This article was originally written by Avanade alum Michael Jacobi.

Loyalty programs are seen as a great way to improve retention. Customers are rewarded when they buy from a company, which also promotes brand affinity and generates higher sales. At the very least, loyalty programs are designed for this. The reality is that although more companies offer loyalty programs each year, only about half of all customers are active in such programs. This contrast suggests that there is something missing from most programs. The link to a marketing automation tool, for example, brings advantages here, because the loyalty program can be integrated into the entire customer journey and not just as a parallel to the end of a purchase cycle, as a bonus, so to speak. 

Customer loyalty is not about a single product or service - it is the result of multiple positive interactions that build trust over time. The focus is on consistently responding to customer expectations, especially in the areas of service and support. This method aims to take advantage of the great opportunity to prevent customers from becoming disloyal, which customers become especially through bad experiences in a service case. Progressive digitization is putting pressure on all companies here, because customers have access to a comprehensive range of information for their concerns and to a global selection that meets their needs.

A common and obvious way to achieve customer loyalty is to try to exceed the expectations of the customers as much as possible. However, a recent Gartner research study shows that customer loyalty increases only marginally at best. 

A customer who has already had an experience with a brand appears extremely authentic to other prospective buyers with their opinion. In a positive case, his enthusiasm turns him into a brand ambassador and provides the company with high-quality reach. A disadvantage for the brand is that negative experiences are often more likely to be spread, thus damaging the brand image. It does not mean that every interaction must be perfect. Customer loyalty can cope with a few negative examples, although too many of them destroy the strength of the connection. In fact, it's not necessarily a bad experience that makes customers disloyal, it's how well or badly the company deals with the problem.

There is a danger here if the contact or complaint process becomes time-consuming for the customer and he feels harassed. Indicators of this are, for example, less intuitive handling, repetition and generic interactions, transfers and channel changes where the customer loses time and energy.

By concentrating on reducing customer effort, a variety of benefits for customer loyalty can be achieved:

• Increasing the Net Promoter Score through more positive word-of-mouth
• Increase in repeat purchases
• Reduction of the costs for interactions in service cases

It also has the effect of increasing the loyalty of their own employees, who feel more comfortable in their work because of the better experiences they can deliver to customers. 

The different phases of the customer journey are often the responsibility of functional departments, which creates risks if those responsible do not have a consistent picture of their leads. The requirements to reduce customer effort and make it as fast and intuitive as possible can only be met by implementing a horizontal approach that complements the strong, highly specialized and internally efficient vertical silos in many companies. This requires a new organizational structure, customer-centric strategies and efficient technology platforms that are accessible to all areas and can be managed by business units as independently as possible of IT specialists.

It is crucial to implement a method to measure commitment in order to identify deficits for optimization. This is difficult because loyalty is not necessarily a question of yes or no. Some customers are more loyal to a brand than others. This can change, at a certain point in time loyalty is high and later it becomes less (or vice versa). Loyalty can also be seen in buying behaviour and yet recommendations or positive evaluations are still missing. Because of its importance and complexity, it is important to investigate this through different metrics that capture the entire customer journey through data and feedback opportunities - knowledge and insight is the cornerstone of building customer loyalty.

Customers are constantly concerned with relevance, which is achieved by means of exactly the right actions and offers at the right time. An effort that cannot be managed by humans, but where automation helps to deliver the defined actions, such as further campaigns or other interactions, at the perfect time. 

Points for purchases or the passing on of recommendation codes, as well as in the B2B area the achievement of certain lead-nuturing levels, fill the points account of the consumers and develop the understanding about the lead in the decisive units of the company more comprehensively. This knowledge helps marketing and sales teams to qualify leads and optimize their targeting, thereby contributing to increased relevance, which ultimately leads to greater loyalty. Customers are similarly keen for companies to make them feel that they are special and to be recognised for the monetary benefits they receive. Thus, loyalty requires rational and emotional motives along the entire customer journey.

Loyalty today is mainly based on the customer/user experience, a soft value that comes from perception. It is the processes that companies offer their (potential) customers to handle their concerns. This perception influences the behaviour of the customers and develops memories and feelings that promote or even reduce their loyalty. To do this, it is of considerable importance to know what customers like and then to use this knowledge to offer personalized experiences that ultimately promote loyalty.

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