Customer Loyalty in the Digital Age

CUSTOMER LOYALTY IN THE DIGITAL AGE

Preparedby:AlokRanjan

THELOVEISEPHEMERALTheriseofdisrup-vetechnologieshascompletelybaffledbrandsinreachingouttotheirconsumers.Tokeeptheconsumersengaged,itisimportantforbrandstorevisitandredesigntheirloyaltyprogramstosuittheneedsoftheconnectedconsumers.

Picturecourtesy:TomFishburne,Marketoonist.com

CONSUMER2.0–THECONNECTEDCONSUMER

3

Research&purchaseonsmartphone

41%

Researchonsmartphone,butpurchasein-store

46%

Researchonsmartphone,butpurchaseoncomputer

37%

Researchonsmartphone,visitedstoretochecktheproductbutpurchaseon

computer

19%

Researchonsmartphone,visitedstoretocheckthe

productbutpurchaseonsmartphone

18%

Visitedthestorefirst,thenpurchasedonsmartphone

8%

MulP-Screen

Purchase

Behavior

Source:GoogleZMOT,2012

73%71%

69%

68%

67%

64%63%

63%

61%

60%

60%51%53%

49%

52%

53%33%

37%

22%34%

55%

Learnaboutnewproducts

GeneralInformaPon

SubmitOpinions

ExclusiveinformaPon

Reviewsandproductrankings

FeelConnectedCustomerService

Beapartofacommunity

Event/promoPonparPcipaPon

Purchase

Discount

Brands Consumers

WhatConsumersWantsvs.WhatBrandsOffer?

Source:IBMInsPtuteofBusinessValue,2013

Thetechnologicallyempoweredconsumernowvaluesrela-onship,authen-cityandnoveltyinabrand.Increaseinnumberoftouchpointshavecreatedachallengeforbrandstoretainthecustomers.Further,thegapindeliveringvalueproposi-onhasanadverseimpactonbrandloyalty.

80%

8%

Companies

CompaniesthatbelievetheyprovidesuperiorvalueproposiPon

Companieswhosecustomeragree

DeliveryGap

Consum

er-Brand

DeliveryGa

p

Source:BainConsulPng

CONSUMERDECISIONJOURNEY–ADAPTINGTOTHENEWNORMAL

4

Awareness

Familiarity

ConsideraLon

Purchase

Loyalty

OldSchoolofPurchaseDecision

Momentof

Purchase

EvaluaLon/InformaLonSearch

BrandLoyalty

AUerPurchaseExperience

TriggerIniLalConsideraLon

NewSchoolofPurchaseDecision

Oldmodelofpurchasedecisionisnolongervalid.Thenewdecisionjourneymakesitimpera-veforbrandstoenhancecustomerexperienceinordertoretaintheircustomers.

PURCHASETRIGGERSFORCONSUMERS

5

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Abundanceofavailableproductinforma-on,near-perfectpricetransparency,specialdeals,fillingthein-storeinforma-ongap,productrecommenda-ons,andsmarterstoreexperience(customizedrecommenda-ons)triggerbrandloyaltyinthedigitalage.

87%BeforevisiLnga

store

79%WhilevisiLnga

store

35%AUervisiLnga

store

ConsumerslookingforproductinformaLon

35%

36%

39%

70%

71%

75%

Coupons/Deals

OnlineVideos

SocialNetwork

PhysicalStores

E-commercefirms

SearchEngines

SourcesofProductInformaLon

Myth Reality ExplanaLon

Searchresultssendconsumerstoe-commercesites Searchresultsarepowerfulwaytodriveconsumerstostores OnlineinformaPonfillsingapandmoPvatesstorevisits

Oncein-storeconsumerbeginslookingattheirsmartphones,storeloosesaeenPon StoresgrabaeenPonthroughretailapps/mobilesites 42%consumersresearchproductonmobilewhileshopping

in-store

Consumersvisitstorestotransact Consumersnowexpectcustomizedin-storeexperiencethanjusttransact

69%consumerspreferphysicalstoreforinformaPonduringdifferentphasesofpurchaseprocess

LOYALTYPROGRAMS–FACILITATEBRANDADVOCACY

6

92%

72%

87%

82%

76%

AsiaPacific

Europe

MiddleEast/Africa

LaPnAmerica

NorthAmerica

57% 46%

ConsumerPurchasebehaviorinfluencedbyloyaltyprogramPedtoa

retailer

ConsumerPurchasebehaviorinfluencedbyloyaltyprogramPedtoa

brand

80% 70%

ProgramsareworthparLcipaLng

ProgramsarepartofrelaLonshipwiththe

company

2XVisitorIncrease

4XSpendingIncrease

88%HigherProfit

Source:Maritz

Source:Maritz

Source:Nielsen

LoyaltyProgramsfacilitatepurchasedecisionstoagreaterextenttherebyinfluencingcustomerengagementandimprovingmargins.

