The Blog

  • May 31, 2016
  • Marketing and loyalty  

    16488948-Abstract-word-cloud-for-Customer-engagement-with-related-tags-and-terms-Stock-PhotoThe CRM industry is shining a bright light on digital marketing these days and it is a sign of how early we are in the digital marketing boom that few if any vendors are championing the idea of using marketing in any way other than for driving sales. Having seen recent marketing events by Oracle and Salesforce, it appears that the focus on driving more sales or some variant of it makes perfect sense for marketing organizations just getting their feet wet. And why not, driving sales is the job of marketing so what else might you expect from marketing?

    Well, looking down the road, I’d say that the most important thing that digital marketers could do would be to build brand loyalty. That’s not a stretch but it doesn’t appear to be top of mind either. Here’s my logic: marketers want to generate leads that sales can close whether in B2B or B2C situations and as long as they can generate acceptable numbers that will be fine.

    Unfortunately though, digital marketing might simply be accelerating an already prevalent issue, churn. Study after study of customer loyalty shows customers not being loyal to much more than a rewards program or discount. Whatever vendor offers the best reward is likely to get the business, at least temporarily. This leads to the confusing situation where customers appear to behave in loyal ways, even saying they are satisfied but in reality they’re ready to go elsewhere whenever an opportunity presents itself.

    The solution to this dilemma is to promote customer loyalty through marketing, but there are some wrinkles to be worked out. You can’t market loyalty under most circumstances. The dismal success rate of many rewards programs shows this. Please don’t tell me about frequent flier programs (FFP), because while they promote loyal behavior, they also contain some of the most disgruntled customers imaginable. Check out a customer sentiment site or two and you’ll see what I mean.

    Real customer loyalty starts with customers wanting to engage with vendors—direction is important too, you can’t expect much if you ask customers to like you. So a logical conclusion might then be that marketing loyalty is useless and why am I writing this?

    Simply put, we need to do a much better job of marketing engagement to customers if we want them to be loyal in return. How? Understand first, that making an additional purchase is a form of loyalty but it is only one and it comes at the end of a longer chain of events. In loyalty terms, a customer repurchase is equivalent to a customer defending your brand online or in public spaces, contributing knowledgebase articles, answering a survey and many other little things like that. Ironically we don’t promote (i.e. market) those things and we often don’t record the events themselves in part because a purchase is often the only recognized loyal behavior.

    Studies I read show only about 15 percent of vendors encourage customer engagement like that but better than 80 percent try the old cross sell and upsell whenever they can. Some vendors even go to the extreme of asking their customers to say nice things. Their reasoning is that such advocacy is a surrogate for loyalty and it is but you can’t start there. Loyalty is driven by engagement and all of that drives advocacy. You can’t rush it.

    So back to digital marketing. It might be the most important customer loyalty tool ever invented but of course, you have to use it that way. If your digital marketing strategy is simply to drive more leads you might want to rethink that. At some point everyone will have good digital marketing tools, and they’ll know how to use them. But at that point customers might not be much different than they are right now, tired of being approached to make one more purchase. So it’s a good time to expand our horizons to figure out how else we can use digital marketing to promote our brands and earn engagement and loyalty.

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    Denis Pombriant is a well-known CRM industry researcher, strategist, writer and speaker. His new book, “You Can’t Buy Customer Loyalty, But You Can Earn It,” is now available on Amazon. His 2015 book, “Solve for the Customer,” is also available there. Pombriant can be reached at denis@beagleresearch.com.

     

    Published: 2 years ago


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