Home » Brands Warned Not To Rely On Loyalty Schemes If They Want To Win Over Lifetime Customers

28 June, 2023

Brands Warned Not To Rely On Loyalty Schemes If They Want To Win Over Lifetime Customers

Loyal customers can be a brand’s most affordable and effective ambassadors by creating word-of-mouth referrals and purchasing time and again.

With retail sales falling – a 0.6 per cent drop in the March quarter after a 0.3 per cent in the December quarter – loyalty is waning, and a top priority for brands next financial year will be finding ways to reclaim and retain customers. A major survey offers the answers: transparency, being community-minded, thanking them, and offering a high-quality at good value are some of the things customers say brands can do to win their loyalty.

The insights were derived from a survey of an independent panel of 2500 Australians, analysed by Customology, Australia’s leading specialists in customer lifecycle management. Collated in a new report, ‘The Unspoken Customer’, Customology offers insights into the attitudes about brands among consumers who don’t normally review online, provide feedback or participate in brand surveys.

Customology founder and CEO Mark James said: “Customer loyalty is intrinsically linked to a brand’s success, and loyalty can be scuppered if customers are not rewarded appropriately. Rewards, however, must be genuine and add tangible value. A coffee wholesaler, for instance, will need to offer customers incentivised value to ensure they shop with them for their next order. They key is to recognise and appreciate the customer’s loyalty and reward the behaviour you want to influence. Conversely, it is extremely difficult to win back once-loyal customers after you have lost them.”

Drawing on its latest data, Customology reveals the six things brands can do to win customer loyalty.

1- Don’t rely on marketing emails. Too many brands use the spray-and-pray approach, relying on marketing emails to create loyal customers, rather than creating genuine value. Customology’s study found that 46 per cent of customers hardly read these emails and almost two-thirds (61 per cent) said they rarely influence their purchase decisions. Brands could use a mix of communication channels, such as SMS, direct mail, push notifications, social media and advertising. And while customers provide plenty of information about themselves to help brands create personalised messages, most brands continue to spam their customers with the same messages at the same time.

2- Thank customers. A simple thank you goes a long way for customers who have chosen to spend their hard-earned cash with you. One in 5 customers (19 per cent) reported not receiving any form of communication after their first visit, despite sharing their contact details. A follow-up email or a push notification with a personalised note on what their purchase means to the business is a good place to start.

3- Give back to the community. Customer expectations of brands have grown. They want a holistic view of the brands they’re purchasing from, and this knowledge makes a direct impact on where they spend their money. Customology’s data shows 82 per cent of customers think it’s important for brands to give back to the community, and 50 per cent believe it would directly influence their brand loyalty. It’s worthwhile for brands to promote their corporate social responsibility – whether that’s supporting a local community project, reducing their environmental footprint, or donating a portion of profits to charity.

4- Be honest and transparent. Honesty is the best policy, and brands need to walk the talk to earn their customers’ trust. The reality is, however, that 48 per cent of consumers don’t believe brands are honest in their communications, and 50 per cent don’t believe online reviews are genuine. When what brands say about themselves don’t match what customers hear from elsewhere, the brand is perceived as out of touch or, at worst, deceptive. Brands could focus on developing a more human relationship with their customers: own up when things don’t go right and be clear on how they will fix them.

5-Loyalty programs must provide strong value. It might come as a surprise that a whopping 68 per cent of customers are loyal to brands that don’t have a loyalty scheme. However, 82 per cent of customers believe they should still be rewarded for their loyalty. Brands could assess whether existing loyalty or reward programs are still relevant and providing value. Customers should be recognised and rewarded based on their unique position in the lifecycle, their specific purchase behaviour and preferences.

6- Quality, value and customer experience are key. There is less reason to provide a loyalty program if you maintain these three values. More than half (55 per cent) of customers would be tempted to go to a competitor if the quality of a brand’s products or services declined, 50 per cent would leave if they found better prices elsewhere, and 42 per cent would leave a brand if they had a poor experience. Ultimately, customers will remain loyal to a brand if they consistently receive quality products and services, at a competitive value rate.

Customology’s ‘The Unspoken Customer’ report can be found here.

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