Customer Loyalty Myth Busters
Customer Loyalty Myth Busters
Loyalty has been around in many different forms for years and has its passionate advocates and at the same time its non believers. We believe we could convince anyone on the power of loyalty given 15 minutes, so if you're a non believer why not challenge us. Whilst there are many statistics on the power of loyalty, there are also many myths. This series aims to debunk the most common myths.
Loyalty programmes are just a means of buying a customers loyalty
A loyalty programme that is based on this premise just wont work long term. Everyone might switch to a new provider for a short period for a cash gain but they wont stay if there isn't an emotional connection. Loyalty should be about building a strong emotional connection with your customer where you understand what they want and need and can deliver that in a meaningful way. Your customers will in turn feel valued, respected and are more likely to remain loyalty for much longer.
Loyal employees means loyal customers
In most cases yes but not always. Employees and customers are motivated by different things and your brand needs to be able to service both audiences needs and requirements successfully. To gain truly loyal customers you need to have everyone in your business speaking the same language, giving the same messages, demonstrating the same values and working towards the same vision. If loyalty truly is part of your experience strategy then you should have both loyal customers and loyal employees.
A loyalty programme will mean you can immediately understand your customers drivers
Not in itself no, you need to know your customer enough to develop a loyalty programme that will create a win-win relationship for you both. Yes, a loyalty programme provides you with the opportunity to understand the customers drivers better but only if the customers engage in the first place.
A loyalty programme will mean I am giving away to much margin
If you calculate the metrics correctly then a loyalty programme shouldn’t be a cost. Yes you may have to give away margin to reward customers but as long as the you are driving profitable behaviour change and action then you should see a positive ROI.
If someone buys regularly from me they must be loyal
This might be true but not in all instances. You might have customers who are mandated by procurement or a boss to purchase from you and they do it begrudgingly. If they leave they aren't going to purchase from you at their new company. It is important in the relationship to understand the individual placing the orders as well as the person holding the budget. This way you can then seek to understand what would benefit each individual and how you communicate with them separately.
A loyalty programme will mean no more customer complaints
A loyalty programme forms a part of the customer experience and to keep customers happy you need to be focused on all aspects of their experience with you as a brand. A loyalty programme does provide you with the opportunity to give customers loyalty credit when they have experienced a problem either with your service or products. It doesn’t however mean you can get away with bad service or low quality products. Loyalty should be used to encourage customers to drive new behaviours not just as a sweetener to apologies for a poor experience.
Millennials aren't loyal
It is a generalisation to even talk about millennials as though they aren't loyal. This isn't true, they have more choice and they are more willing to shop around but they also want to purchase from brands that have the same values as them. If you can appeal to millennials on a value level they are more likely to choose your company. You could do this by offering charity donations, offering better options that give them the freedom of time or choice.
Companies don’t need external help to run a loyalty programme
Our answers to this might seem obvious (as we are an external agency) but in reality most companies need external help to get things off the ground. Think about how often you have had an internal project that has taken three times as long to complete. In our experience internal data and IT teams, if you have them, are always busy and always get pulled onto too many projects which means things take longer and don't have the focus they should do. By asking an external agency for help you are also gaining experience of loyalty strategies and software deployment over a range of industries, sectors and market dynamics. This experience is invaluable. When you appoint an agency ask them about the learnings, when they have fallen down, hit hurdles etc and how they overcame them. This will tell you more about their mindset and the support you will get than anything else.
Giving customers what they asked for will mean they remain loyal
Although in theory this should work, it rarely does. If you offer people cash versus an experience most people will select the cash but they wont remember the cash reward in years to come whereas they are likely to remember and still talk about the experience. You need to understand what your customers will want in the future rather than what they want right now. You may also find that if you ask them what they want and you don't then deliver every request you encourage dissatisfaction and discontent rather than loyalty.
Loyalty programmes focus only on customer retention
A good programme will focus on both retention and acquisition where you need it to. By delivering great customer experience and rewarding your existing customers to review your products, provide testimonials and refer you to their friends or colleagues will be the best way of acquiring new customers that already think highly of you before they even work with you. We would all prefer to get a recommendation than to select a new provider from a google search. Rewarding your existing customers for those behaviours will not only make them feel good but will also mean they continue to deliver for you.
The Net promotor score is the best way of assessing customer loyalty
The net promoter score is one way of assessing customer satisfaction and loyalty but on its own isn't enough. With all measurements and scoring systems you need to measure consistently to ensure you are getting good trend lines and assessing based on a range of scores rather than just one. We all have days when things aren't going well and our external environment is a big factor when responding to these sort of surveys. We have written an article on the importance of creating a customer loyalty index and how this type of multitudinal scoring can lead to much greater insight. Get in touch if you would like a copy.
Every company can benefit from a loyalty programme
In our experience not all companies are a good fit for a loyalty programme but they are a good fit for a loyalty strategy. A programme by its definition is a thing, a tactical way of delivering a strategy, that is overt in its description. Your company might benefit from a strategy that puts customer loyalty at its heart through delivering what the customer wants. Take Apple or Playstation, customers queue for hours to get the latest console or phone. With Apple specifically, there aren't any points or programmes mentioned ever in their communications but there customers are loyal fans. They have such a range of connected technologies and products that customers want the next big thing immediately. Even when product launches don't quite go to plan or new products don't really have any new features, customers forgive because at its heart Apple puts the customer first when designing its products. A loyalty programme that works on transactions works really well where customers buy from you more frequently and there is a big enough range or services or products to upsell.
Loyalty programmes don’t work for service led companies
This isn't true although you are much more likely to find loyalty programmes used in traditional transactional businesses. To use loyalty in a service business you have to think more strategically. You need partners who can assist you with more than just pulling together a points based programme. We are a software as a service business and our clients normally pay us an implementation fee, a consultancy fee and then a quarterly licence fee. We have our own loyalty programme (of course we do!) where customers earn extra services or benefits based on a range of actions which include referrals, reviews, testimonials and extra product purchases amongst others. We also have a range of rewards that appeal to both the bill payer and our day to day contact (if they are different).
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