Customer loyalty shifts up a gear

First it was loyalty cards, then it was voucher codes. The UK market is one of the largest in terms of loyalty card users, and Boots’ Advantage Card was one of the forerunners of this, rewarding customers with points for every purchase that they made. This was quickly followed by voucher codes, with companies sending strategic email deals to offer substantial discounts on flowers close to Mother’s Day and money off mulled wine at Christmas.
Groupon is one of the leading websites that offers targeted voucher codes to appeal to audiences. Consumers are used to high-street price reductions, but schemes such as Groupon were the first to go further than this and offer customised deals and incentivise consumers to make a purchase.
The recession has caused a seismic shift in the way in which companies appeal to and retain customers. Limited budgets and a desire for quality over price mean that basic ‘money off’ deals are no longer enough: price-conscious consumers are looking for value, not just in a monetary sense but in the quality of product or level of service being delivered.
With the rise of social media, the marketing landscape has now evolved to include an online culture of sharing content with friends, making recommendations and promoting products through word of mouth. Content-sharing has become an integral part of many leading campaigns, with brands using channels varying from print ads to social networks, such as Facebook, to gain consumer loyalty and encourage customers to share their positive view of a brand with their friends.
One of the most recent online loyalty platforms to appear is SNAP (Social Network Appreciation Platform), which encourages customers to gain loyalty points with their favourite brands by recommending it to friends through their social networks. Customers make a purchase with their favourite brand and swipe their gift or loyalty card. The company’s central system sends the data to SNAP, which posts an update to the customer’s social networks, promoting the brand and rewarding the customer with loyalty points.
This means that companies now have access not only to individuals, but, by extension, access to their friends. Traditionally, marketing was a one-way process, with communications being sent to individuals, rather than groups. If the messages didn’t reach the intended recipient, there was no way for brands to measure how effective it had been or even if consumers had received their messages.
However, there has been a huge shift in the way in which companies communicate with consumers. Marketing is no longer a one-way street, and marketers are starting to appreciate the benefits of building customer loyalty through individuals’ networks. One of the benefits of this type of promotion is that this is a great way of incentivising consumers and building their loyalty to a brand. In addition, consumers are more likely to trust recommendations from their friends, which lends the brand more credibility.
Having said this, the same rules apply, so it is crucial that companies ensure that everything they send to consumers is relevant, or else they run the risk of bombarding them with spam emails and causing potential reputational damage to themselves. This may even lead to consumers disengaging from the brand.
With the recent fifth anniversary of Twitter, the consumption of information has evolved rapidly in such a short space of time and has dramatically affected the way in which consumers interact with brands. For instance, there have been many examples of brands that have gone wrong when trying to harness social networks in order to expand their customer base. One example of this is search engine Bing, which offered to donate $1 to the earthquake and tsunami relief in Japan for each time Twitter users “retweeted” (shared) content. This blatant self-promotion caused a backlash amongst consumers who were outraged to see a brand use a humanitarian disaster in order to publicise their service.
In addition, now that consumer opinion of a brand is increasingly informed by online sources such as bloggers and other influencers, it is more important than ever for brands to act with integrity. Brands must treat information that is volunteered by consumers carefully, making sure that they earn their trust by ensuring that every interaction consumers have with the brand is meaningful and relevant.
So, is this a new form of customer loyalty? As customers make recommendations based on their experience of a brand, and companies increasingly engage with them to deliver the service they require, I would suggest so.

Mike Spicer is chief executive of Pulse Group