Building customer loyalty

Less Value in "Lifestyle Marketing"

I'm not sure I agree with all of this, but it really calls 'one-to-one' marketing into question. In a good way. 

I'm a member of many loyalty programs, but I've never earned a reward for a referral. Rather than introduce my friends to a brand, I want to connect with the other people who appreciate the brand. We all have diverse tastes, and I like meeting new people based on one specific shared interest, not because we share a bunch of interests. 

LinkedIn: Why taste communities are the future of marketing, 2020-Jan-21 by Ana Andjelic

Thanks to the Internet and its numerous influence networks, products across categories are now more susceptible to trends than to individual preferences. A show becomes popular because a lot of people watch it, and it’s entirely possible that a big chunk of the show’s audience does it not because it reflects their interests or values, but because everyone else they know is watching a show and they do not want to be left out...

Think about your brand in plural. Just as my Netflix isn’t your Netflix, my pair of Off-White sneakers is not your pair of Off-White sneakers. It doesn’t matter that Netflix is a platform and Off-White sneakers are a physical product: when we apply tagging system and shopping data, each product is worn in a manner that reflect its user.... 

Target communities, not individuals. Every Netflix user belong to three or four taste communities. Members of modern societies belong to many more. No two persons are exactly alike, even those that buy the same products, chose the same brands, and like the same content. There are those who enjoy foreign movies and travel documentaries, horror and romantic comedies, Vineyard Vines and Everlane, sneakers and high jewelry. People are communities they belong to. 

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To deepen loyalty, turn your customers into members

A membership program helps your customers become brand ambassadors, proud to share their insider status with the larger community. If customers can learn from one another, they can build something together. Being a member is much more satisfying than being a customer. 

The Sociology of Business: From Loyalty to Membership, 2020-Feb-11, by Ana Andjelic

In the modern aspiration economy, consumers are fans, influencers, hobbyists, environmentalists, and collectors. Membership programs are designed for them.... 

The keyword here is not necessarily prestige and exclusivity, but identity and belonging. There’s a pure pleasure in the intimacy of consuming together, along with enjoying status within a community. Thanks to a membership in a community, a hypebeast gets access to new product drops and events. This is the domain of intangibles that most loyalty programs fail to deliver, and that membership excels in.... 

Membership is mentorship... define the activity that members can learn from one another. This activity needs to stem from a brand’s role in culture, environment, or society.

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Designing the world for our children

As my mother enters the late stages of Alzheimers, I'm looking around her cluttered home and wondering who'll carry out all the stuff. Then I go home and look at my cluttered home and think, "I'm not leaving this for someone else to sort out." 

In the future, when I acquire something and manage my home, I'm always going to visualize where that item will be after I'm gone. (And if it's going into the trash, I better be the one to put it there!)

Forbes: Lovesac's Loyalty Secret For Keeping Customers For Life And Saving The Planet, 2019-May-3 by Jackie Huba

In recent years, Nelson has been honing the Designed for Life (DFL) philosophy. Now 41 years old with four children, he is focused on growing the company in a sustainable way beyond "green washing." He wants to get rid of the status quo; that what we buy is designed to be used one time and thrown away. Nelson says, “There is an Iroquois saying that I think of daily... ‘we are borrowing this earth from our children.’ I think [about] what that really means and how our consumer actions right now will influence this world for my kids and yours.”... 

Nelson hopes the DFL philosophy becomes a movement among other businesses and has created a website, dflgroup.org, that explains the concepts and provides helpful resources. Ultimately, he believes the philosophy will help companies connect with customers on a higher level than just a transaction. Nelson says, “[We want to] have an ethos that resonates with souls at a fundamental human level. You don't have to be a sustainability freak or even an environmental advocate to appreciate something that's well built, and that allows your life to be flexible, and that you'll love more after owning it for four or five years than you loved it on the day you bought it.” 

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Consider how loyalty is built or destroyed by emotional experiences

I've been considering contacting ex-Houstonians for support in building a better image for the city. Their interest and support will be built on their having had positive emotional experiences here. In many instances, their bad experiences will be unrelated to the city itself, but affect their attitude. So when we reach out to ex-Houstonians, we'll need to be very sensitive and accepting of their sometimes bad opinion of the city, even if it's unfair. 

We cannot always prevent bad experiences and we have to allow others the space to be unhappy. Can we repair the relationship? Maybe. Sometimes. If we can afford to. 

CMS Wire: Positive Memories: The Shortcut to Customer Loyalty, 2019-May-08 by Liraz Margalit

When researchers at Forrester analyzed whether ease, effectiveness or emotion had the biggest impact on customer decision making and brand loyalty, they found that emotive connections won hands down.

Both long-term loyalty and memorability are built through experiences that drive positive emotions — even when that long-term loyalty is misplaced or fundamentally irrational. In fact, my company Clicktale’s research with data professionals suggests that as many as three quarters consider consumers to be “fundamentally irrational” in the way they shop. Clearly, feelings, not facts, are what drive our decisions — a factor that needs to influence the way that brands think about customer loyalty. 

Forrester: A Closer Look at the Monetary Value of Emotion, 2016-Sep-21 by Victor Milligan

Companies need a way to understand and measure emotion: to design experiences, to predict its impact, and to formally connect emotion to P&L performance. Specifically, companies need to know:

  • If the emotion driven by an experience is positive or negative, meaning did it create an emotion that has the potential to draw customers closer to you or push them further away?
  • What was the intensity of the emotion, meaning is it likely to alter the existing level of affinity or spending behavior?

Forrester’s Customer Emotion Matrix provides a simple yet powerful method to understand and ultimately quantify emotion by examining the two primary factors that determine if and how customers may alter behavior:

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Cementing loyalty with an annual report on the customer's performance

I would certainly wince to see an annual report from some of my favorite places to spend money, but The RealReal and Rent the Runway are emailing customers a personalized annual report that makes them feel good.

