Loyalty is dead. What’s next?

Ghent,

December 3, 2014

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Definition Customer Loyalty

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Definition Customer Loyalty

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What is Customer Loyalty?

Difference Retention Management and Loyalty Management

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Behavioral loyalty

Attitudinal loyalty

A customer who stays (repeat purchase, renew contract,…) is often seen as a loyal customer

Commitment to continue using a product or service, despite situational influences and marketing efforts of competitors, is true loyalty.

Watch out: This does not mean that these customers are loyal, because they

might leave once the situation changes…

Source: Klantenloyaliteit, Marnix Bügel

Customer loyalty is a behavioral and attitudinal tendency

to favor one brand over all others

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Definition Customer Loyalty

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What is Customer Loyalty?

Difference Retention Management and Loyalty Management

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In contrast to retention management, loyalty management

aims to increase both behavioral and attitudinal loyalty

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Get! Grow! Keep! Get (again)!

Acquisition Development Win-back Retention

Loyalty

Ma

rgin

Time

Source: THoM analysis

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Loyalty management is often confused with retention

in terms of objective, tactic and customer group

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Loyalty management

• Increasing involvement

> Increasing behavioral & attitudinal loyalty

• Long term • Focus on customers with high

potential (customer lifetime value)

• Aims at retaining and

increasing customer value • Through building sustainable

relationships

Retention management

• Focus on switching barriers,

involvement is a secondary objective > Increasing

behavioral loyalty • Avoid churn on short term

• Focus on customers with

high churn risk

• Aims at reducing and

preventing churn • Through fixing the basics

KEEP

GROW

GET

High

Low

Low High

Involvement

Switching barriers

Source: THoM analysis

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Loyalty should be a mindset

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Loyalty appears when customer experience matches at

least expectations and loyalty drivers are met correctly

Each individual will have specific expectations and drivers

influencing attitudinal loyalty

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LOYALTY

DRIVERS

Source: Klantenloyaliteit, Marnix Bügel

Trust

Satisfaction

Quality of competitive alternatives

Investment in

relation

+

+

+

-

Expectations

Experiences

LOYALTY

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Customer experiences can be divided into 4 types

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Relational Relationships

Transformational Actualizations

Aspirations

Transactional Products

Services

Information

Experiential Senses

Environment

Moments

Emotional Emotions

Feelings

Source: Qblog - A series on customer experience: Types of customer experience

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Loyalty tools & tactics

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Customer

experience

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Savings programs are often seen as good loyalty initiatives,

though these are only a small part in the loyalty chain

Customer data Loyalty savings

program

Loyalty X

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Loyalty initiatives can be ranked on 3 axes: reward

moment, required counteraction & customer initiative

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Immediate Postponed

Transaction based Not transaction

based

No initiative

Initiative

Contest Participation Events Customer Adv.

Program

Savings Program Direct Advantage Offering

Relationship Building

Customer initiative

Counteraction

Reward-moment

2

1

3

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REWARDS

PERSONALIZATION

& TARGETING

AWARENESS/WOM

RULES

MEDIA CHANNELS

Evolve from rewards easy to translate to

monetary value towards rewards with a

higher perceived value

To develop a valuable loyalty initiative you need to use a

number of building blocks

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REWARDS

PERSONALIZATION

& TARGETING

AWARENESS/WOM

RULES

MEDIA CHANNELS

• Evolve from one-size-fits-all towards

personalization

• Do smart targeting

To develop a valuable loyalty initiative you need to use a

number of building blocks

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REWARDS

PERSONALIZATION

& TARGETING

AWARENESS/WOM

RULES

MEDIA CHANNELS

Evolve from functional value proposition with

little user adoption towards high awareness

and adoption among general public

To develop a valuable loyalty initiative you need to use a

number of building blocks

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REWARDS

PERSONALIZATION

& TARGETING

AWARENESS/WOM

RULES

MEDIA CHANNELS

Keep it simple. Many rules, no glory!

To develop a valuable loyalty initiative you need to use a

number of building blocks

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REWARDS

PERSONALIZATION

& TARGETING

AWARENESS/WOM

RULES

MEDIA CHANNELS

Evolve from traditional media channels

towards interactive and cross-channel media

To develop a valuable loyalty initiative you need to use a

number of building blocks

Thank you for your attention! (and now it’s time for a drink...)