Magazine article Marketing

Andrew Walmsley on Digital: The Reverse Loyalty Bonus

Magazine article Marketing

Andrew Walmsley on Digital: The Reverse Loyalty Bonus

Article excerpt

Online brands should switch their world-view by measuring how loyal they are to consumers.

Long ago, in a previous life, I did some consultancy on customer loyalty for one of the big banks. As part of it we held a workshop, where senior marketing folk debated loyalty in their market, and how they planned to maintain it in the face of pressure from digital channels.

After all, the numbers seem to support this world view. Even today, you're more likely to change your spouse than your banker.

But it seemed to me this construction was based on a fundamental misreading of consumers. Put crudely, the banks' customers thought they were terrible. But they thought their competitors were terrible, too (though they rarely put it that delicately), so there was little point in moving, and they did it only if their bank did something so incompetent or unfair that they felt humiliated if they stayed.

So customers weren't loyal - they were tolerant. And in this conception, the metrics are inverse to the convention - a 'loyalty rate' of 83% is the obverse of a 17% 'tested beyond tolerance' rate. The 83% are simply the ones we haven't pissed off yet.

This theme is ever-present in digital channels, too. According to panellists at a recent summit hosted by Retail Bulletin, customers have little loyalty to online stores, and prefer to base decisions on price, fulfilment and the relevance of marketing emails.

But perhaps unlike the bankers of 15 years ago, the panellists expressed no surprise at this, stressing the importance of delighting the customer right there and then. These marketers dismiss loyalty. For them, the secret of success is in the moment - from ease of use on the website to speed of delivery, reliability and price.

For online marketers, the traditional segmentation that would have given rise to a catch-all proposition for the market has given way to an individualised response. Emails based on demonstrated behaviour and interests, search copy that reflects the user's query, fulfilment options that meet consumers' needs.

For them, the search for loyalty is a vain one. Rightly, consumers want what they want, but they are constrained by resources - money, time, interest - which they balance actively. For consumers, trust in a brand (based on its continued emotional or practical delivery) is a currency they will trade for these resources - it saves time in decision-making if they're not interested, and that can sometimes mean they will pay more. …

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