Think that every sale is equally valuable? Think again. Customers who return for second, third and subsequent purchases offer more value. And at 5% to 25% lower cost. So, what's the key to creating loyalty? Develop a Unique Emotional Proposition that speaks to your customers personally.
Romain Colomer, Creative Consultant at Mirabeau, explains what loyalty looks like. "There's a common misconception that 'loyalty' simply means a points or rewards program, but that is just one of many tools that can impact customer loyalty. It's about being front-of-mind for customers from an experience point of view. Delving into customers' motivations and designing a customer experience around them by increasing perceived value, emotional connection and ease of use are the things needed to inspire real loyalty."
But, is digging into customer motivations and emotional triggers really worth it? You bet. Louie Mathew, Digital Strategy Consultant at Cognizant, says there is a clear link between personal connection and revenue. "Our experience shows that if retailers can get 50% of their customers to share even a little personal data, the revenue from that cohort can be 20% higher through personalized offerings. And some studies show it can be even higher," he says. "Plus, loyalty is channel agnostic. Whatever channel connects with customers - web shop, brick-and-mortar-store, mobile app, kiosk - if there is a seamlessly orchestrated personal experience, customers will be loyal."
Romain and Louie walk us through the steps needed to secure a place in customers' hearts and minds.
Tip 1: Develop your UEP
A Unique Emotional Proposition (UEP) is the way a company differentiates on the way it connects emotionally to its customers. And it can be more powerful than any USP. "Developing loyalty means creating a value exchange, rather than dependency. Trust, ease and value are the new loyalty, and should be the basis of a valuable relationship with customers," Romain explains. "And creating the desired emotion can change the way customers feel about your product overall."
This starts with self-reflection. What do you stand for as a brand, and how can you design the customer experience around those principles? Adding data analytics, market research and customer feedback can help you fine-tune the details of your UEP, and discover gaps in the market where your brand can score big. Romain: "the Harvard Business Review says that emotionally connected customers are more than twice as valuable as highly satisfied customers, so finding the key to customers' wants, needs and motivators can be crucial."
Tip 2: Make loyalty a priority
Spending lots of time, money and energy developing your company's biggest and most complicated digital solutions? You may be missing some huge opportunities for quick wins. "Companies involved in transforming major components of their digital business model sometimes have to wait a year or more to see the fruits of their hard work," Louie explains. "But in our experience, a focus on loyalty can show an impact on KPIs in as little as three or four months. The measurable and quantified results of dedicated loyalty efforts can be essential proof points to show that the digital transformation is working. This offers concrete evidence to support the continuous cycle of investment in digital - something digital teams sometimes have trouble justifying to results-driven boards of directors."
Tip 3: Track and trace your techOnce you've established your UEP and prioritized your loyalty efforts, you can begin to apply technology to further build loyalty. Every interaction retailers have with their customers is an opportunity to create loyal customers. "A key thing to consider is the rise of A-commerce (Artificial Intelligence), now that we're seeing shoppers outsource their retail experiences to tools that automate search, comparison, payment and repurchasing. Brands must consider the ramifications this has on customer relationships, and optimize their offering for this shift," Romain advises. "And remember the days when standard demographics were the only tool we had to identify our customers? The lines are too blurred now for demographics. AI can help shift consumer behavior and create segments and experiences of one - the ultimate in personal brand connections at scale."
"Retailers shouldn't forget the next, up-and-coming channel that's set to change the face of shopping convenience: personal voice assistants.Romain Colomer, Creative Consultant Mirabeau
And with all this automation and optimization, every channel increases in importance. "Retailers shouldn't forget the next, up-and-coming channel that's set to change the face of shopping convenience: personal voice assistants. Siri, Alexa and Google are quickly becoming the channel of choice. So retailers should be looking into optimizing for voice search (VSEO) in the same way they optimized for SEO just a few years ago. Even more advanced retailers can think about developing their own conversational companion, uniquely tied to the brand's identity, values and UEP."
