HOLISTIC. EMPIRIC. AWESOME.
Loyalty isn’t bold enough anymore. It doesn’t draw blood. Doesn’t excite the senses. Too many years spent as an abstract idea of a vague notion of customer devotion. Obliterated from the contemporary marketer psyche by today’s splashier tactics: madtech, programmatic anything, real-time anything, predictive anything, machine learning-anything, software-defined anything.
A shame, considering it’s common for businesses to lose 15-25% of their client base per year and it costs companies 6-7 times more to acquire a new customer than keep a current one.
Loyalty marketers sit stranded, dangling in the shallows. No new loyalty signal to shape our sails. Or is there?
“Unstructured initiatives identify loyalty as an outcome, ” says Emily Collins at Forrester Research. Grounded in customer data, unstructured loyalty initiatives influence and encourage customer loyalty without a structured give and get. They originate in various departments, from marketing and product development to the call center, and they focus on cross-sell/upsell opportunities to improve the brand experience, reduce churn, and increase engagement and customer lifetime value.”
Grounded in customer data, Unstructured Loyalty relies on empiricism, thoughtfulness, and context-rich flashes of awesomeness. Sometimes found by accident but more typically by extraordinary skill, the micro-moments of unstructured loyalty are a mix of great CX, next best action analytics, and serendipity.
The essential carbons of unstructured loyalty? Holistic customer experience, constant iteration based on big and small data insights, and creativity to overcome your most vicious competitor: consumer indifference.
UNSTRUCTURED LOYALTY IS HOLISTIC
Loyalty is an outcome of good CX. This is crucial. The most brilliant loyalty program in the world cannot overcome a weak CX. Wrap Loyalty in CX and it’s revealed as holistic: marketing, product development, the call center, self-service, all contribute to unstructured loyalty. Great CX motivates loyalty behaviors—such as buying, buying more, buying more often, recommending that others buy, etc. These behaviors determine LTV and create value for a company.
The brands with a reputation for cult loyalty — like Apple, Coca-Cola, Harley Davidson, Nike, and USAA — don’t even have an explicit loyalty program in place.
THE UNSTRUCTURED LOYALTY GAMEBOARD
Today’s loyalty leaders democratize good CX for all, then use value, insights, data, serendipity and judgment to add great experiences to great experience.
Our aim should be to inspire loyalty that is ultimately viral. Superior customer experience drives a loyalty cascade of advocacy, retention, and growth. Memorable interactions become a part of the awareness and discovery cycle decreasing the cost of customer acquisition and increasing the probability of customer retention. Don’t neglect the value of WOM as a reinforcing form of self-generated advertising that reminds givers of their positive experiences and pushes the nudgeables toward your brand.
Unstructured loyalty often co-exists with formal loyalty programs but for a growing number of brands, unstructured loyalty alone creates emotional (v. transactional) loyalty. Amazon delivers good CX for all while over-delivering through intelligence and logistical brilliance.
- Non-monetary rewards and symbols of belonging, such as Ikea’s Family Member program, with free childcare, play events and frozen yogurt
- Services to improve the shopping experience, such as Neiman Marcus’ shopping app that incorporates shopping, blogging, events, and loyalty points management
- Broader lifestyle applications, such as Walgreens’ Balance Rewards program
UNSTRUCTURED LOYALTY IS EMPIRIC
Consumers nowadays are much more demanding than they were when Green Stamps or even Starbucks Rewards launched (2009!). They are a lot more educated around value exchange and they expect rewards and elevated treatment for their data. Leaders, too, are much savvier and perform big-data analysis using multiple sources of data to provide rewards based on consumer behavior and life cycle, with a focus on cross-selling and retention.
Long-term, competitive differentiation in loyalty will come from better customer analytics – underpinning more innovative rewards and experiences for consumers – as well as improved decision-making in the core business to calibrate rewards and CLV. For leaders, value is variable.
KEEP VALUE VARIABLE
UNSTRUCTURED LOYALTY IS AWESOME
Of course, empiricism has its limits. An illusion we can’t seem to relinquish is that with enough data we can predict and control how our customers will behave. This is limiting when it comes to awesomeness. We’re talking about building loyalty by providing users with awesome benefits, hooking them in, and offering those benefits with every purchase. Customers will be loyal because there are few other options as spectacular as you, and you’ve communicated that value from your first interaction. Apple comes to mind. Uber. Airbnb.
Unstructured loyalty combines great CX and empiricism with unstructured rewards and experiences, and works without a structured give and get.
The secret ingredients.
- Great CX for all
- Wider variety of recognition methods
- More emotional content
- More personal
- More frequent
- More random
- Anywhere, anytime, any platform
It’s that simple and that hard.
When it comes to loyalty innovation, there isn’t a perfect time to get started. Whether you are transforming the way members interact with your programs or the analytics you use to understand and predict behavior, start small, with the key data pieces required to drive insight, and move swiftly. Build out the story and evolve, one lesson at a time.
Step 2: MAKE. Create new customer engagement tactics, reward types, offers, and communications, test on a small slice of your customer base to gauge success.
Step 3: TEST. With an iterative test-and-learn process, it’s easier to identify the approaches and tactics that will be most effective. Run an A/B test against treated and untreated customers to determine the overall effectiveness of the loyalty initiative.