Understand Your Customers & Build True Customer Engagement
In the battle to maximise retention rates, it can be easy to default to a loyalty scheme.
It might buy you some short term sales but it won't engender any sense of true customer loyalty. And if you already have customer data then a loyalty scheme really shouldn't be required.
Instead, understand your customers - their needs, expectations and journeys - and use this understanding to build true engagement.
The difference between a loyalty programme and a scheme
A loyalty scheme is just a tactic. A sales mechanic that typically aims to increase short term sales with a value-led proposition.
A loyalty programme is a commitment to better customer experience and continuously growing customer loyalty.
Why you don’t need a loyalty scheme
There are several reasons why you don't need a loyalty scheme.
Two of the most obvious are:
- You already have customer data. A loyalty scheme is a tool to capture customer details if you don't have them and to connect the customer to a specific transaction. This is often hard for a bricks-and-mortar retailer who doesn't know exactly who is making the transaction; but in most other B2C categories (think ecommerce, insurance, healthcare, gaming), customer data is easily linked to transcation data.
- Cost. Customer loyalty schemes are notoriously expensive and difficult to measure. They are a blunt tool: available to everyone, loyalty schemes are untargeted and assume that the whole customer base has the same needs and interests.
A third and perhaps the most important reason is that a loyalty scheme doesn't meet the needs and goals of your customers, doesn't solve a particular pain point and doesn't actually build a meaningful relationship with the customer.
So How Should You Create Customer Engagement?
Build emotional loyalty
Successful loyalty programmes build a relationship with customers. Like any relationship this is a more emotional bond and should leverage five mechanics:
- Put Me In Control. Consumers want more control over their interactions with brands - the touchpoints that they want to use, the access to their information and the the content that they wish to use.
- Help Me Improve. We all want to get better at the things that are personally important to us.
- Show My Progress. We all want to see results and feel a sense of achievement. Progress shouldn't mean transactional mechanics (tiers, points) but it is a key emotional driver.
- Help Me Connect. Brands can certainly play a role in facilitating connections and interactions and engendering a sense of belonging. This is a particularly powerful emotional driver and one that, done with empathy and careful consideration, can significantly differentiate a brand.
- Help Me Make A Difference. The desire to do what we do in the service of something that is larger than ourselves.
The best loyalty programmes use all five mechanics. This may not be possible for all brands but focus on the mechanics at which you can be credible and use these as the basis of your value proposition.
Deliver At Moments of Truth
When are your customer's key moment of pain? And when are the moments of glory?
It's critical that you understand these across the customer journey and that your value proposition, using the mechanics above, delivers at them.
They won't be uniform and the same for all customers so think about the experience and expectations of differnt customer segments or personas.