Customer Loyalty isn’t Just a Choice, it’s a Lifestyle
"Loyalty isn’t about more points, promotions or emails. It needs to be reciprocal, authentic and emotional."
When it comes to acquiring customers, content marketing is fast replacing traditional forms of advertising. But what about customer retention? Real loyalty is no longer achieved through points and promotions. Businesses and brands must apply the principles of content marketing and identify their consumers’ lifestyle needs to create deep, on-going emotional connections.
Research shows consumers have increasing control over the messages they receive from brands, aided by ad blockers and other ways to opt out. Against this landscape, content marketing works because it meets a consumer need or lifestyle interest which lays the foundations for product purchase. Take L’Oréal, who created Makeup.com to engage consumers with style and beauty tips - without directly plugging L’Oréal’s own products. Or American Express, who created Open Forum, a platform to discuss issues facing small business owners. Content marketing reaches, engages and converts people who are continually looking for information, entertainment or help.
It has long been a truism that retaining customers is more cost effective than engaging and acquiring new customers. Bain claims that increasing customer retention rates by just 5% increases profits by anywhere between 25-95%. Not only are repeat customers more likely to buy, they usually spend more than a new one.
So, how can businesses apply the benefits of content marketing to not only attract, but retain customers? For me, there are three key principles to consider:
- Principle 1: Understand customers’ tastes and interests – learn about them and use that insight to keep them coming back
- Principle 2: Become integral to customers’ lifestyle – be useful and add value to the customer
- Principle 3: Be authentic – generate gratitude from consumers, not only through rewards, but by having a shared purpose
Is it time to move on?
Is the traditional loyalty card still relevant in the age of content marketing? It’s certainly still prevalent – nearly 95% of Britons are members of one or more retail loyalty scheme and 65% of businesses have a program. Originally designed to offer rewards to regular customers, loyalty schemes have become a rich source of data for the companies that offer them.
With loyalty schemes increasingly ubiquitous, customers are starting to feel overburdened and suspicious. Businesses are equally dissatisfied - schemes are expensive to run, rewards erode margins and research shows that Generation Z shoppers (the critical teen market that companies are fighting to gain traction with) are even less brand loyal than Millennials. That said, the fundamental benefits of a loyalty scheme for a business is still there – they’re a way to understand and retain customers in an era of high competition.
In this environment many brands are now starting to think beyond the traditional card-based programme. Focus is instead on loyalty across all aspects of the brand, enabling better understanding of consumer needs.
Do you really understand?
O2 seems to. Their ‘Priority’ scheme uses internal analytics to understand which customers would be interested in specific types of offers. “For some, the £1 lunch on Mondays is most popular, for others it’s access to gigs,” explains Nina Bibby, Marketing & Consumer Director at O2. At the end of 2015 there was a tenfold uplift in conversion through better use of customer data. “Using insights and analytics can lead to loyalty beyond the card and it’s about how you marry the emotional and the tangible”.
Are you a part of my lifestyle?
A number of businesses are identifying the lifestyle needs of their customers and forming relevant partnerships to build retention. Take Pod (a health food chain with 22 takeaway restaurants across London), who recently partnered with NipNip (a mobile cycle repair business) to incentivise existing audiences by providing mutual discounts. As Rosie Parkes, marketing manager at Pod, explains; “Both NipNip and Pod help Londoners to live healthier lives”. The synergy between the two brands was clear.
Can brands and businesses reward ‘positive’ lifestyle choices as a way of boosting loyalty? 1 in 3 Londoners have said that a lifestyle reward scheme would appeal to them. UK consumers would like to be rewarded by retailers for recycling (29%), exercising (20%), spending time with family (19%), getting enough sleep (14%) and charity volunteering (10%). It’s particularly attractive to young shoppers, with 42% of 16–24 year olds in the UK advocating such a scheme.
Do I really believe?
Loyalty isn’t about more points, promotions or emails. It needs to be reciprocal, authentic and emotional. As a recent HBR article pointed out, brands must focus on fostering the emotional response that is most likely to drive loyal behaviour – gratitude. This isn’t only achieved by acts of kindness (aka rewards), but by having a shared purpose. Personal wellbeing, environment, social responsibility could form the new basis of brand loyalty.
If businesses can create schemes that encompass all three principles, they’ll be on their way to achieving true loyalty. The reward? Retention is just the start. Customers are happy to trade data for loyalty scheme membership, which presents a huge opportunity for brands to continue engaging with them. True loyalty is powered by emotion, repeat purchases are just the result.