The most successful businesses today understand the importance of forgoing quick gains in order to invest in the longer-term benefits of customer loyalty.

Now that the twin tidal waves of digital telecommunications and social media have washed through the world of marketing, what is
left standing?

To some, it is the core foundations of that world: trust, service and the value proposition.

“Those principles of creating loyalty among your customers have not changed at all,” says Matt Hampshire, managing director at commerce, loyalty and marketing consultancy contiigo. “But what has changed is the fact that the customers are now connected. They’re demanding, they’re discerning and they’re changing the face of retail.”

You can no longer afford to dictate when your customer base can connect with you – it’s in the hands of your customer. If you aren’t prepared to do business on their terms, whenever and wherever they want, it’s only a matter of time before your competitors will.

“Between them,” says Hampshire, “the smartphone and the new connectedness through social media have changed the game. Joseph Jaffe, president of thought leadership and marketing innovation consultancy jaffe, sums it up beautifully: ‘When it comes to customers, retention is the new acquisition.’”

With social media, how you manage customer service and the customer experience dictates how well you build advocacy among your customer base – how you leverage that to grow and attract new customers. Social media gives you a much greater ability to draw on existing customers to gain new ones.

“It’s wonderful that we can be so connected to our customers, through email, the internet, Facebook, Twitter…,” says Hampshire. “No longer do we have to hope that they watch our ad or walk past a billboard or walk into our store. That creates a lot of opportunities for more immediacy in marketing.”

Hampshire cautions businesses that the digital world does have its downsides as well, with poor word-of-mouth able to spread furiously online. If your customer has a negative experience with your business, it doesn’t take long for a large number of your customer base to know about it via channels such as Twitter.

Another issue with a connected market is that within a couple of seconds, your customer can opt to leave your website and be on your competitor’s site – so it’s critical to engage your customer online.

Reacting to the digital world does not require a change of approach, just a change of execution, says Hampshire. “The first step in building customer loyalty is to simply thank your customer for their purchase,” he explains. “The second is to get their permission to market to them, or to follow up with more information. The third step is to build your knowledge about that customer. And the next step is engaging them with some sort of incentive to become an advocate for your brand.”

In the digital world, argues Hampshire, this process is actually easier to get started. “If you have been given an email address or a mobile phone number, you’ve at least got the customer’s permission to talk to them … and can potentially engage them in activity-based loyalty,” he says.

“It might be as simple as rewarding your customer for doing an online product review or Tweeting about a product, or for inviting them to bring a friend along to an event that you put on. It’s a slightly different approach to overtly saying, ‘here are your points; here is your reward’. At the end of the day, the challenge is still to create advocacy.”

Loyalty marketing continues to rely heavily on customer data. The big challenge now is that there’s just so much of that data available and the question is how to best leverage it. It’s no longer about the 5 per cent discount you’re offering – it’s about using your data to understand your customers better and to target them better.

The views expressed in this article are those of the author and the interviewees, and not of Australia Post.

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