In the ongoing battle for consumers share of wallet, smart retailers strive to drive not just repeat purchasing of products but actual loyalty to their brand. That is emotional loyalty which drives behavioural loyalty, helping the retailer to differentiate themselves and rise above the noise of the competitive arena. How can this be achieved? By focusing on customers, what’s important in their lives and integrating loyalty programs across experiences that meet their demands of more for less. On a digital front this means providing useful and engaging solutions across relevant channels, solutions that are relevant to the individual consumer. Just take a look at the way Tesco in the UK really gets this change of focus and how to leverage digital with loyalty programs.
Garth Hallberg suggested a measurement of the emotional state of loyalty through what he describes the stages of consumer loyalty, shown in the ‘Loyalty Pyramid’ below. Consumers are assigned to one of ﬁve levels on an emotional loyalty scale from ‘No Presence’ meaning no awareness’ of a brand through to ‘Bonding’ where consumers believe that the brand’s beneﬁts and properties are unique or shared by few other brands.
His quantitative research further found that the average shopper (first column below) spends more as they move up though the pyramid, a super loyal ‘bonded consumer’ generally buys four to ten times more than a consumer way doen at the presence stage of loyalty. When segmenting the customer base heavy or high-value category buyers, deﬁned as the top third of all buyers in terms of category consumption, generally buy at least 50 per cent more than the average buyer in the category. Basically in many cases the sales value of a bonded heavy category buyer or user is 15 times more than the average consumer at the base level of emotionally loyalty.
It is no surprise that more loyalty equals more revenue, but just paying lip service to loyalty though behavioural drivers such as discounts is likely not enough. Retailers need to be asking themselves at least three key questions. Are we really focused on the customer experience? How can we tap into our loyalty program and deliver relevancy? What technologies both existing and emerging can we utilise to drive engagement and value enabling utility?