As you will probably know by now, Be Bold takes a different approach to marketing, one that operates according to the inbound marketing model.

We talked about the inbound marketing model in the first blog of our series, which you can read here. Then we introduced the concepts of lead generation and lead nurturing in the follow-up articles. Next up, customer loyalty and retention programs!

In this blog we will talk about customer loyalty really means. Is it the same for all customers across all markets? And what can you really expect from a customer loyalty program? Let’s find out!

Customer loyalty and customer retention

What is customer loyalty?

Customer loyalty is often described as an attitude that can be influenced by CRM initiatives such as the loyalty and affinity programs. However, research by the University of New South Wales and London Business school show that loyalty in markets where customers often buy or interact with the brands is shaped more by the passive acceptance of brands than by strongly held beliefs about them.

What can you hope to achieve with your program?  

There are two clear aims, one is to achieve an increase in sales revenue by raising the purchase/usage levels, the other one is more indirect: building a tighter relationship between current customers and your brand. The latter also aides in achieving the first goal.

The choice of program is heavily dependent on the type of product and market your brand deals in. At the one extreme end you have niche products that presume their buyers to be lifelong fans, at the other extreme end you have interchangeable products that cater mostly to price and availability-sensitive shoppers. The larger and more common centre of the curve is attributed to the many different products and services “for the brands people already buy”.

In this blog we’ll be focusing mainly on the most common one, the repeat-purchase market. A place where there is direct competition between branded products and services, and loyalty of your customers is not easily gained.

Let’s dive in!

Marketing, like life, is about love ❤️

Well, there are three ways of looking at it, and those ways pretty much correspond with the way you think marketing works in general, or relationships for that matter.

How your therapist looks at your relationships…

The first way is called the “attitude approach”. This model aims to increase sales by boosting the beliefs about a brand and strengthening the bond between customer and brand. The “one-true-love” model and guiding principle for fairy tales and romcoms. It’s also the most commonplace philosophy and the established way of thinking in marketing and CRM.

The second model is dubbed the “behavioural focus”. Operating under the assumption that most customers have divided loyalties to a number of frequently bought brands. These customers view publicity more as annoying rather than something that will fundamentally impact their attitudes and behaviour towards the brands they buy. As inbound marketers, it’s our natural reflex to be averse to intrusive advertising and to prefer relevant, targeted and timely content. Think of it as ignoring the candidates with the obvious opening lines and intentions, while still being receptive to someone who slows down, takes their time and gets to know you properly.

The third model, the “contingency approach” adopts an even more direct approach. Routinely using price promotions, deals and special offers to attract customers of competitor brands. For brands in these types of markets, responding directly to the programs of your competitors will offer more return than intently focusing on brand-building programs. This metaphor writes itself, doesn’t it?  

customer loyalty conceptualization

Knowing yourself only increases your chances of success   

When brands are competing in a category that is functionally similar and marketing budgets are comparable, the right choice of theory is crucial. In most markets, high competition and repeat purchases can be assumed. This means the second theory, or the behavioural focus model, should be applied.

Empirically, people do not appear to want to watch one streaming service, order from one takeaway restaurant and drink the same bottle of wine every night, for the rest of their life. Would you? This is where we steer clear of the relationship-metaphor because this level of involvement isn’t comparable to your evenings’ entertainment. Some brands will try and place themselves on this level, but few succeed.

Introducing the concept of “customer brand acceptance”, the standard way customer loyalty works in a standard market. We accept multiple brands into our life, because why wouldn’t we? Aren’t they all virtually the same? And don’t they all, more or less, tell the same story?

However, this doesn’t automatically mean that all hope is lost. This realization only grounds you and helps you focus on what really matters in a customer-brand relationship.

Research has shown that when we’re able to easily access different brands, satisfaction with previous interactions (purchases or otherwise) will explain most of people’s behaviour. Only the truly exceptional and unexpected will influence the actual brand chosen on a specific occasion.

It’s here that the inbound marketer can make a difference. Putting all our energy in delighting your customers in every interaction, offering them what they are looking for, when they are looking for it. And when the time is right, offering something exceptional.

customer brand acceptance

So, what can customer loyalty and retention programs actually do for you?  

1. Reinforce brand equity to boost brand acceptance

Use your loyalty programs to maintain the loyalty of your existing customers, by building on existing levels of customer brand acceptance. If the customer feels the connection with your brand or desires receives an explicit reward for their loyalty, they’ll join your program. But beware! Your customer could fall in love with the offer in the loyalty program, rather than with the brand offering it. Be consistent, authentic, and don’t pretend to be something you’re not!

2. Get into the consumers’ portfolio of acceptable brands

We know that repeated positive interactions sway customers over to your side and keep them there. The aim is to use your program to improve the accessibility and top-of-mind awareness of your brand. It should provide you with more opportunities to interact with customers and perhaps, with more sales opportunities. In either case, the aim is to present yourself as one of the possible acceptable brands in your customer’s portfolio. Only then can you truly begin to start the courting process.

Taking the leap

In summary, knowing what loyalty actually means in your specific situation, will help you determine which approach is best suited for your market. Whether it’s brand building, competitive offerings, or driving brand acceptance, customer loyalty and retention programs have many ways to define the relationships you want to cultivate. And having a grounded, pragmatic way of looking at the market will help you put into action successful and relevant customer loyalty programs.

Are you interested in taking your customer loyalty plans to the next level? Book a call with one of our marketing strategists and discover if your customers are waiting to fall in love with your brand.

Sources:

  1. The Influence of Loyalty Programs and Short-Term Promotions on Customer Retention: https://apps.olin.wustl.edu/workingpapers/pdf/2009-03-001.pdf
  2. The Impact of Customer Loyalty Programs on Customer Retention: https://www.uop.edu.jo/download/Research/members/loyalty%20programs.pdf
  3. Customer loyalty and customer loyalty programs: https://www.researchgate.net/publication/235361557_Customer_Loyalty_and_Customer_Loyalty_Programs