The importance of customer loyalty and retention can’t be overstated. Loyal customers are less price sensitive and more likely to make frequent purchases—in addition to being brand advocates. Research also shows that just increasing customer retention rates by 5 percent increases profits by 25 percent to 95 percent. Plus, retaining customers costs less than continually acquiring new ones.
But what does it mean when the usual factors that drive customer loyalty—product, price, place, and promotion—have been stripped away or nullified? Brands are finding out for themselves as they look to adapt to markets and customer behaviors that have been upended by the coronavirus pandemic. As companies reshape their business strategies, here are 3 predictions for the evolution of customer loyalty.
1. Relevance will be redefined
To keep customers loyal, brands need to be relevant. They must be able to track changes in consumer behavior and quickly act on those fluctuations. However, brands walk a fine line between coming across as superficial (see: the deluge of generic emails from brands assuring customers that ‘we’re here for you.’) versus authentic.
More and more consumers expect companies to take stances that reflect their values. According to a recent report from communications firm Edelman, which surveyed 12,000 people in several countries, 71 percent of respondents said that if a brand is perceived as “putting profit over people, they will lose trust in that brand forever” and 77 percent said “they want brands only to speak about products in ways that show they are aware of the crisis and the impact on people’s lives.”
Some brands, such as the British retailer Boden, took a frank approach in acknowledging the pandemic while explaining why they’re continuing to sell merchandise. “It might seem highly inappropriate to show you clothes for which you currently have no need,” the retailer wrote in an email to customers. “But we’ve already made the clothes. We’ve already taken the photographs, we’ve already printed the catalogues. It was too late to stop. We hope you don’t find it horribly insensitive.”
Other brands highlighted the ways that they’re supporting people who have been impacted by the pandemic, such as continuing to pay hourly workers such as office cleaners for reduced-service needs, or converting factories to produce hand sanitizer and masks.
Prediction: Looking ahead, relevance will be defined less by the products and prices themselves and more by a “what have you done for me lately” mindset where brands must demonstrate how their values are aligned with their customers’ values.
2. Contact center associates will play a more active role in driving customer loyalty
Contact center associates are at the front line of customer issues but most are limited to resolving problems after they occur. What if contact center associates were instead proactively identifying solutions in a methodical, strategic approach that improves efficiencies, increases cost savings, and increases customer satisfaction?
At TTEC, we’ve been helping clients empower their front-line staff to make recommendations on how to solve customer pain points and improve the customer experience using their deep domain expertise and insights. For example, by equipping agents for an airline company with a speech analytics tool and Proactive Solutions training, they were able to uncover the fact that more than 57K inbound calls and chats were from members seeking assistance in retrieving their frequent flyer number (FFN).
Based on that insight, associates made it a point to inform members that they can retrieve their FFN, reset their PIN, and get access to other profile information through the airline’s online portal or its app by using their registered email address or mobile number. This insight ultimately led to an 87% reduction in call volume and $128K in annual cost savings. In another case, associates shared customer feedback about a new campaign that helped increase the brand’s Net Promoter Score by 2.3 points.
Prediction: At a time when many companies are working with tight profit margins, more will be looking to maximize employee resources. Empowering agents to proactively recommend solutions that improve the customer experience and increase loyalty is just one example of how companies will be making incremental improvements that drive fast outcomes.
3. Convenience becomes hyper-personalized
Even before the coronavirus struck, customers valued convenience. In January, the National Retail Federation released a report that showed 97 percent of consumers have backed out of a purchase because it was inconvenient for them. Fast forward a few months where conveniences such as contactless payments, curbside pickup, and grocery delivery have become a necessity.
It’s not a secret that customers value their time and appreciate brands that recognize this. They loathe being forced to take extra steps such as having to re-identify themselves to a customer care associate or repeat a question in order to complete a request.
Prediction: The companies that win at convenience and customer loyalty won’t necessarily be the ones with the shortest delivery times or most sophisticated contactless options. Rather, it will be the companies that understand as an individual's situation changes, his or her perception of what is convenient also changes. Brands that have a robust system for identifying a customer’s digital behaviors coupled with the customer’s historical transactions, demographic, and psychographic data, will be better positioned to anticipate and act on a customer’s needs.
A new era
Even after the pandemic subsides, customers won’t return to pre-COVID expectations of service and support. To succeed in this new era of customer loyalty, companies must be willing to abandon old approaches and engage with customers in newly relevant ways. The good news is that companies already have most of the data needed to deliver more value to the customer—they just need the right strategies and tools to unlock those opportunities.