How to build consumer relationships with value

For more than 25 years, I’ve worked with companies to develop marketing strategies and infrastructure systems to help create stronger relationships with consumers.  While much has changed over the last 25 years, in the last three to five years the pace of change has accelerated dramatically as consumers have gained control through access to limitless amounts of information.

But as consumer access to information has increased, organisations have not kept pace in their efforts to be more responsive to consumers; in fact, organisations often hamper rather than accelerate their relationships with consumers in this environment.

To overcome this challenge, the solution first considered by many marketers is a loyalty programme because they feel it can be implemented without requiring much internal effort.

The misnomer is that a service provider or agency can provide everything that a marketer needs to build a relationship with the customer. And, while that may be an option for some (and particularly, less mature) organisations, for most, this approach is only a temporary solution.

Initially, the loyalty programme yields results and a belief that the approach is working. Then, engagement results plateau and may even start to decline to a level below when the programme was launched.

A programme may seem to be working because the consumers’ range of experience and touchpoints are mostly through the programme itself. As consumer interest and trust in the brand increases, the consumer expands their exploration of the brand through other touchpoints, and discovers information gaps that lead to poor consumer experiences.

This often happens because the loyalty ‘programme’ is operating in isolation from the rest of the brand. All consumer touchpoints are not being leveraged at once to build a full view of the consumer’s interaction with the brand.

Yes, the details matter.

Successful organisations understand that consumers have an expectation of receiving a total experience with the brands they choose to do business with. To make this work, organisations need to plan their consumer relationship and loyalty programme efforts enterprise-wide with a keen focus on connecting touchpoints and using customer information across all channels.

Organisations successfully executing consumer relationship and loyalty programme efforts:

Have connected customer data. Note I’ve said connected and not collected. There is a tendency to plan to collect consumer data in one place, therefore ensuring all consumer information is in one place.

While that is an option, the more successful organisations focus on their information architecture and how to make the flow of customer information fluid. This doesn’t preclude them from building a central consumer data store although it doesn’t make everything contingent on the need for one. There are benefits to storing consumer data in a more federated approach.

A federated approach limits the exposure of a potential breach, provides a way to meet regulatory requirements around PII and can reduce latency issues based on the relevance of a particular data element to a consumer engagement.

Use the internet to engage and not just market. Cost reduction has been the primary focus for the internet and marketing to consumers. In the early internet days, organisations wanted to reduce the marketing cost of a campaign so they could increase the number of consumer touches. It was all about getting the organisation’s message in front of the consumer.

Only recently did the internet become a two-way channel thanks to social media. Consumers started having conversations in social networks and brands felt ignored. In reaction, brands felt they had to be part of the conversation and simply interrupted consumers like a party crasher with no comprehensive strategy. Today, brands are learning to listen before engaging so they can be part of the right conversation.

Now, organisations have more ways to engage with consumers, share information and use that information to improve the consumer experience. From fitness wearables to the microprocessors in our vehicles and appliances, there are more opportunities for consumers to share information with the organisations they choose. Organisations should have a strong strategic engagement plan to increase the degree and depth of first party data because it is a competitive asset that is growing in value thanks to the Internet of Things.

Break down the internal silos: Consumers don’t care about the complexity of an organisation’s internal structure, they want simple. This is probably one of the more difficult challenges for organisations.

For decades, companies have been designed around functional areas such as IT, marketing, finance, advertising, e-commerce and operations. This organisational structure provides clarity around who does what and streamlines overall management; however this structure doesn’t work well for the connected consumer because it doesn’t deliver a coordinated customer experience.

Adding a customer experience officer, a digital experience officer or shifting to a ‘customer centric organisational structure’ is not enough. There is a deeper audit that needs to be conducted to consider how data is collected, how it is shared, how it flows and how it is used.

Only then, can everyone in the organisation determine how he or she will use information to engage consumers to continually learn, share information and improve the experience across all channels. It is a coordinated effort, not the result of a single department or person. To make this effective, a governance approach needs to be defined and followed across the organisation.

Identify consumer data that is most used across the organisation and make it accessible and mineable: Organisations generally have a lot of data although the majority is collected or stored in a way that makes it difficult to use. Perhaps the data is not organised or tagged appropriately to understand freshness or sensitivity.

Nearly every organisation I’ve engaged with claims to be working on a ‘consumer data’ strategy or project.  For most, data acquisition is not the issue, but rather how to connect the data to a consumer.

Organisations have transaction, profile data, mobile, social and online data. Most though don’t have a method to connect disparate files to a single consumer view. Depending on the organisation, Customer Data Integration or CDI may provide results although it rarely provides a complete solution.

Often, the way the data is collected severely limits the effectiveness of CDI. This is where a loyalty approach can be very beneficial to an organisation, because it acts as consumer identification. Loyalty is based on a consumer opt-in, permission based approach where consumers identify themselves when they interact with a brand. They do this because there is the expectation they will receive preferential treatment: whether it is pricing or service. When consumers identify themselves, it becomes easier to collect, share and apply consumer information to improve the consumer’s experience.

When loyalty is an element of the consumer approach, organisations have a higher probability of gaining increased consumer engagement and the ability to distinguish the brand from the competition. But loyalty programmes can’t act in isolation. These programmes must be supported by a coordinated customer relationship management strategy across channels.

When executed appropriately, loyalty effort gets consumers actively involved through their identification each time they interact with the brand. And, loyalty provides a better way to collect, share, deepen and apply the most valuable asset many organisations have today: Their customer relationships, the one relationship that keeps the organisation in business.

The writer is John Bartold, practice leader of loyalty |CX at Epsilon.

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