There is a pile of about 100 cards on my desk, rising steady every week.
Yet they are not from any Magic game nor from any trading collection, though both would be far more valuable, in my opinion.
The cards covering my desktop are the much more mundane loyalty cards, that in many cases inflate our wallets: from supermarkets, to restaurant chains, from hotels to trains to parking lots and (sic!) to universities.
Almost every activity you do today entices you with a loyalty card, promising rebates and unequalled deals, with the bottom line of no connected cost for the subscriber.
Yet each card brings many attached costs for the issuer (physical cost of issuing, subsequent data entry with connected ERP and CRM software solutions, development of loyalty programs and their marketing, ….), which seem nonetheless worth perpetuating, seeing the cards’ expansion, although today many cards are no longer paper based, but they come ever more frequently in the form of Apps. Smartly integrated into our devices and into our lives.
The reason why so many companies are continuing to build up their loyalty enclosures with us – the customers – their consenting captives, is not just for locking-in consumers’ purchases to their offers, but broadly speaking, to court them on a long term basis through collection of their personal data and subsequent customisation of the offers, in what has been called the One-to-One communication of brands, leading to the Segment-of-One Marketing.
As a still actual article by BCG points out, the challenge for companies and marketers today is to reach as many consumers as possible through the logic of information retrieval and service delivery: of course, this entails the compulsory touch of an intimate, personalised communication.
From an Executive’s perspective, the message sounds a little bit like: forget about those cash-cow products that could rein in lots of money appealing to hordes of consumers, don’t kill those underperforming dogs you absolutely wanted to dismiss and do not bet excessively on stars, while trying to figure out the correctly tailored answers to all those puzzling question marks.
In short, a sort of U-turn from management practices, oriented towards economies of scale and of scope, that have been so popular until a few years ago.
Imagine you are entering a new bookstore, to buy a book for your best friend, knowing what she likes but still undecided about the exact title you should get her, and you find a helpful clerk who relates you in detail the features of a few books your friends could be interested in.
Now imagine she could suggest you some more interesting books you were not aware of that your friend would enjoy – based on your information and on her experience as a store clerk – since many satisfied customers have enthusiastically shared their feedbacks with her after their past purchases.
It is actually the way Amazon was born: the Seattle-based company used to employ book reviewers to stimulate the purchase interest of the first e-shoppers, back in the ‘90s, who missed the human touch in the online web-shop. Then Big Data broke in and the reviewers soon became obsolete, replaced by an algorithm that could inform customers of titles that are usually viewed or bought together, effectively and efficiently increasing customer retention and purchases’ turnover.
As mentioned, however, Big Data are just a part of the picture.
The key is winning consumers’ advocacy, which means creating upfront a stronger tie with them.
Kotler brilliantly describes this process in his 2017 best-seller Marketing 4.0: he states that today consumers are faced with far too many messages and they consequently disconnect to turn to their trustworthy circles in order to make their decision to buy. For this reason, companies have to stand on the customers’ same playground, becoming a trusted peer that customers will turn to, when making their next purchase decision.
This brings to a transformation of the customer path which switches from the previous 4As (aware, attitude, act, act again) to the more actual 5As, a funnel leading to the brands’ selection through multiple touchpoints and interactive decision-making processes.
Customers are now exposed to a long list of brands (aware stage) either from past experiences or from advertising messages or conversation they hear. They then process these messages into a short-term memory, or they amplify them to a long-term memory, creating thus a consideration set of brands: this is the appeal stage. Following, they enter the ask stage, which has them interact either with friends and family or directly with brands to gather confirming information. If the information they retrieve, reinforces their previous attitude, they finally purchase the product or service, getting to act. This is not the last step of the process, however, from the brand’s standpoint. In today markets, it is foremost to capitalise on the customers’ loyalty, transforming it into advocacy: the advocate stage aims to reinforce customers’ positive feelings in order to enhance repurchase and recommendation.
All along this funnel, customers become more and more selective, acting through erratic, sometimes spiral ways and forcing marketers and advertisers to increase their presence in as many points as possible, while tightly monitoring consistency of their brands: this will help being accepted as members of the communities, which are the places most customers turn to, nowadays, to test their initial perceptions of a brand and to receive an influential advice (appeal to ask). Confidence will stimulate the willingness to advocate, useful for WoM (word-of-mouth) and to respond to haters (dormant advocacy). Transparency is key, because consumers attitude is based on casual conversations, non-stop connection and personal opinions, which all should fit to the brand image (ask-and-advocate relationships).
That explains why today customers are no longer seen by companies in terms of present purchasing power, but they are more effectively considered for their LTV (lifetime value), i.e. the net profit they are supposed to generate for a brand during their whole lifetime.
That also explains why more and more money is invested in trying to figure out the motives that make social media experiences remarkable for customers and hence effective for companies, as a recent article from Harvard Business Review points out: which brings to the centrality of qualitative social media research, the necessary step for understanding the quantitative trends obtained through Big Data analytics.
Definitely, it is much more than a game of cards, with stakes, which have been just partially captured and that are potentially bringing increased turnover and cutting-edge advantages to the companies, that will be most able to stir the customers’ engagement.