Is customer experience the new loyalty?

Discussion
Nov 05, 2015

Through a special arrangement, presented here for discussion is a summary of a current article from the rDialogue blog.

Customer experience, like customer engagement, is a term that defines the white-hot space right now for marketers, much like CRM in the late 1990s and early 2000s. But things are different now, as we live in what is described by Forrester and others as "The Age of the Customer."

We have accelerated past the prime of mass marketing and, fortunately, there is no slowing down. Customers want (and increasingly expect) relevance, given the data they share with brands, the scarcity of their time and the transparency of pricing and quality. As Gartner recently reported:

"Customers will not tolerate companies that have amnesia when it comes to remembering them and their preferences for recognition."

If customer loyalty starts with customer engagement, then understanding what makes a customer willing to pay attention to the brand is fundamental. People pay more attention to you when you pay attention to them, something most brands fail to do. Brands tend to look at customers with a wide-angle lens, and still (sigh) look closer at non-customers, focusing on acquisition.

Customer in J.Crew

Photo: RetailWire

Customer experience — just like customer loyalty — is the sum total of all customer interactions, at all touch points, both online and offline, throughout the customer lifecycle. And the reasons one pursues a great customer experience strategy parallel those to loyalty marketing:

  • To build addressable and direct customer relationships;
  • To drive organic (i.e., same customer) growth and engagement;
  • To increase relevance and differentiation at the expense of mass promotion;
  • To build data and insights;
  • To align marketing (and other) investments with value.

There is no divide between customer engagement, customer experience and customer loyalty. Each strategy aligns with a mandate to deliver a better customer experience and recognize the appropriate differences between customers. Brands can’t be the same thing to everyone because that same thing is not going to engage everyone.

Being relevant, whether you’re a brand or a person, comes from paying attention to the other party. It’s why we define loyalty marketing as paying attention to customers and acting accordingly. Does this not also apply to customer experience? Isn’t customer experience, by definition, a reflection of doing just this? We think so, without question. It’s why there is no mention of points or rewards in our definition. The paradigm of customer loyalty needs to flip: brands need to pay attention to and be loyal to customers rather than starting the other way around.

So, is customer experience the new loyalty? Or is loyalty the new customer experience? Clearly, the answer is both.

Is customer experience driving loyalty more so today than in the past? Do you agree that the key to loyalty for brands is to “pay attention to and be loyal to customers”?

Braintrust
"Customer experience needs to have roots in engagement and emotion in order to drive loyalty. If shoppers feel nothing they tend to do nothing, that’s a fact based on brain research."
"Count me as skeptical. Despite all the talk about data and customization, most CX initiatives still have a "one size fits all" flavor to them. It’s just another band-aid that retailers are putting on a gaping wound caused by their inability to truly understand and leverage customer-level data."
"Gotta chime in here. This article is confusing to me, because all the technology in the world will not build loyalty, period! Loyalty is not what it used to be, as there is a pretty large segment of the population that base their loyalty on how much your ground chuck is this week."

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23 Comments on "Is customer experience the new loyalty?"

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Max Goldberg
BrainTrust

Customer experience has always been important to consumers. The difference today is that technology is empowering brands to gather more information about consumers, which consumers feel entitles them to a one-on-one experience with the brand. Consumers’ sense of entitlement has grown.

Dick Seesel
BrainTrust

“Customer experience” may be the new buzzword today, but the essential premise of CRM remains valid: Using data science to evaluate the shopping behavior of your shoppers in order to turn them from satisfied to committed customers. Where the focus on “customer experience” might differ is by looking at elements like customer service, store design and good old “execution” as part of the loyalty mix. So there is definitely room for both “art” and “science” in the cultivation of loyal customers, perhaps now more than ever.

Tom Redd
Guest

Have people really forgotten the “good old corner store” theme? I am so, so tired of all the push on customer experience in retail. Whatever you call it — besides omni-experience — it is still the basics of core retail: if you take care of your shoppers they will be loyal.

Yes, retail is a larger space now, but no matter the size, the core science remains the same. Titles to articles like Forrester’s report “2016: CIO And CMO Must Rally To Lead Customer Obsessed Change Now.” Come on! A retailer should not be in retail if they haven’t figured out that in this day and age, with all technology and all the shoppers, you need to sync-up your key forms of communicating with the right customers at the right time and in the right place so that they do visit your stores or channels and also re-visit.

