Is There Common Ground Between Customers and Brands on What Loyalty Means?
By Mary Wardley - Vice President, Customer Care and Loyalty Research, IDC
Posted in Customer Engagement
Organizations are amid a shift in customer handling philosophies in an age where interactions between customers and brands are occurring increasingly primarily through online and digital channels.
The philosophy is customer experience. Brands are looking at the entire experience their customers are having and trying to first understand what the experience is and how to influence it.
Because brands are feeling a loss of control, they are experiencing an inability to interface directly with the customer—and they are seeing customer movement that suggests that their customers may not be as committed to them as they had thought.
According to the recent Verint Digital Tipping Point survey in which 24,000 consumers in 12 countries across nine industry sectors were polled, it was found that customer retention is down from the 2015 version of this study, with the percentage of customers staying with providers for more than three years declining from 61 percent in 2015 to 53 percent in 2016.
It is essential that brands hone in on the subtlety of what the Verint Digital Tipping Point brings to light. We know there is an increase in the use of digital channels. We witness it every day. As the above data shows, there is generally less stickiness among customers. Brands are faced with a perplexing problem. How to improve loyalty and stickiness when they don't interface with the customer 1-1?
There is a window of hope. Customers reflected across the board that personalized, 1-1 interactions through service resulted in positive outcomes. Of the survey respondents, 64% reflected that 'on the whole, I think it is more convenient and I get better service using traditional methods of contact (e.g., phone, in-store/in-person).'
How can brands capitalize on this fact? What is going on in these interactions?
Stickiness is often referred to as customer 'loyalty.' From a brand's perspective, customer loyalty means customer retention, or more meaningfully, low or lack of customer attrition, a measure of lifetime-value in the form of revenue over time and hopefully an increasing share-of-wallet.
But what does loyalty mean to a customer? As an individual, and not as a brand, I think of loyalty as a behavior rooted in an emotion. At the risk of using a weak commencement speech convention—a definition—loyalty is defined as being 'faithful to any leader, party, or cause, or to any person or thing conceived as deserving of fidelity.' I'm going to roughly translate that into, 'you be true to me and I'll be true to you.'
So, I am loyal to my family or my friends by virtue of the fact that they deserve it. They have demonstrated over time positive behavior that motivates me to give them my fidelity or my commitment. What is the equivalent of this with my interactions with a brand?
In an IDC survey on customer experience, respondent organizations were asked what the top 'tasks' or reasons were that their customers contacted them. Interestingly, the top reasons were all practical needs based on a purchase: pricing questions (55%), product or service support (50.1%), billing and payment (49.4%) and shipping information (47.1%). These types of customer-to-brand interactions are not the sorts that would be conventionally opportunities for 'relationship building.'
Customers are not contacting the brand just to chat or to spend time in their tastefully appointed retail location—they have a specific need that they want serviced. This data is supported by Verint’s 2015 Research Survey “The Rules of Engagement” in which customers rated the response of the brand to answer their inquiries quickly as being the most important factor in customer satisfaction.
These two pieces of data highlight the same focus point on the part of the customer. They purchased a product or a service—they paid their money. So, they want that contract to be honored by either receiving a quality product or service in support of that product, quickly or having their issue resolved. If these things happen in a satisfactory manner, they will be 'loyal' because the brand has lived up to their part of the contract.
Now that the brand has successfully executed on their part of the equation, the customer's 'loyalty' is theirs to lose. Perhaps this is the bigger challenge to organizations: the ever-moving target of retention. Each progressive interaction builds on the history of trust established by the previous interaction. You will gain my fidelity if you earn it—over and over again.
Now we return to the idea of customer experience. Execution needs to occur in a manner that is comfortable, stress-free and through the channels desired by the customer. Once the customer’s needs are met through positive experiences targeted at their needs, it is ok to introduce organizational goals.
Upselling and cross-selling to gain share-of-wallet are fine—particularly if they are well targeted to the shopping basket or complimentary to existing customer product ownership, and also occur in a manner that is comfortable to the customer. Obviously, this warrants a separate discussion.
Loyalty doesn't come just because a brand wants it, and once gained it can be lost. But keeping the following in mind will keep the focus on course to engender true customer defined loyalty:
To learn more about the 2016 Verint Digital Tipping Point Survey, go to www.verint.com/digital-tipping-point.
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