The Connection Between Customer Experience and Loyalty Programs


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Customers and companies alike love loyalty programs. According to analysts at Forrester, nearly 75% of US adults online belong to at least one. In a massive survey conducted by KPMG, 81% of millennials said these programs prompt them to spend more with a company, 78% adding they’d switch to another if their offering was better. Further, 86% of those loyal to a brand said they’d recommend it to friends and family.

Underlying it all is a positive customer experience (CX), which in a survey from Gartner, was cited by more than two-thirds for driving loyalty, beating out price and brand – combined. With social distancing limiting face-to-face interaction, and the transition to remote work and school, more people than ever are embracing purchasing and customer service online, especially in new categories such as grocery.

For companies, this offers a chance to build customer loyalty, and with the right timing and tools, build relationships that deliver more net profit at less cost than traditional customer acquisition efforts.

Seize the opportunity from the beginning of the relationship
The best opportunity to influence customer behaviors is at the beginning of the relationship because habits, once formed, are hard to break. This is why many brands are highly focused on the experiences they deliver when onboarding, the overarching purpose being to cultivate their actions from the outset.

Onboarding, of course, goes far beyond the initial welcome. Smart organizations carefully execute the first 30-60 days of the relationship educating and inspiring customers to adopt the types of behaviors that will lead to a mutually beneficial relationship. If, for example, a customer is accustomed to making payments via phone, it’s going to be difficult to convert them to the new app your company invested in. The streamlined processes, expanded marketing potential, targeted sales gains – all that was hoped for would be lost.

Thus, as an example, a goal might simply be to get the customer to download the mobile app, followed by an action for them to make a first payment using it. When they get it right, the result can be remarkable advances in digital adoption, spend, loyalty and advocacy. Perhaps from there the next-best action is introducing customers to the loyalty program – detailing the “why” and value for the customer in a relevant way. Getting buy-in at the right time with powerful messages can translate into years of customer support.

That’s why, especially in this increasingly remote age, we’re seeing brands enlisting video to seize opportunity, close engagement gaps and cement relationships.

Communicate with empathy and emotional intelligence
Over the past few years, video has become a critical tool for brands to drive a differentiated CX and for good reason. It’s easy to digest, entertaining and engaging. It brings to life, and simplifies, messages that are often complex and confusing. It’s widely accessible via the internet and on personal mobile devices. It uses both verbal and visual communication to tell a story like no other medium.

Personalized digital experiences continue to be a top priority for marketers. Once customers are bought into a loyalty program, this data can be used to deliver contextually relevant promotions. With a personalized email linked to a video experience (VX), for instance, a company can reinforce the value and benefits of the loyalty program for members in an easily digestible, uniquely relatable and entertaining way.

Target is an example of a strong rewards program that could take advantage of VX to reinforce the value and benefits of the loyalty program to its members in a personalized way at key customer moments or pain points. For instance, a birthday experience can reinforce delivery savings, an extended discount for the month and online access to a special collection prior to store sales. Another annual and critical customer shopping headache is around the holidays. Best selling gift recommendations and how to use Target’s app for curbside delivery can also ease holiday stress. In both instances, reminding customers of their available credit and lifetime savings reinforces the value of why the customer is a program member.

When it comes to getting personal, you need to communicate with empathy and emotional intelligence – and that means listening to customers and getting creative to build loyalty. Each of these clearly accomplished that, and despite the many details involved, the videos delivered it all understandably and powerfully in just over a minute.

Still, the last thing a brand wants to do is come across as insensitive. For instance, right now you don’t want to be the retailer or provider suggesting new card members take advantage of loyalty benefits tied to immediate travel. Special attention should be paid to keep this from happening and here’s a good example of how that can be done.

United Airlines was only weeks away from kicking off a new digital VX for its loyalty members when the pandemic started. Previously, they might have encouraged them to strive for Gold Status within 30 days, perhaps showcase their airport lounges with video of in-person interactions. This wouldn’t have gone over well whereas most people are wondering if flying is even safe and what it would entail.

The airline quickly pivoted, using their VX platform to create personalized video content showing what loyalty members could expect when flying, what safety measures the airline had taken, advice on how to prepare for a trip and more. By adjusting their scenes and messages accordingly, they answered what travelers wanted to know most of all, creating video that elevated their reputation as a business that cares.

Forge bonds and see progress
During this pandemic, progress in consumer online usage – and ecommerce capabilities – has been expedited by years. Those customers that were once hesitant to dip their toes in the digital waters will now jump in with both feet, that is, if you can make it easy for them.

In March 2020, The Baker Retailing Center at the Wharton School and WisePlum conducted a study to explore the attitudes and experiences of US shoppers with a focus on the impact of loyalty programs. It revealed a 7% increase in program enrollment during the first quarter, despite it marking the very start of a crisis.

While CX and loyalty have always been intrinsically linked, today it’s more apparent than ever. With the right messages, timing and tools – delivered in a highly engaging way – the connection can be made even stronger, enabling companies to forge bonds that deliver the most profitable types of relationships for the long term.


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