If a retailer does not know that you need to link together the experience a shopper has to support their loyalty to that retailer, then that shop should go Chapter 7.

Customer Experience: the E = MC^2 factor of retail.

Anne Howe
BrainTrust

Customer experience needs to have roots in engagement and emotion in order to drive loyalty. If shoppers feel nothing they tend to do nothing, that’s a fact based on brain research.

The idea of using experience to increase emotional relevance at the expense of mass promotion is, to me, a key objective marketers must focus on in the coming years. Relevance and engagement are built through meaning and stories. Price tags don’t tell stories. They become a sea of things shoppers’ brains learn quickly to ignore.

While in-store, the human brain needs to be startled into attention by triggers, and coaxed into reaction by connecting to emotion. The principles of human influence are largely lacking in most in-store encounters. To do better will take a commitment to more human engagement principles, applied in real life or via digital technology.

This will require smarter and more informed communication strategies across the board.

Ed Dunn
Guest
1 year 7 months ago

I believe “hipster tribalism” drives loyalty to retailers. Starbucks and Apple Stores bring in a certain crowd creating a special atmosphere attracting like-minded people. The used clothing industry maintains loyalty from hardcore fashionistas engaged online and offline in the conversation of up-cycling. We can look at active lifestyle, used sneakers, conservative outdoor gear and see the same “hipster tribalism” in play attracting a crowd of loyal customers who are attracted to their newfound tribe more than the retailer.

Adrian Weidmann
BrainTrust

Brands definitely spend too much time and resources on acquiring new customers instead of focusing their attention on their existing customers — those that have already chosen to purchase from you! Why do cable companies offer better deals to only new customers as opposed to rewarding their existing ones?! I, for one, am in the process of switching providers over this very issue.

If you create (and maintain!) a customer experience that makes it easy, fun and personal to shop with you, then that experience will be communicated through the social network and more shoppers will be drawn to you. The iconic line from the movie “When Harry Met Sally” — “I’ll have what she’s having,” defines human nature and we are all drawn to success and personal attention.

Vahe Katros
BrainTrust

This reminded me of the Henny Youngman joke: “Doctor, it hurts when I do this.” “Then don’t do that.”

Paying attention to the experiences is half the battle, transforming those experiences into something that makes things better or removes friction is the first step in having people say nice things about you. Today, so much can be done to help the customer via technology and it’s not just about communications, it’s changing the business model. Don’t build faster horses, build a car.

Ralph Jacobson
BrainTrust

The answer to the question in the title of this article is no! Forty years ago, if a shopper enjoyed their time in a store, they would return and exhibit some level of loyalty. “Shopping experience” as a barometer of shopper satisfaction is nothing new. We just get excited about it because it’s one of today’s buzz words … or two words, actually.

Bottom line, loyalty is simple, but just not always easy to accomplish. Generate a compelling, consistent, seamless and enjoyable shopping experience, both online and offline and shoppers will tend to be more loyal to your stores than to competitors’ stores that do not offer that level of shopping experience.

Brian Kelly
Guest
1 year 7 months ago

Define experience. Shopping has to satisfy a need to build loyalty. Equipped with the knowledge that a particular outlet will satisfy a particular need will create an expectation of fulfillment.

Not all categories are the same. Not all shopper modalities are the same.

That’s why we say, “retail ain’t for sissies!”

Ken Lonyai
BrainTrust

“Paying attention” and the general points defining the phrase have little meaning. Customers are people and people want to have fun and enjoy life. Every hitch in their experience with a retailer rubs the wrong way against their pleasure and causes an irritation that, consciously or not, affects their perception. As the issues add up, consumers start to look for new avenues that provide more happiness. It’s exactly why some stores can charge more than others for the same products and make it work — they make the experience outweigh the added cost.

So paying attention and being loyal to customers is to walk a mile in their shoes, have empathy, solve every possible impediment to their delight that shopping a brand’s store or mobile/e-commerce site presents, improve/innovate on the experience(s), then rinse and repeat forever.

