What’s the Price of Loyalty?
I got my car insurance renewal last month and it was higher than the previous year. So, I did what we’re all actively encouraged to do; I used comparison sites to ‘go and compare’ what else was out there. The results revealed my incumbent insurer was offering an annual premium £50 cheaper than my renewal but its price was by no means the lowest.
At this point, as all good money saving experts will advise you, I rang my insurer to haggle but the lowest it’d go was to honour its comparison site price, so I switched provider. But it got me thinking about loyalty, especially when we’re actively encouraged to shop around, is it still worth trying to develop long term relationships with clients?
According to research by Accenture earlier this year, organisations are wasting billions on customer loyalty programmes that don’t work like they used to. It claimed a new language of loyalty has emerged and went as far as identifying five new drivers of customer relationships in the digital age:
Tokens of affection: think personalised discounts and gift cards to reward loyalty
Get to know me: It seems we like brands that tailor products for us, that only communicate through our preferred channel, and leave us alone the rest of the time, and who safeguard our private data.
Thrill-seeker: brands that offer multi-sensory experiences, new products or services, or the opportunity to co-create something seem to garner the most loyalty.
If you like it, I like it: Social influencers e.g. vloggers, celebs, friends and family are all powerful influencers on choice and if brand actively supports a good cause that can also sway opinion.
Hook me up: Symbiotic partnerships where brands connect with others to enable customer loyalty points to be redeemed also seem to generate greater loyalty.
What I took from this research is that the window of opportunity for customers to return is now narrower for today’s tech-savvy shoppers. Loyalty is not dead, but it seems our appetite for the extra-ordinary, for hyper-personalisation and co-creativity is changing the dynamics and culture around loyalty, and compelling brands to re-think their strategies and programmes.
The bi-annual UK Customer Satisfaction Index (UKCSI) released in July revealed that customer satisfaction has again risen, largely driven by better complaint handling. Amazon was the top rated organisation followed by first direct, John Lewis, Jet2holidays.com, Subway, Next, Aldi and Greggs.
You can look behind its numbers – and certainly plenty of sceptics have – and ponder whether loyalty is in fact dead. I don’t think it is but I do believe that today’s customer is far more discerning and demanding, but there are opportunities to make a difference. Just looking at the UKCSI’s statistics (see figure 1) on how customer satisfaction drives trust, reputation and future custom you can see the difference in percentage points that one point can make in scoring brands.
That one point of difference could make a significant impact on repeat business and brands should think about capitalising on it. Our top tips for encouraging loyalty, given the dynamic new backdrop are:
- Stay in touch: keep customers informed through their preferred channel of communication, make it easy for them to contact you.
- Trust is valuable: 41% of UKCSI respondents said trusting an organisation was the most important reason for preferring excellent service, even if it cost more.
- Be honest: don’t promise and not deliver, set achievable deadlines or delivery dates
- Become the ‘go to’ company or person: social influencers, friends, family, celebrities, media all help reinforce brands
- Co-create: ask for advice and feedback to improve your services/product
Could my incumbent insurer have put more effort into persuading me to stay, given I’ve been loyal to it for a few years and have my household insurance with it? Yes, I believe it could but it missed its window of opportunity; try not to miss yours.