyOne Global Solutions
The days of grouping customers as “close enough” profiled segments are over. The future of marketing is all about engaging the loyalty of a segment of one.
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