Peter Fader
BrainTrust

Count me as skeptical. Despite all the talk about data and customization, most CX initiatives still have a “one size fits all” flavor to them. It’s just another band-aid that retailers are putting on a gaping wound caused by their inability to truly understand and leverage customer-level data.

Lee Kent
BrainTrust

I know, I know, I’m a broken record on this one. Loyalty is something you strive for and earn and the only way to do that is to serve the customer in not only the way they expect, but also in ways that enhance their shopping journey.

Points are not part of the definition though they can be part of the game. Not the WHOLE strategy. Consumers will sign up for points, everyone. Loyalty, shmoyalty!

And that’s my 2 cents.

Mark Heckman
BrainTrust

In order to create a relevant customer experience, the retailer must have a database platform and an intelligent strategy to reach the same shopper across all of its touch points and further understand how the communication might be different in each venue. That is difficult enough for many, but complicate it with having the resources and commitment to build a strong content bank of messages, offers, and perks sufficient to maintain a customized but fresh message to each shopper, and it becomes even more challenging.

Impossible? NO. Easy? NO.

Imperative to creating both loyalty and a competitive customer experience? ABSOLUTELY!

Shep Hyken
BrainTrust

Yes, customer experience drives loyalty. Every time a customer comes into contact with with any part of the company — and any person in a company — they form an impression. The total of those defines the customer’s experience. That experience, if positive, gets the customer to come back. When the customer repeatedly has the same positive experience it becomes predictable, which builds trust. And trust leads to loyalty.

To top it off, when you can personalize the repeat experiences through recognizing customer, remembering their preferences and more, you take the experience up to an even higher level.

Doug Pruden
Guest
Doug Pruden
1 year 7 months ago
The headline to this article (“Is customer experience the new loyalty?”) and Forrester’s suggestion that we now live in “The Age of the Customer” leaves me scratching my head. Is “customer experience the new loyalty?” Huh? The customer experience is what the retailer provides. Loyalty is what the customer gives in return if they consciously and subconsciously feel that they are getting a proper return for the time and money they invest in the interaction. They are the two sides of the interaction. One does not replace the other. Can this be the “Age of the Customer”? Once the customer gained access to more than one place to buy the goods and services they want and need, it became the age of the customer. Yes, online access has increased the choices and the competition, but if you’re a retailer, hasn’t it always been the age of the customer? What a retailer does is “manage” the customer experience. Some do a good job of it while others spend their time and resources chasing only the next new customer. Some take advantage of all the resources offered by technology to track and better serve individual customers, but many still do not. Assuming… Read more »
Matt Schmitt
BrainTrust

Customer Experience is currently the new-new thing. This seems weird to many people because it begs the questions why hasn’t this been the key focus all along, and what have retailers been focusing on, if not customer experience?

It’s easy to throw rocks and say that retailers got off track on CX, but to be fair the massive upheavals in the dynamics of retailing in the age of the customer certainly sent everyone into a dizzying and frantic dance of new tactics, initiatives, and experiments to navigate the new age of retailing.

If Customer Experience is, as Gartner posits, the next great battlefield for marketers, what does this mean for brands tracking the effectiveness of CX efforts on customer loyalty?

Putting aside the chorus of “hype-labeling” and skepticism, I think we should all rally around the reality and importance of brands paying attention to customer experience and the benefits of asking a simple question. Why do customers engage with the brand, and how can their experience be improved? Loyalty is a result of caring.

Tony Orlando
BrainTrust
Gotta chime in here. This article is confusing to me, because all the technology in the world will not build loyalty, period! It can be an enhancer to the efforts made by real people in any transaction with the consumer. Loyalty is not what it used to be, as there is a pretty large segment of the population that base their loyalty on how much your ground chuck is this week, which all of us are aware of. Consumers will put up with more lousy service and long lines than ever before, as their discretionary income continues to go down. That my friends is a fact, HOWEVER, there are still many customers that have always appreciated a well-run business, that always puts customer service at the very top of their training, and believe me, it is alive and well. As I continue to add technology pieces to our new services, it can not come at the expense of poor service, just to save a few bucks, as in the long run, we lose. I travel a lot, and am a frequent repeat customer in the places I have been treated well, and that is how others feel as well. You… Read more »
Ed Rosenbaum
BrainTrust

This is something I have been trying to get the word out on for too many years. Now it is becoming a focus. I am pleased to see it happening. But, I am sensing a problem. Too many of those in charge in the retail world have grown up with their smart (ish) phones, and are not in tune with how to really speak with the customer. Maybe there needs to be some cross communication with the older generations and those newer managers in charge of this. If that would be a task taken on by any company, we might start seeing what true ability to communicate can be.

