CMOs Need To Monitor The Evolving Consumer Loyalty Landscape

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Genuine connection remains a major priority for consumers who prefer brands that “get me” and make no mistake it is about me. My personal brand matters to me more than your brand said “every consumer every day.”

I vote for the brands I prefer with my wallet. Consumer loyalty is no longer about just gifting frequent customers with rewards. Today’s savvy brand marketer knows it’s about building deeper relationships with customers to keep them coming back. I spoke with Mark Johnson, CEO of Loyalty 360, about what customer loyalty trends.

“There’s a dichotomy between brands who have a rewards program and a true customer loyalty focus,” Johnson said. “It’s not just a program, consumer loyalty impacts all facets of an organization – or at least it should.”

According to Queue It, 79% of consumers have established some sort of relationship with the brands they purchase from, making it harder for brands to keep customers who have yet to establish those same close relationships. But that doesn’t mean there’s not opportunity.

“For the programs that are done well, there is still a growing trend of those who join customer loyalty programs,” said Johnson.

As brands prioritize understanding their consumers to build a desirable loyalty program, a common challenge emerges – bridging the gap between what the brand offers and what the consumer wants. Genuine loyalty is cultivated through a comprehensive understanding of consumer behavior, a process that goes beyond analyzing purchasing patterns like frequency.

When it comes to the difference between frequency and loyalty, take airlines as an example. Passengers might frequent a specific airline for convenience or cost but may not demonstrate true, authentic loyalty. It could be the only airline with a non-stop flight option between cities, but as soon as travelers no longer have a need for that flight, they may switch to another airline.

That’s why the way brands show loyalty matters.

Delta recently applied changes to its own loyalty program that made it more expensive for customers to earn higher statuses, but the airline quickly reverted the changes after members express their dislike for the updated program and threatened to change brands.

“There are significant challenges in the industry right now,” said Johnson. “Programs are being devalued… and it’s becoming a cost center for brands. Some brands are challenged with regard to the value that it’s providing, the attribution is providing incrementality to the brand.”

Delta may have missed the mark on these changes because they were moving in a transactional manner rather than thinking about how to deepen relationships with customers. As a side note as a former high-value Delta flyer I found they did an exceptional job at operating with brand consistency.

True loyalty extends beyond transactional habits. Considering the emotional connection a consumer feels toward a brand is ultimately what helps a business thrive, and communication is essential to understanding it. Social media platforms, surveys and other feedback channels act as invaluable touchpoints, offering a real-time pulse on consumer sentiment and empowering brands to adapt their strategies and offerings to keep pace with the changing preferences and expectations of their audience.

“Consumers consistently expect more from brands they show their loyalty to, and they’re increasingly vocal about what they want to be rewarded with,” said Angela Presnell, SVP of marketing at TFL. “For example, a study conducted by The Harris Poll on behalf of TFL found that most consumers wish to be offered live event tickets and would speak more highly of brands that allowed them to use their loyalty and rewards points.”

Listening and understanding customers matters.

“Customer loyalty is growing in importance,” added Johnson. “It’s interesting because you have to learn everyday – challenges, opportunities, technologies, how it works, measurement, metrics.”

In addition to communicating with customers, artificial intelligence has become a key player in learning about consumer insights – including frequency – extending beyond the realm of personalized interactions.

“The more personal you can get for a customer with relevancy of content and the right channel, but also the right time with the right offer, there’s a great interest to do that,” Johnson emphasized.

AI, functioning as a tool for optimization, assumes the critical role of identifying customers on the verge of disengagement. This break might come because of issues with specific loyalty programs, concerns about pricing, lack of communication, etc. If a brand can better determine that a customer is getting ready to leave, it may be able to offer new promotions or experiences within their loyalty programs to keep them.

“Successful customer loyalty is ever evolving, which is why we view AI as a pivotal catalyst for ongoing meaningful engagement,” said Tom Madden, EVP and managing partner at marketing agency Phaedon.

“We’ve been harnessing advanced AI/ML analytics and predictive modeling to foresee customer disengagement, especially in highly competitive industries like travel, retail, hospitality and restaurants,” Madden added. “With the advent of Generative AI (GenAI), we’re moving beyond traditional analytics to craft more compelling experiences that resonate with customers on a personal level.”

Looking forward, the landscape of loyalty programs stand on a distinction of what true loyalty looks like. Brands need to listen to what their customers want in order to forge meaningful relationships with them. Research shows that what customers want points away from the conventional loyalty programs we’ve seen in the past 20 years. Instead, customers are looking for loyalty programs with increasingly dynamic and experiential models.

Leveraging AI will undoubtedly play a vital role in reshaping loyalty programs. Beyond its established purpose of enhancing personalization, AI is positioned as a pillar for risk attribution. The ability to identify customers on the brink of disengagement provides brands with the foresight to address issues proactively and retain their truly loyal customers.

The shifting landscape of customer loyalty will depend on how brands navigate the difference between frequency and genuine connection. This balancing act calls for an approach where data, AI and committing to customer connections will be the most prevalent.

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