Customer loyalty part 2: ​How to leverage data to boost loyalty

We find out how bid data tracking and customer insights are being used as part of modern customer loyalty programs and communications

In the latest instalment of our customer loyalty series, we look at how data is playing a vital role in understanding and bolstering modern customer loyalty and engagement.

Leveraging deeper data insights has become critical to ensuring customer loyalty in an increasingly competitive digital landscape.

According to retail software provider, CitiXsys A/NZ senior vice-president, Paula Da Silva, capturing transactional information as well as organising data to gain genuine insights into customer spending habits are essential practices for anyone trying to secure robust customer loyalty.

“Transactional and social interaction data available enables loyalty marketers to spot brand loyalists,” she told CMO. “Starting connections with your best customers can be achieved through close analysis of data, and the best thing is, there is so much technology available now that can help you to identify these influencers. And marketers can now start offering tailored content and sales in efficient ways.”

One emerging data set Da Silva highlighted is the intersection between mobile usage and location services. These insights present many opportunities for retailers to leverage mobile data and also connect with switched-on consumers, she said.

“Customer adoption of mobile is mindboggling, with forecasts suggesting it will only continue to grow,” she said. “Geo-tagging and mobile-local connection will be a few big trends in the loyalty space in the coming years, as marketers search for opportunities to reach out with customers whilst they are in-store.

“Such interactions are invaluable because they start conversations on the shop floor, which builds relationships between customers and brands. All of these interactions are solutions to providing exemplary experiences both on and offline.”

Sentiment and intent

At OgilvyOne, tracking and measuring loyalty has shifted over the past five years from loyalty purely based on an RFM model (recency, frequency and monetary value), to also assessing sentiment and intent, said managing partner of the customer engagement agency, Michelle Holland.

“Now, we have so much more data to overlay to determine true customer loyalty,” she said. “We are using sentiment and intent as keys for measuring loyalty. We are looking at how customers engage at all levels, from email opens and website revisits to post-visit surveys. These are all designed to help build a more robust loyalty score on an individual customer, as well as to then help identify key behavioural changes that could trigger defection.”

The single biggest change is the ability to see all this in real time in order to enable organisations like OgilvyOne to act quickly and become more agile, Holland said.

In one example of a client engagement, she explained the agency identified a high-value customer who said something negative in social media.

“The result was the CEO immediately called them personally to resolve their issue,” she said.

Everyone is different, however, and Holland said the extent to which data fuels an understanding of customer loyalty depends on how data-driven the client is.

“We range anywhere from a couple of gigabytes to a couple of petabytes of data, which we analyse on an ongoing basis to determine customer loyalty,” she said. “But the driving factor for a client’s data engagement level is the number of touchpoints they have with customers, such as Web, mobile, CRM, in-store, sales data and even weather data.”

Ultimately, Holland believed customer loyalty is based on emotion first, and behaviour second.

“The sooner a brand can find a way to focus on the emotional relationship, the sooner repeat purchases follow,” she claimed. “Critically, this should always be a two-way conversation, not an ongoing carrot and stick to drive purchases. Customers are savvy to the old rational tricks.”

OgilvyOne is working with a spectrum of brands to unlock the emotional and social bonds in relationships with their customers.

“I am still a strong believer in rewarding customers for loyalty,” Holland added. “That could be a simple ‘Thank you’ note, or removing a late fee. It could be posting their comment on Facebook and giving them their 15 minutes of fame. Or it could be as elaborate as an upgrade on a plane seat or hotel room.

“The truth is, once brands were powerful, and consumers grateful. Today, consumers are powerful and brands are grateful. This is especially true when it comes to building loyalty.

“Brands need to show customers they value their business, and it isn’t one-size-fits-all. You need to know them. It’s not nearly enough to personalise an email, you need to show you understand their needs and wants, and that you are listening. You need to know that you do understand and you are ready to respond in any channel and at any time they choose.”

Data as the fuel for understanding customer loyalty

ING Direct head of marketing and communications, Chris Kenny, positioned data as the essential fuel for understanding and responding to customer loyalty.

“When we map customer journeys, we don’t concentrate on making a pretty picture, instead we rely on rich insights that point out where the journey must be improved, according to what matters most to the customer,” he said. “It is a challenge to pull in data from various sources, but once it’s done, it shines a light on the path to make it easy for customers.”

From ING Direct’s perspective, Kenny said customer loyalty will only increase in prominence and importance for businesses, as customers demand better and faster solutions to their needs.

“The definition of customer loyalty is evolving too,” he continued. “It used to be that acquiring as many customers at the cheapest rate was acceptable. Now, smart organisations will be using data to devote their attention to customers who are truly committed to them. Both sides of the equation will be forced to be more ‘loyal’ and success will be about working together for mutually beneficial solutions.”

ING Direct’s primary bank strategy is focused on rewarding customers who use its services as their main bank.

“Put simply, the more loyal a customer is, the more they will benefit from our products and services,” he said.

ING Direct has been concentrating on extending its industry Net Promoter Score (NPS) leadership as part of its customer retention strategy. This provides a gauge on how healthy the bank’s reputation is among our customers, and their likelihood to advocate its products and services.

“Having an industry-leading score, we are focused on capitalising on this positive sentiment by motivating customers to actually bring their friends and family to us,” Kenny said. “It’s working, and over 50 per cent of new customers come to us via these referrals.”

A companion metric ING Direct is using more of is ‘Easy Score’, otherwise known as Customer Effort.

“This is built off the insight that ‘easy’ is the most popular word used by our customers to describe ING Direct,” Kenny explained. “We measure how easy each of our moments of truth are, and use accompanying customer insights to continually improve.

“Extensive analysis, deriving correlations between the scores that customers give us and additional business they do with us, is ongoing, fascinating work.”

Across ING Direct’s customer engagement communications, one of the most popular and successful to date has been demonstrating the value of the relationship with the bank. Monthly rewards statements show customers how much they have earned in ATM, payWave and mortgage repayment cash back rebates, as well as their bonus savings interest if they have a Savings Maximiser account.

“Customers are intrigued with this communication,” Kenny claimed. “If this number is high, the customer loyalty spikes. If it’s low, it encourages them to increase their usage and loyalty to ING Direct. This is also in line with our ‘customer equity’ philosophy, which rewards customers for their loyalty and for supporting our strategy to be the main bank for Australians.”

To keep attracting and retaining customers, Kenny said the bank remains mindful of the difference between what a customer says and what they do.

“Banking is particularly prone to apathy, where a customer may complain but may not vote with their feet,” he said. “We want to help them find that voice, and make it easier to switch with a compelling proposition and world-class experience. Segmentation is also critical and it will definitely inform our customer-centricity going forward.”

Part 1 of our customer loyalty series, 'Are millennials actually loyal?' is available here.

More from the CMO archives on building customer loyalty:

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