Consumer

Customer Retention, Engagement Remain Top Challenges for 2012

By Mark Johnson
January 23, 2012

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Customer loyalty has replaced customer acquisition as the critical key for driving sustainable growth. Yet businesses report that retaining and engaging customers remain part of their greatest challenges.

To help you develop more effective loyalty marketing strategies, here are a few customer loyalty trends expected to unfold in 2012:

Listen, listen…. and listen some more: The key to effective engagement in this challenging economic time is to listen to your customers. The explosion of social engagement tools and technologies enables you to truly understand what your customers are saying—their needs, wants, likes, dislikes. This insight is the foundation for developing incentive/reward programs that are driven by data, can be monitored and measured in real time, and drive sustainable behavioral change.

Gamification is here to stay: Like it or not, gamification is here to stay. So embrace the idea that you can encourage customers to stay loyal to your brand by using some of the ideas involved in game mechanics on your site, in your service, and even in your storefront. Consumers want more fun in the form of challenges, rewards, and “surprise and delight” tactics. Gamification (or “game science”) will answer the call in 2012, increasingly moving from trendy idea to program staple. In fact, Deloitte recently predicted gamification to be one of the top 10 technology trends in 2012. And analysts expect it to become embedded in day-to-day business processes, driving adoption, performance, and engagement.

Based on the latest findings, game science drives higher levels of participant engagement and, ultimately, better business results. Participants in a “gamified” recognition, incentive, or loyalty program see game-like features on their program websites, the way their programs are communicated, and their program rules. The goal is for participants to feel they are part of an engaging, long-term journey—an enhanced and enriching experience that keeps them excited about their programs on an ongoing basis.

We will see a focus on social media ROI: While marketers believe that social media is worthwhile, most don’t know how worthwhile it is. As marketers become more sophisticated and skilled at social media, they will be more demanding of tools that track and improve ROI. In fact, the 2011 IBM Global CMO Study found that 63 percent of chief marketing officers believe ROI on marketing spend will be the most important measure of their success by 2015. However, only 44 percent feel fully prepared to be held accountable for marketing ROI.

"Measuring ROI from social media investment is just as critical as any other investment evaluation an organization can make. The challenge, however, is quantifying the gain from the investment,” notes Ashish Gambhir, co-founder and executive vice president of newBrandAnalytics, a provider of social business intelligence solutions. “To date, social ROI has been an inexact science. While many organizations will use changes in online metrics like followers, friends, star counts, etc, to measure results of social expenditures, the link between 'social measurables' and true gain is still unclear. Instead of trying to search for that distant correlation, organizations should segment social media feedback into relevant business categories, like food-quality feedback for a restaurant or concierge feedback for a hotel. This new approach to ROI clearly matches gain from the investment with specific business activity.”

Until now, many brands have experimented with social media, trying the latest tools and technologies permeating the marketplace. But as the stakes get higher and as the expectations from internal stakeholders heighten, social media will have to deliver solid business benefits.

Brands will embrace social referral marketing: Today's consumers are increasingly researching online to find out what others are saying about a product or service they’re interested in buying. In fact, a recent Nielsen report suggests that word-of-mouth endorsement is critical: 78 percent of consumers said they trusted recommendations from other consumers, while only 14 percent trusted advertising. A review or recommendation carries even more weight when it comes from colleagues, friends, or family members.

With consumer-generated content and online interactions significantly influencing purchase decisions, brands will work to build stronger relationships with their existing customers. We will see companies formalize social personalization (or social referral) strategies in order to acquire new customers through existing brand advocates.

Worthy causes will continue to influence consumer brand loyalty. A study by Cone Communications found that consumers are more likely to pick a brand based on charities or causes it supports. A full 94 percent of responding consumers said they would abandon their typical brand for one of approximately equal quality and price if it backed a social issue.

Consumers who are looking to make this world a better place but don’t know where to start need not look any further than the loyalty cards in their wallets. From hotels and airlines to convenience stores and retailers, loyalty programs are gaining momentum as a powerful way to give back, and this trend is poised to continue in 2012. EcoPlum, a green shopping rewards site with eco-friendly products and green living ideas, is an example of a company that is fueling this trend. Purchases at EcoPlum earn EcoChipz points, good for coupons in its shop or donations to environmental causes, such as the Nature Conservancy, Rainforest Alliance, Greenpeace, Sierra Club, Oceana, and Pesticide Action Network. As Gia Machlin, founder of EcoPlum, points out, more shoppers are donating their points versus redeeming them for discounts. "We've seen loyalty to EcoPlum increase as our customers want to make a difference—not only by purchasing eco-friendly products but also by supporting the environmental causes they care about."

Mark Johnson is CEO of Loyalty 360, an unbiased, market-driven, voice-of-the-customer-focused clearinghouse and think tank. Loyalty 360 is committed to bringing customer loyalty to the forefront as a critical marketing strategy. A trusted source for cutting-edge research, best practices, and networking opportunities, Loyalty 360 gives members the expert insights and guidance they need to better understand loyalty and develop programs that effectively engage their customers and employees and build stronger relationships with them. For more, visit www.loyalty360.org. Johnson can be reached at markjohnson@loyalty360.org.
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