Five steps for brands to rethink customer loyalty

Leading marketers such as Mastercard’s global CMO Raja Rajamannar have questioned the future of customer loyalty, given the rise of digital consumption and consumers’ push towards subscribing to a raft of services. However, new research from Ogilvy suggests that brands and marketers can yet make this facet of marketing work.

A paper from Ogilvy, The Loyalty Habit, lists five measures marketers can take to rethink tired loyalty programs. The pandemic has disrupted old habits and customers are creating new ones online, the report states. According to a previous McKinsey study, 71% of users (first-time and regular) plan to continue using digital channels to the same extent or more after the pandemic.

Historically, brands have preferred to focus their investment in digital platforms primarily on customer acquisition. But with rising costs on big platforms like Facebook, Google, Amazon, and Snapchat, reaching new customers online is only going to get more expensive, and brands that take this approach will likely struggle to ensure greater returns, placing the onus on brands to rethink their loyalty programs. For example, when Apple rolled out its iOS 14.5 update in April 2020, new features made it more difficult to track users, which in turn caused the average price per ad on Facebook to skyrocket 47% year-over-year in the second quarter of 2021.

Here’s how the paper suggests brands can instead rethink their customer-loyalty programs:

High value actions: For most companies, successfully nudging customers to carry out a small number of these actions while interacting with a brand can have a disproportionately positive impact, the report suggests. Consider in the media and entertainment space, a good example is wish-listing, with studies estimating that even one item on their wish list are 70% more likely to come back the following month than those without.

Timing matters: Once brands have identified a high-value action, timing is everything in improving loyalty performance. Thanks to the rise of technologies such as AI and predictive-analysis algorithms, marketers can now more closely track the performance of campaigns and offers. For example, Jakarta-based online grocery delivery platform HappyFresh needed to quickly solve a surge in orders—and subsequent abandonment of carts from frustrated shoppers—in the Covid pandemic. To address the problem, the online grocer identified these times and and created an in-app message to inform users of the situation and give them the choice to opt in for updates. This led to 33% purchase rates.

Push creative boundaries: The authors of the report contend that customer engagement is a tool for generating data as much as it is the means for acting upon insights. Brands need to learn from this process, and to do this they need to experiment with engagement to figure out what works. For example, Australian ride-sharing brand Car Next Door experimented with its onboarding process using triggers such as earnings badges to double conversions from listed cars to complete profiles of drivers.

Opt for a cross functional approach: Tiket.com, an Indonesian online travel platform, was able to triple its revenue by implementing a crosschannel onboarding experience. The brand knew that app and web users have different experiences, so it designed two unique onboarding flows to ensure that it was catering effectively to users on the web and within the app. To make the most of the potential, brands should consider an engagement strategy and organisational model that allows all that data to be shared and for engagement to be orchestrated consistently across the entire user journey, according to the report.

Building a (long-term) habit: Brand loyalty is about brand value, the report reckons. Too often customer engagement is thought of as short-term tactics and a piecemeal approach. However, the authors argue that this process should encapsulate brand building and engagement, and brands should use the loyalty process to “unlock loyalty, brand value, and business results.”