Glossy: How The RealReal and Rent the Runway are using personalized email reports to deepen customer loyalty, 2019-Apr-29 by Danny Parisi

“Our clients have told us for years that the sustainability element is one of the biggest motivators for buying or consigning with us, but for the first time, we really wanted to be able to quantify exactly how positive consigning is for the environment,” said Allison Sommer, director of strategic initiatives at The RealReal. “This is our first and biggest effort to translate what the circular economy means in a tangible way to consignors.”

Rent the Runway does something similar with its personalized reports, which break things down by carbon imprint and water waste, equating them to more understandable, everyday measurements — for example, 6,000 bubble baths’ worth of water saved.

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How to create a retail experience that allows us to compete against Amazon

As Amazon expands into the grocery business, we can learn great lessons from the companies which are competing effectively, especially Walmart and Trader Joe's. Walmart's success is mostly about distribution power, but Trader Joe's uses techniques which any retailer can copy. 

The Trader Joe's approach to retail:

  1. Make it personal
  2. Make it enjoyable
  3. Make it easy to manage transactions
  4. Make us feel like we are supporting the community.

Harvard Business Review: What the Grocery Stores Holding their Own Against Amazon are doing Right, 2019-Apr-12 by Amit Sharma

The nature of customer loyalty is changing as shoppers get more comfortable buying groceries online — prioritizing convenience, choice, and ease over physical proximity to a store. As consumers become more sophisticated, retailers need to inspire lasting loyalty across their customer base. To do it, they should offer flexibility, proactively communicate about order status and other details, and build emotional connections with shoppers.... 

And people are emotionally connected to grocers, as utilitarian as grocery shopping may seem. For example, Trader Joe’s, which ranked highly in the C Space study, inspires loyalty by creating an enjoyable shopping atmosphere. A 2018 Forrester survey of 287 brands rated Trader Joe’s first in positive customer experiences, and the company regularly outranks other grocery chains in sales per square foot. Trader Joe’s fans closely follow new product releases, request stores in their towns, and have even created their own community on Reddit.

Trader Joe’s doesn’t offer grocery delivery, but it has created such a personal and enjoyable shopping experience that customers actually want to visit its stores. Everything at Trader Joe’s is designed to make grocery shopping feel more friendly, personal, and laid-back, including its flexible return policies, free samples, quirky product labels, fast check-out, and helpful employees.... 

Grocers need to offer their customers more than points-based customer loyalty programs, which are no longer a competitive differentiator. Most grocery chains offer similar benefits and do little to foster an emotional connection between a shopper and a brand. A study by Accenture found that 78% of shoppers abandon loyalty programs after signing up.

By investing in the factors that build long-lasting loyalty instead of transactional programs that most people ignore, grocers can attract repeat buyers and brand advocates.

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Taking the emotional rewards out of loyalty

Loyalty programs developed to reward customer behavior. The idea of a basing rewards on a paid subscription was not invented by Amazon, but many people think Amazon has now 'redefined loyalty.' What they have done is make loyalty a financial relationship. Now we have to evaluate the cost-benefit ratio before we sign up. But more disheartening now, we, the consumers, pay upfront then feel pressured to spend more in order to maximize our reward. That's not customer love. I resent people calling Amazon Prime a loyalty program. 

Loyalty360: The Scoop on Premium Customer Loyalty Programs, 2019-Feb-11 by Duy Nguyen

More retailers are providing membership plans and betting that you’ll pay a fee for the privilege of shopping with them. For example, Amazon charges $119 per year for Amazon Prime and has more than 100 million members who make the e-commerce giant their first stop when they go shopping. In exchange for that loyalty, Prime members get lots of benefits, including same-day and free one-day delivery on millions of items, free streaming movies and music, and discounts on groceries at Whole Foods Market. At least a dozen other chain retailers now offer membership plans, and that’s likely to grow.

“We anticipate more paid loyalty programs will launch in the next few years, including programs at grocery stores and gas stations,” says Scott Robinson, Vice President of Design and Strategy at Bond Brand Loyalty, a marketing and consulting firm.

As more membership plans become available, consumers need to carefully weigh the pros and cons. In addition to the perks these plans offer, the cost of membership and the risk that you’ll turn into a spendthrift could outweigh any benefits.... 

Among the membership plans that may now be vying for your business are Bed Bath & Beyond’s Beyond Plus, which you can join for $29 per year. For that, you get 20 percent off every time you make a purchase online or at the store. You also get free shipping. Others, including Sephora, Newegg.com, Restoration Hardware, and Wayfair, have rolled out or are testing membership programs, charging fees up to $100 per year.

When you sign up, these retailers offer online and in-store discounts, deals on shipping, dedicated customer service, and financing deals with lower interest rates. Depending on the retailer, membership comes with other perks, too, such as access to exclusive events, discounts on furniture-assembly help (Wayfair) or even free fitness classes (Lululemon).

To help figure out whether a membership will be worth the cost, ask yourself these questions.

  • Will the discounts really save you money?

At $15 per year, the PowerUp Pro membership at GameStop, for example, will get you 10 percent off all pre-owned games, so you’d have to buy about six pre-owned games in a year to offset that cost. A $100 membership to Restoration Hardware gets you 25 percent off any full-priced item, an amount you could likely offset with just one piece of furniture....

  • Will a membership cause you to spend more than you should?

Amazon Prime customers spend an average of $1,400 per year on the site, compared with just $600 spent on Amazon by non-Prime members, according to CIRP....

    • Will you use the extra perks?

    • Do you know how the retailer might use your data?

    • Is it simple to end a membership?

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