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Customer loyalty – the golden apple of retail

Loyalty is the linchpin we as a society rely on. From relationships to team sports to brand allegiances, we as people are a loyal breed – but only when it meets our expectations.

In the brand world, loyalty and price are either hand-in-hand or in direct conflict in the quest to capture consumers’ hearts (and wallets). Within your own company, hand-in-hand is your objective, but sometimes to get this you need to tip the scales on price in your favour against a competitor.

Look at the group buying sector. It captures this scenario perfectly – advertising on a site, pitting price conscious consumers against the loyal ones, all the while hoping these new customers become devoted customers in the long-term. And, despite the slowdown since the industry burst onto the scene in 2011, group buying, when done well, will continue to be a powerful platform for many brands.

In March this year, a Darwin cruise company broke a sales record in what would traditionally be a slow period on the daily deals site, LivingSocial. In 24 hours they sold all of the 1,000 deals they had on offer. A further 500 deals were offered and these sold out in the following 48 hours.

According to Experian Hitwise, there were 30 million total visits to the top 15 group buying and daily deals sites in March this year. In 2012, Australians spent $500 million on group buying deals – a strong figure during tough times for local businesses.

Despite this, the group buying industry is ready for the next evolution to bring brands one-step closer to the loyal consumer.In my view, technology plays a big part in this evolution. Online behaviour and preferences opens a new world to advertisers and marketers – fighting the ongoing challenge of your target audience not seeing your ad if they don’t frequent your advertising sites of choice. So how can brands overcome this?

With data.

It’s time to profile consumers to develop relevant campaigns, with personalised communications and pertinent offers. Consumer segmentation informs a brand with details on the customer base: their gender, age, location, as well as behaviour and attitudes. It helps to determine what types of products and services will be of interest to them, enabling more impactful communication.

Timing is also important.  Many daily deals are often sent in the morning, when people are the busiest and are using emails for work related activity, rather than in the evenings or lunch when shopping online is high. It’s a fine balance to engage you audience without becoming white noise.

Of course, emotion plays a big part in whether a customer is buying for loyalty or buying for price – and positive service and experiences are going to tip the emotional scales in the name of loyalty.

Look at airline frequent flyer programs. The benefits consumers love usually include: access to an exclusive lounge, discounted flights and the ability to upgrade seats. The desire for these perks means frequent flyer customers are willing to pay more for flights with their preferred premium airline, despite offers from competing, low cost airlines.

Apple is often looked at as the pinnacle of brand loyalty. Founder Steve Jobs’ passion for Apple products, ensuring they were of the highest quality and cutting-edge, simplistic design. Knowing his devotion to perfection created an emotional connection with customers. They’re more lenient if the product experiences a hiccup and more willing to pay a higher price for a guaranteed quality product. Customer service also plays a big role in this. Knowing you can always contact someone to resolve a problem quickly goes a very long way.

If loyalty is the end game, it’s time to stop telling customers about what your company makes, or what your product can do. First, tell your customers about what you stand for, what you believe in. Loyalty is driven from the emotional connection to what makes your brand tick.