Customer Loyalty is Earned Through a Personal Understanding

It often seems as if retailers will try anything and everything to cultivate brand loyalty. More rewards. Steeper discounts. Lower redemption thresholds. The one constant of loyalty programs is change. Retailers continually analyze programs to determine what’s most effective in building a loyal customer base. New research from Dynata, in a survey commissioned by Redpoint, reveals that for many customers, loyalty has less to do with discounts than it does with a brand demonstrating an understanding of what makes each customer unique.

In the survey of 1,000 US consumers, 74 percent said that a key component of a brand loyalty program is that members feel valued and understood. Being “valued” was defined as a customer knowing their worth to a brand is more than transactional, while being “understood” was defined as a brand recognizing a customer as unique, knowing individual preferences and behaviors vs. just another customer. In other words, a discount that kicks in for every customer who accumulates a set number of points isn’t enough to differentiate at scale.

Loyalty Derives From a Single Customer View

How, then, do brands demonstrate value and understanding to a customer? Offering relevant product and service recommendations (52 percent) was the No. 1 way survey respondents said they feel understood, followed by 44 percent claiming it’s when a brand offers seamless in-store and online navigation. Nearly one-fifth (17 percent) cited a consistently high-quality experience across all channels as the chief requirement for earning loyalty.

Knowing what fosters loyalty, it stands for reason that irrelevant recommendations, disjointed navigation, and inconsistent experiences across channels will send consumers fleeing into the arms of a brand that does a better job of demonstrating a unique understanding.

The challenge for many retailers is that processes and technology are traditionally channel-centric, which creates siloes of data that serve as a chief culprit in preventing brands from creating a consistent, relevant customer experience. That becomes magnified as customer journeys are increasingly dynamic and shoppers indiscriminately move between channels. To meet a customer with a relevant next-best action, retailers must move in the cadence of the customer and possess a contextual understanding of the holistic journey.

A contextual understanding is made possible by having a single view of the customer. Centralized customer data that includes everything there is to know about a customer — all transactions, behaviors, preferences, social footprint, devices, identities, etc. — is the key requirement for delivering an omnichannel customer experience because it overcomes data and process siloes. When a unified customer profile is updated with real-time data from every conceivable source, a retailer is presented with an up-to-the-second view of how a customer journey unfolds. It’s as if the brand is walking hand-in-hand with the customer as the customer navigates through various channels.

A detailed, personal understanding of a unique customer — and unique customer journey — becomes a matter of course; a brand is always positioned to deliver a next-best action that factors in every channel in relation to every other channel. Consider, for example, a retailer’s response to an abandoned shopping cart. Demonstrating a personal understanding of the customer might entail knowing when that same customer arrives in-store and being ready with the perfect offer most likely to result in conversion.

That’s the type of consistency and seamless cross-channel experience customers mean when they speak about value and understanding. In the survey, 64 percent of respondents said they would rather purchase from a brand that knows them, and roughly half (49 percent) said they’re more likely to purchase from a brand that does personalization well. Increasingly, demonstrating a personal understanding is the gateway to earning a customer’s loyalty.

John Nash is the chief marketing and strategy officer at Redpoint Globala customer data platform and engagement hub.

Joseph P. Harris