Dennis Armbruster
Guest
Dennis Armbruster
1 year 7 months ago

At LoyaltyOne, we have very recent research results indicating that the customer experience is a strong driver of loyalty. It’s timely to note, in fact, that this research tells brands they should pay very close attention to their customers’ online holiday shopping experience come Cyber Monday, November 30.

According to our October 2015 nationwide survey of 1,019 American consumers, nearly half (47%) of Cyber Monday shoppers indicated they’ll be reluctant to make an in-store holiday season purchase from a retailer with whom they have an unhappy online experience on the Monday after Thanksgiving. And Cyber Monday online shoppers represent a significant portion of overall holiday season shoppers. Nearly eight out of ten LoyaltyOne survey respondents (78%) said they plan to make Cyber Monday purchases. In the youngest end of the millennial demographic, 18-24 year-olds, the rate of Cyber Monday shoppers skyrocketed to 93%.

We know that a poor experience can have a negative impact on shopper spend. Our research shows that the online purchase itself is a high-risk touchpoint. Retailers that fail to reduce the risk of an unhappy Cyber Monday experience could pay a crossover price in the form of lower in-store sales this year.

Peter Charness
BrainTrust

Right product, right price … good service. If you don’t get the first two right the customer won’t give you a chance at the third. Customer loyalty is earned by the customer getting fair treatment and satisfying their product needs. That gets a repeat trip. If not, the second trip goes elsewhere. Not really that complicated.

Arie Shpanya
Guest

Great article, Phil! The most valuable customers to a business are the ones it already has. I think today more than ever a great customer experience is dividing the winners from the losers in retail. There is so much competition and it’s no longer enough to just offer products that shoppers want. How are they priced? How’s your customer service? How quickly do packages arrive?

It’s time for retailers to pay close attention to the customer experience because it will determine their success ultimately. If one retailer doesn’t meet the evolving standards of shoppers, there will always be another to gladly pick up the slack.

Doug Garnett
BrainTrust

I highly recommend reading Byron Sharp’s books and other writing on loyalty. What these show is that loyalty has been far over-sold. Most recently he observed that loyalty programs have only small effect on loyalty and (for example) tend to reward those who are already loyal.

Now we see this shift to emphasize “experience” (not a bad idea), but this article really focuses on some of the things online marketers claim. In my own shopping world, I have yet to encounter a situation where a retailer or online site (including Amazon) has brought anything to my attention from their assumptions based on my past purchases. As a result, I tend to find their attempts to match me to products to be offensive.

This is a knife’s edge. I suggest we all take more care before spending huge sums on clever programs like those described here.

Jonathan Hinz
BrainTrust

In a world where I can buy the same product from one hundred different online shops, the word unique can rarely be used. What is unique in today’s marketplace isn’t that consumers value a great customer experience any more than they ever did, it’s that really tremendous customer experiences have become more rare. When a consumer has a great experience, it stands out, just as a really terrible experience does.

Brands seeking customer loyalty should most definitely “pay attention to and be loyal to customers,” but that’s rather simplistic and tough to do well at scale. With the support of technologies such as CRM and online reviews, brands can gain the insights necessary to deliver relevance, authenticity and transparency that are at the heart of great customer experience and loyalty.

wpDiscuz
Braintrust
"Customer experience needs to have roots in engagement and emotion in order to drive loyalty. If shoppers feel nothing they tend to do nothing, that’s a fact based on brain research."
"Count me as skeptical. Despite all the talk about data and customization, most CX initiatives still have a "one size fits all" flavor to them. It’s just another band-aid that retailers are putting on a gaping wound caused by their inability to truly understand and leverage customer-level data."
"Gotta chime in here. This article is confusing to me, because all the technology in the world will not build loyalty, period! Loyalty is not what it used to be, as there is a pretty large segment of the population that base their loyalty on how much your ground chuck is this week."

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