Loyalty is an area that we at Blue Feathers are often asked to help clients with. In particular, what loyalty means to our clients’ businesses and whether it’s an area worth investing in – and if so, how to approach it.
This is a vast topic and one we love getting stuck into, so we thought we’d share some of our thinking, along with some of the insights we’ve learned along the way.
This is the first article in a series of articles. Here, we’re focusing on the high-level view of what loyalty actually is. In future articles we’ll cover how you can reward customers, different reward types and future trends impacting loyalty.
Loyalty is simply about your customers enjoying being with you.
Loyalty at a very simple level is about whether consumers want to do business with you, and whether they want to keep repeating this business. Either by:
- Staying with you: for example, remaining a customer beyond their initial contract length.
- Buying more from you: choosing to buy more than one product or service from the same company
- Buying from you more frequently: coming back to buy similar products or services, again and again
- Recommending your company or brand to others: in turn driving additional new business
All these behaviours are normally a result of a customer feeling a connection with your brand, either because of what your brand means to them, the great products you offer or a positive experience they had with you in the past. Without happy customers that love your brand, it’s very hard to get them to want to buy from you, stay with you and recommend you.
Recommendations are also a form of loyalty, as happy customers are more likely to want to talk about and recommend your brand and products. Giff Gaff and Monzo are great examples of how they have used this loyalty and brand love to grow their businesses and acquire new customers.
Businesses that value their customers and put them first are seen as customer champions, and this again can help increase the appeal of the brand to potential new customers.
The foundations of loyalty
What we always hear from customers is that when they make purchase decisions, they expect some fundamentals to be in place.
Pricing needs to be competitive and affordable for them, products need to be great with features that consumers value, and the experience of engaging with your brand needs to be easy and positive. On top of this, your brand needs to be seen as credible by consumers. It’s worth noting affordability can mean different things to different people, affordability in this context is about affordability for the audience you are trying to acquire or retain.
Anything you want to do above and beyond this to create connections with your customers and encourage loyalty is an added bonus, to help tip their purchase decisions. However, without the fundamentals in place, these loyalty-driving added extras are unlikely to persuade consumers to buy or stay.
There are many different approaches to driving loyalty or creating loyalty programmes.
Once the foundations are in place, loyalty can be further encouraged using a variety of approaches. Many people think they need to have a complex reward programme (and many successful reward programmes do exist), however loyalty approaches can take many forms. Here are some examples:
- Offering a set of benefits that are available to everyone such a discounts if people take up or buy more than one product or stay longer. Our favourite example of this is Admiral and their multi-car or multi-product discounts. If you have more than one car or one insurance product, you can benefit. Plus, it’s not just about the discount, their customer experience also brings together all your insurance needs in one easy account.
- Recommend a friend programmes, as mentioned earlier with Giff Gaff and Monzo. Customers often get discounts or other rewards for recommending products or brands. The rewards are given once the person they refereed signs up or buys the product. There are often rewards for the new person signing up as well. This approach can often have a lower cost to acquire than normal acquisition channels.
- Tiered rewards targeted to specific behaviours or customer types. Example behaviours being targeted could be length of tenure, spend or product take up. Customer types could be based on customer value or life stage. Rewards can be anything from preferential service, extra discounts or features to name just a few. HSBC Premier is an example of this, where customers that meet certain income, savings and product criteria get access to additional benefits.
- Loyalty reward schemes which can create powerful data for your business and be a way in which customers can earn rewards, points or preferential pricing. Tesco Clubcard is a brilliant example of this. Some are also not just about earning rewards, they can also be about giving back to communities and charities of your choice. Customers tend to have to opt into these programmes.
The type of approach you adopt depends very much on the specifics of your business and what you want to achieve – your brand, what behaviours you want or need to drive and who your customer are.
Then there are the types of rewards to offer, which is something we’ll cover in a future article.
Deciding whether loyalty is an area your business needs to focus on
Loyalty may seem like an obvious area to focus on. Who doesn’t want customers that buy more, more often and recommend your brand? Plus, we’re probably all aware that it’s easier to keep an existing customer than to acquire a new one.
While this is all well and good, if you’ve not focussed on loyalty before, or have given it a go and not seen the results, creating the case and momentum behind loyalty can be tricky. Benefits need to be proven, it does require some investment and results can be longer-term than tried and tested acquisition techniques.
If you’re interested in loyalty and whether it’s the right strategy for your business, we recommend you start with your customer data (including who your loyal customers are, what purchase patterns they demonstrate, their potential value/ head room and the propensity for different customer groups to buy more from you) and your customer insight.
Helping you get clear on why it is you want to focus on loyalty. Interrogate who your customers are, what they want from your brand, what makes profit for your business, existing customers behaviour and future potential behaviour. This should help give you an initial picture of what is happening today and what behaviours you may want to drive in the future and with which customer groups.
Once you’re clear on all of this then you’ll have a much better case and foundation to look into loyalty further.
This is a big topic with a huge amount that can be discussed. We’ll come back and delve further into how you can reward customers, different types of rewards and future trends impacting loyalty and rewards.
For now, we have shared that loyalty is ultimately about whether consumers want to do business with you and whether they want to keep repeating this business. There are multiple ways to start encouraging more loyalty amongst your customers, building from strong foundations. The place to start is with understanding your customers and where the real opportunity for growth exists.
If you’re keen to find out how we can help you with the challenges you face in loyalty then please do reach out to Blue Feathers – email@example.com
Author: Jess Poore
Jess has experience across a breadth of areas from brand and commercial marketing to customer experience. Her passion is putting customers front and centre to drive business growth and customer happiness. Jess brings together data and insight, creativity and commercial understanding to shape impactful brand and marketing strategies.