Customer loyalty part 1: Do millennials make loyal customers?
- 02 December, 2015 07:47
With the rise of millennials making more informed purchase decisions, the pressure is on brands to find innovative ways to make this next generation of customers loyal. And experts agree millennials can be loyal customers, provided your marketing strategy is agile enough to meet their changing needs.Read the other articles in our customer loyalty series:
- Customer loyalty part 2: How to leverage data to boost loyalty
- Customer loyalty part 3: Four ways to use social media to boost customer loyalty
A recent survey by Adroit Digital confirmed millennials are now a heavily scrutinised generation and a key focus for brands and agencies. This highly connected, tech-savvy, socially responsible and customisation-craving generation wants to create their own experiences with each brand from which they buy.
Interestingly, the report showed 64 per cent of millennials are more brand loyal than, or as brand loyal, as their parents. Brands that can succeed in giving millennial shoppers what they want stand a large chance of capturing this generation’s loyalty throughout the customer lifecycle, the report found.
Earlier this year, Ogilvy & Mather also released a report, Brands that Do: Building Behaviour Brands’ 2015, which revealed the next generation are very much behaviour-led. The report showed the next gen of consumers to be persuaded less by materialism and more by experience as a form of social currency. As a result, they remain loyal to brands they see as acting in accordance with their values.
For marketers, ‘behaviour branding’ now provides greater competitive insulation when it comes to customer loyalty than ever before, Ogilvy & Mather claimed.
OgilvyOne managing partner, Michelle Holland, says the recent global study saw millennials emerge as engines of action. She suggests millennials can be loyal, and are actually more loyal than their parents.
“But, and it’s a big ‘but’, they need to be treated according to their engagement needs – leveraging all digital opportunities to engage with brands,” she tells CMO. “Millennials have taken personal responsibility for tackling issues and let their lives be guided by their values rather than external measures. Crucially, they feel the need to be heard. Hence two-way communication between brand and millennials is essential.”
For brands wanting to attract and retain customer loyalty, Holland says it’s vital to act in a way that parallels millennials.
“We must stop asserting beliefs and pushing messages,” she says. “Instead, we need to start demonstrating value in ways which matter to them. And that makes them loyal.”
The journey from habitual loyalty to genuine loyalty
Andy Crawley, director of Byron-Bay based ad tech firm Jack Media, consults to next-generation digital brands including Kogan, Living Social, Groupon, Yellow Brick Road and OzSale. He believes millennials are no more or less loyal than other segments.
“Actually, I think there’s more potential to create loyalty with millennials than there is with other customers,” he says. “While they are still young, there is an element of laziness and laziness can create almost habitual loyalty, which can then turn into genuine loyalty. So millennials may not all be loyal right now, but they’re in the process of forming their loyalty and it’s a time to cement those relationships.”
According to Crawley, the key to leveraging millennial customer loyalty is lead nurturing. This is where he sees a lot of marketers falling down.
“A lot of people will connect with a brand but won’t necessarily go and make a purchase right now,” he explains. “And a lot of brands understand that’s not necessarily a closed conversation. Someone may have connected with you, but they may need more nurturing or need you to support them from the outset. But the level of nurturing has to be natural, it has to ongoing, and it needs to be continually adjusted as you see the impact on your results.”
Keep it authentic
In order to reach out and connect with millennials effectively, Crawley agrees brands need to maintain an authentic, genuine voice, and give the next generation a truly personalised experience and grassroots level.
“Millennials see through too much automation,” he says. “They are looking at brands having a more authentic voice. It need to be natural, it shouldn’t be forced or disingenuous. So implementing things like marketing automation should be crafted more carefully. For instance, it shouldn’t just be an automated Twitter response – nobody likes that.
“Just because you’re an online customer, it doesn’t mean you should lose out on the complete experience. Automation needs to be done in a way that makes you feel nurtured and makes the first purchase memorable and enjoyable – and loyalty builds from there. We do a lot of work with our clients to build automated processes, so that the digital and online customers can have that similar hand-son experience as you would offline.”
While Crawley says there’s ‘no secret sauce’ or ‘magic pill’ in marketing to millennials, he advises brands to steer clear of being too quirky or humorous. In contrast, he believes in a more natural, true-to-brand approach to attract and retain customer loyalty within the millennial space.
“If you look at the likes of PedestrianTV, the company has a very quirky and interesting humour that resonates well with its audience, and that same language and presentation is being done well in that case,” he said. “But if brands want to use the same tactic, they could run the risk coming across as a horrendous failure. So the way that you talk should be natural and not out of context with the brand and your audience reach.”
Meeting higher customer expectations
With the beauty space a heavily nominated millennial playing field, cosmetic and beauty brands are striving to find more agile, adaptable and engaging ways to attract and retain customer loyalty.
CEO of online cosmetic and beauty site AdoreBeauty, Kate Morris, expects loyalty will become an increasingly elusive, and therefore more valuable goal for marketers, especially as millennials become a larger part of the consumer population.
“Loyalty will become less about ‘loyalty cards’ and more about actual behaviour in terms of repeat business and share of wallet,” she says. “Millennials can be loyal customers, but they also have extremely high expectations of immediacy and service. You can’t let them down. You’re on a global playing field with millennials, so you’d better be world-best or they’re off elsewhere.”
Regardless of generation, however, Morris stresses true loyalty is only earned by providing a consistently great customer experience every time.
“You can offer all the points and perks you like, but having great inventory and fulfilment systems as well as an excellent customer service team will trump points every time,” she says. “That’s where we focus our energy: Improving the customer experience for every single sale.”
CMO of beauty subscription provider Bellabox, Stephanie Michel, agrees. She sees millennials as both versatile and used to having extremely quick access to any content at any time.
“They are used to being exposed to new experiences every day - if not many times a day,” she comments. “Their relationship with social media and mobile is stronger than any other age group, and competition is high to get their attention and to drive engagement and loyalty there.
“That said, however, I believe they can definitely be loyal and even turn into your best ambassadors, while not being one of your customers yet. The key is to manage to catch their attention and deliver good experience. Their loyalty might be hard to get in the first instance, but it's incredibly worth building it for the long-term.”
At Bellabox, Michel reveals maintain customer loyalty now requires a multi-channelled, flexible and agile approach. She says the brand takes time to listen to members, whether they give feedback through a survey where they tell the company their opinion on products they have sampled, through comments on social media, or when they contact the company’s customer service.
“As a result, we are constantly taking new initiatives to improve their experience,” she continues. “Just to give two examples, we are very flexible with brands we feature in our boxes every month so as to match new trends and changing members' expectation.
“We also beta test some membership alternatives when members share with us they want to unsubscribe because they now have received enough products.”