LOYALTY MARKETING
SECTION ONE
SECTION TWO
 |
Three Keys to Making Customer Loyalty
An Enterprise-Wide Philosophy
To make the most of customer loyalty, companies must see it as a
philosophy uniting the entire business rather than just a marketing program.
More specifically, companies serious about attaining customer loyalty -
and making the most of it once they get it - need to connect the business
to the concept. They must think about the big data challenge resulting from digital opportunities in today’s marketplace, and be responsive to change. But above all, they need to make their entire company customer-centric.
“You’ve got to be hungry for that success as an organization, but you also have to be aligned and you have to make sure that what gets executed across the business is consistent. How you do that within a big organization is a really big challenge,” said Matthew Keylock, senior vice president, client solutions, dunnhumby USA.
Keylock spoke on “Improving the Customer Connection along the Path to Re-Purchase” at this month’s LEAD Marketing Conference in Chicago. LEAD, produced by the Shopper Technology Institute, stands for Loyalty, Engagement, Analytics and Digital.
A loyalty philosophy isn’t just a set of tactics to be deployed across the business, he said. It has to be a way of going to market, connecting the board room to the shop floor. Everybody has to be aligned about winning with the customer because if one piece of the business isn’t going in the same direction, customers will be lost. So companies need to execute this consistently across every aspect of their business, and that requires a strategic change in how the business thinks.
In a wide-ranging presentation, Keylock cited three keys to creating a more customer focused company:
- Understand who your best consumers or shoppers are
- Understand what their needs are
- Align the entire enterprise to be customer-centric.
The first two points relate to consumer segmentation. Most people get segmentation wrong because they try to create one segment to fit everything in their business. The beauty of segmentation when you get it right is it actually creates polarized views of consumers and shoppers that allows companies to execute different strategies and tactics for them. If a company tries to combine all of those things into one segmentation, it is compromising every single dimension and creating a slightly blended average.
Start by determining who your best customers are. This helps you understand where to invest because you should overinvest in your best customers, unless you are a start-up and you don’t have any customers. It also helps you know whether the decisions you make worked or not.
However, this doesn’t reveal how to treat individual customers. It doesn’t tell you that Mrs. Jones has a different set of needs from Mrs. Brown even if they spend the same amount of money. You’ve got to understand the DNA of those customers:
- What is it that drives their behavior?
- What are their interests?
- What are their needs?
- What are their motivations?
After building this DNA, it needs to be refreshed on a regular basis. That means getting to know every single consumer by their shopper DNA. Then companies need to build it up into a set of segments that creates a language for their businesses. Segmentation is important as a framework for strategy and a language for the business. It is unimportant for execution, where you need to be going down to individual profiles, dimensions, or personalized communications.
There’s no use having customer data for your categories, saying we need to keep certain products, if you are incentivizing that part of the business purely on financial and sales measures. You need to change the incentives to drive the behaviors that you seek within the organization, and do so across the whole organization. This needs to reach all the way to supply chain and logistics, where they are not thinking about customer-centric supply. They are thinking about product-centric supply, which may not meet the needs of your customers in the store.
So you need to change the organization top to bottom. You can’t do that overnight, but you need to make sure the business is going at the same pace together, rather than suddenly excelling in one area, but lagging in another. Without that kind of consistency, it won’t drive the changes you seek in performance, and it won’t create the kind of performance that Kroger has seen with quarter after quarter of same-store growth.
To summarize: Having a loyalty philosophy is much more important than having a loyalty program. A loyalty program can be a great tactic for enhancing or enabling true customer loyalty within the business, but the loyalty philosophy and approach is absolutely essential. That needs to be an enterprise-wide philosophy and strategy that connects the board room with the shop floor.
The above article was abstracted from a presentation at the LEAD Marketing Conference on Sept. 21 in Chicago (Rosemont, Ill). Matthew Keylock is senior vice president of client solutions for dunnhumby USA (www.dunnhumby.com). He can be reached on Twitter @MattKeylock.
Click on the LinkedIn logo to join the new Shopper Technology Institute Discussion Group
SECTION THREE
