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29/09/2011 / loyaltymarketingnews

It’s being customer-centric that counts now

The consumer world is changing, and customers are more difficult to reach, satisfy and retain now than ever before, according to Shyam Shah of Oracle Corporation. There are number of factors driving this change:

1. Shifting behaviour

The proliferation of web-based and new generation interactive channels (such as mobile and social media) has led to a dramatic shift in the ways in which customers research and buy products, and even how they interact with each other. To build brand loyalty and retain customers, companies must focus on delivering great online and cross-channel customer experiences.

2. Increasing competition

Competition is growing and becoming more global in nature. But, perhaps most importantly, the increase in competition has not been accompanied by an increase in demand. To keep their best customers loyal, companies now need to deliver superior value propositions and build up genuine competitive advantages.

3. Growing complexity

An explosion of new products, brands, and channels, coupled with dynamically changing customer preferences and compressed product lifecycles, is increasing the complexity of doing business. To devise effective business strategies, organisations must develop a clear understanding of their target customer segments, as well as their value and profitability.

4. Discerning customers

Customers are becoming more demanding, better informed and increasingly empowered. Traditional marketing is no longer working, and customers want richer and more relevant dialogues with the companies they deal with. They want their preferences to be respected and their loyalty to be rewarded. Under these conditions, so-called ‘pray and spray’ communications are destroying both relationships and brand value.

Amid these challenging circumstances, how can an organisation differentiate itself? With the best product? No, because products can be duplicated. With the lowest price? No, because discounts can be matched and promotions can be copied. With satisfied customers? No, because satisfaction isn’t the same as loyalty.

A number of studies have indicated that majority of the customers who defect are either ‘satisfied’ or ‘very satisfied’ with their former suppliers. So, while customer satisfaction is clearly important, true loyalty is what is absolutely essential. This is because loyal customers:

·  Buy more and more often than other customers;

·  Enhance profitability and cost less to service;

·  Provide an invaluable referral system (i.e. they share, recommend and advocate).

In order to drive true customer loyalty, you need to understand customer’s perspective, and know what they want – which usually includes statements such as:

·  Treat me as though my business is important to you;

·  Reward my loyalty and recognise me for who I am;

·  Respect my preferences and the information that I share with you;

·  Make it easy to do business with you, anywhere, at any time;

·  Be relevant to my needs and circumstances;

·  Help me realise my needs and dreams;

·  Save me time and money;

·  Connect me with people like me.

Strategies to build a customer-centric enterprise all involve fulfilling the customer’s needs. Each strategy described below can be viewed as a milestone in the overall path to customer-centricity:

1. Understand your customers

Organisations need to develop a deep understanding of who their customers are, how their behaviour is changing, what tactics will drive the best results, and so on. Understanding customers involves the monitoring and tracking of several factors:

i. Factual information: where they live, and their socio-economic and family background;

ii. Transactional information: what, where, how, and why they buy;

iii. Attitudinal information: their preferences, desires, and needs;

iv. Interactional information: which offers they have received, how they responded, what they usually complain about, and what they pay compliments about;

v. Analytical information: their churn potential, profitability, lifetime value, recency, frequency and monetary value.

2. Reward, recognise and differentiate

Organisations have a very little or no influence over the buying behaviour of anonymous customers. These consumers tend to shop intermittently and then stop buying at some point, severely limiting their potential value. To maximise customer value, organisations therefore need to build strong brand affinity through effective reward, recognition and differentiation strategies that aim to:

i. Offer personalised rewards, aligned to the preferences and lifestyles of individual customers;

ii. Recognise customers and deliver differentiated benefits based on their value;

iii. Deliver timely, targeted and relevant communications through the right channels.

3. Deliver great cross-channel customer experiences

Customers today tend to traverse several channels before they conclude their buying process. They do research through social networks, they purchase online, they track orders by mobile, they pick-up goods in store, and complain to the call centre. More and more customers are engaging in cross-channel shopping behaviour, with nearly 50% of all retail sales in the US being projected to be cross-channel or online by 2012. Studies have indicated that a small improvement in the cross-channel customer experience can lead to significant improvements in customer loyalty and revenue thanks to additional purchases, enhanced retention, and word-of-mouth customer advocacy. Organisations must realign their people, processes and technologies to deliver consistent and coherent cross-channel experiences and one-to-one personalised engagement via both traditional and emerging channels.

4. Build and leverage a powerful community of loyal customers

Some 74% of the US population uses social media. Customers prefer to engage in multi-party conversations in order to satisfy their need for information and guidance, and they tend to trust their peers more than other key influencers (including industry analysts, academics, and the CEO). They must therefore create an environment in which customers can reach out and interact with each other and share their ideas, views and experiences. The marketer can then use these customer-to-customer conversations to understand, respond, and be able retain more customers, increase revenue, and establish a customer-centric brand reputation.

This article is an extract from the 30 chapters of detailed coverage in ‘The Loyalty Guide 4’, which is The Wise Marketer’s latest 1,000+ page global guide to customer loyalty and engagement techniques, best practices, models, metrics, practical advice, market data and research. The report provides hundreds of detailed case studies, forecasts, trends, tables and visual materials to support new initiatives, presentations and proposals. See how customer data can increase profits, reduce churn, and increase frequency, spending, and share of wallet, and find out where your competitors are succeeding or failing, and why.

For only 1,095 the electronic (PDF) edition of The Loyalty Guide 4 gives you a complete, portable reference library of customer loyalty, engagement and marketing strategy. A free 50-page Executive Summary, chapter samples, table of contents, text searching, licensing and ordering details are online now at http://www.theloyaltyguide.com

 

(via The Wise Marketer)

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