Tip 4: Defend your data
There's a competitive edge to focusing on loyalty as well. "The competition for data grows stronger every day, and retailers who want to hold or improve their market position need to defend their data turf with everything they've got," Louie says. "Increased competition from coalition programs is heating things up even more. Unilever bought Dollar Shave Club for $1 billion to strengthen and enhance its market position and create connections to new customers. But also to defend itself against their biggest competitor, P&G. I suspect we'll see more and more of these coalition partnerships, as retailers scramble for bigger and better groups of loyal and repeat customers."
Tip 5: Secure the sequence
One of the oldest adages in the retail game is that it costs more to gain a new customer than it does to keep an old one. But studies also show that the more often a customer buys from you, the more likely they are to do so again. After their third purchase, the likelihood of another purchase goes up to 54%. And each subsequent purchase typically has a higher order value. But it's not as simple as '20% off your next purchase' or impersonal email campaigns. "Retailers need to take a far more personal, emotional approach to creating repeat business," Romain warns. "Even a second purchase is often completely different than a first purchase in how it is achieved, what is expected from the brand and how much a customer is willing to spend. Retailers need to analyze purchases and customer sentiment to consider how these sequential purchasing experiences change, and how they can be optimized."
Tip 6: Follow the likes
The rules of retail aren't the only thing that's changing. Customer behavior is changing, too. Luckily, data and analytics can help retailers adjust their offering in real time. "Retailers are using social media tracking to change their sales proposition based on likes, retweets and social media banter," Louie says. "Since loyalty is based on understanding and responding to human drivers, the immediate drivers are often the most telling. So retailers can adjust their on-site merchandising to suit the hot topics of the day, or even the hour." Adapting on the fly to changing customer expectations is becoming the new normal. And social media is the place to hear the best - and worst - of what your target audience has to say about your brand.
But these analytics are not just about the digital world. They work in brick-and-mortar stores too. When online retailer Missguided took its concept offline, it created an entirely new shopping experience for their young, female demographic. "Missguided took full advantage of digital, and the knowledge of their customers, and reinvented the in-store experience," Louie says. "Everything from Instagrammable fitting rooms to whacky signage to an app that responds as soon as customers walk in the door, they're using digital to adjust the shopping experience in real time to reflect their customers' preferences and expectations. And those personalized experiences make customers more comfortable about sharing their data to enhance the experience even more. It's a self-fulfilling cycle that is proving to be very successful - and it's the ultimate example of building loyalty with emotional connections."
Louie goes on to say that "at any given time, retail giants like Target and Bol.com can be running from 8,000 to 10,000 simultaneous experiments with live customers, and monitoring their answers to simple yes and no questions. They can then quickly adjust the customer experience to better align with customers' emotional cues."
Tip 7: Be accountable for customer accounts
Customer accounts should be far more than just a collection of customer data. They are, in fact, a prime opportunity to get closer to customers. "A common mistake I see with brands is that they don't focus on using customer accounts to remove friction or increase flow in the overall experience, instead they focus simply on trying to collect data," Romain explains. "A customer account can be the passport to a seamless, long-lasting, value-based relationship. Retailers should be thinking about how customer accounts can benefit their customers, and not themselves."
The Cognizant difference
Cognizant is no stranger to the tactics and strategies that stimulate loyalty and repeat business. In the United States, they developed a program for a fast-food chain that used gaming to engage their customers. A loyalty campaign with an app and a website encouraged customers to game their way to more products. The 'Taco Titan', for example, could celebrate his high score with more tacos. In the UK, Cognizant helped a major grocery retailer optimize their e-merchandising with the help of social media signals. Still another example comes from a major auto manufacturer in Japan, who uses customer and third-party data to adjust website imagery on the fly. "If we know that the visitor is a big fan of biking, then the images that appear on the website feature the cars with bike racks attached, and happy cyclists standing next to the cars," Louie explains. "Adjusting the imagery in this way for just 5,000 site visitors resulted in a 10% increase in the click-through rate."
Want to create loyal, repeat customers? Design your customer experience around the Unique Emotional Proposition your company can offer. Forrester has shown that CX increases loyalty, and that increased loyalty is what drives revenue growth. To survive in the retail future, you must get in touch with your customers' emotions and behavioral triggers - and tap into them at every turn.
Our top tip
Emotional connections create loyal customers, and loyal customers spend more and cost less. Ensure your Unique Emotional Proposition is at the heart of every digital strategy.