Consumersaremorelikelytopurchasewhenofferedloyaltyprogram

LoyaltyProgramsIncreaseMarginsConsumersAgreetoLoyaltyPrograms

BESTPRACTICES–ANALYZINGWHATISRIGHT

7

55%

51%

51%

36%

22%

Easeofredeemingrewards

Monetaryrewards

Easeofearningpoints

Accesstoexclusivedealsandcoupons

EasyenrollmentopPons

WhatCustomersWant?

34%

70%

64%

14%

Morerevenue

CustomerretenPon

Customerengagement

Beeercustomerexperience

WhatBusinessesWant?

60%firmsconsiderloyaltytobeastrategicpriority(Forrester).Itisnecessarytostrikeabalancebetweenwhatconsumersdemandandwhatisoffered,keepingfirmsexpecta-onsinsyncwiththeirbusinessobjec-ve.

Source:Mintel

Source:Forrester

DefineprogramobjecPves Offercross–channelcustomerexperience

Engagewithconsumers Innovatewithnewchannels

Createvaluethroughpersonalizedexperience ProvidevaluebeyondtradiPonal

Nocustomerisequal UsegamificaPon

CommunicateeffecPvely Believeindata

HappyCustomer

CriLcalSuccessFactorsforaPerfectLoyaltyProgram

DESIGNINGTHELOYALTYPROGRAM

8

Theconnectedconsumerdemandsaunique,transparentandcustomizedloyaltyprogramfromorganiza-onsthataidsthepurchasedecision.Itisimpera-veforfirmstoleveragestrategicdirec-onadoptedbytheindustryleadertodesignatailormadeloyaltyprogramtotheircompe--veadvantage.

TheSuccessfulloyaltyprogramaddressescustomerexpecta5ons,buildstrust,ensuressa5sfac5onanddevelopsasenseofbelongingnessforthebrand.

IdenPfyconsumertouchpoints

Mapbusinessprocesses

Defineprogramgoals&businessoutcomes Segmenttargetgroup Defineprofitability

drivers

DefinemeasurableanalyPcs

Formulatepartneringstrategy

DesignincenPvestructure

DeviseintegratedmarkePng&communicaPon

strategy

Tools&vendoridenPficaPon

VALUEDRIVERSOFTHELOYALTYPROGRAM

9

Customertouchpoints&Businessprocessmapping

Defineprogramgoals&Businessoutcomes

TargetgroupsegmentaLon

Profitabilitydrivers

Definedata&analyLcs

Partnerstrategy

DesignincenLvestructure

IntegratedmarkeLngstrategy

Tools&vendoridenLficaLon

˃  DefineconLnuumoftouchpointsforconsumers˃  ListprocessesandidenLfyvalueintegrators˃  Develop/Maintainprogramspecificstrategies

˃  ManageprogramcommunicaLons˃  IdenLfyexpiringinventoryandpurchasefrequency˃  ManagegovernanceformostvaluedandinacLvecustomer

˃  ManagetechnologylimitaLonsandprograminerLa˃  MovebeyondLeredsegmentaLonandidenLfyprofitabilitydrivers˃  RiskmiLgaLon

˃  Performprofitabilityplanning˃  Manageserviceusagelevels˃  Performgapanalysis˃  Managedatafromdisparatesystems˃  Setparameterstodrawinsightsfromavailabledata˃  DefineloyaltyanalyLcs˃  IntegratedmarkeLng&loyaltyanalyLcs˃  Definepartneringformat(Single,MulL-partner)˃  Financialviabilityofpartnership˃  BrandadracLveness˃  IdenLfyincenLveareas˃  DefineconsumerbehaviorforeachincenLveareas˃  RedempLonrules˃  Manageregulatorycompliances˃  Devisecross-channelmarkeLngstrategy˃  ReacLve&proacLvemarkeLngcommunicaLonstrategy˃  LoyaltymarkeLnglifecyclemanagement

˃  GapanalysisofexisLngresourcesvstoolsdesired˃  Requirementmappingavailableservices˃  Setcriteriafortechnical&funcLonalevaluaLon

Firmsshouldevaluatedriversoftheloyaltyprogramtogaincompe--veadvantage.Tailoringoffers,providingancillaryservicesandincreasingswitchingcostwilladdtothecompe--veposi-oningofthefirm.

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