Monday, November 7, 2011

A Strategic Approach to Sustainable Customer Loyalty

A Strategic Approach to Sustainable Customer Loyalty

Recap: our previous blog laid out the challenge facing business institutions - achieving sustainable customer loyalty is becoming increasingly important in a world of slowing growth, while at the same time it is  becoming increasingly difficult in light of exploding consumer choices.

Tactical vs. Strategic: the approach taken by many companies to increase customer loyalty is to tactically ratchet up the level and frequency of short term financial incentives – however this approach seems to have limited enduring effect. A more strategic approach is needed that tightly integrates what each customer (and potential customer) experiences with the value proposition of and the relationship with the  merchant.
Some of the key elements of this more strategic approach are outlined below:

1. Experience Differentiation: your customers are explicitly making CHOICES between your products and services and those of your competitors. For this reason an essential first component of any successful customer loyalty strategy is to ensure that your offerings and the entire customer lifecycle experience compare favorably with other customer choices – only RELATIVE value counts. This is an iterative process and you may find the need to change your offerings in order to be the best choice of a larger and/or more profitable segment of the population.

2. Understand WHY: understanding and modeling the explicit reasons WHY consumers  choose a particular product or service, brick and mortar merchant or etailer, product brand or financing instrument is absolutely essential in being able to predict how they will respond to your offerings and those of your competitors. It is also absolutely essential in being able to shape your total customer experience over time to reflect and take advantage of what customers really want. Customer loyalty is all about satisfying customers’ desires in a sustainable win-win environment.

3. Personal Value Alignment: your brand and offerings must align with  customers’ VALUES and their personal PREFERENCES about specific products and services. Segmenting your existing and potential customers based on demographics does not achieve the personal value alignment. It is critical to develop a new segmentation strategy based on the importance that your target consumers place on all of the features and aspects that influence their buying decisions across the life cycle of their experiences.

4. Proactive and Preemptive: you must proactively reach out to customers BEFORE they make their purchase decision. Based on their defined preferences and values, you have to RECOMMEND potential next purchases. This is “1 on 1” permission marketing, based on your offerings which match  features and experiences of your customers’ stated preferences. Compare this proactive “1 on 1” approach with a shotgun marketing approach directed at  an entire predefined demographic or psycho-graphic segment.

For more information about strategic approaches to sustained customer loyalty contact applez2applez via e-mail at or follow us on Twitter at

The Challenge of Sustainable Customer Loyalty

The Challenge of Sustainable Customer Loyalty

A number of transformational changes are assaulting the marketplace and challenging traditional paradigms and strategies for achieving sustainable customer loyalty:

Shrinking Discretionary Spending: the lingering global recession and the rise in energy and related costs are stagnating per capita discretionary spending and eliminating the passive strategy of “a rising tide lifts all competitors”. The current and foreseeable future reality is that significant growth in most verticals MUST come at the expense of competitors losing clients or at least share of clients’ wallets.

Proliferation of Choices: consumers are being overwhelmed by the increase in the number of available products and services, distribution channels, financing instruments and coupons vying for their discretionary income.

Consumers Demand Personal Differentiation: consumers increasingly exhibit any semblance of sustainable loyalty only to those goods and services where they experience a direct fit with their personal values and preferences, where they “see themselves” through the prism of a companies’ offerings and interactions.

Loyalty Leads Loyalty Programs: consumers increasingly determine their loyalty to a company through the prism of personally experienced differentiation and  use loyalty programs as a reward for bonding decisions they have already made. For this reason most loyalty programs are designed to incentivize customers that are already loyal and do not have a strong track record of promoting loyalty switches. Most loyalty programs may increase frequency and/or volume of purchases – but do not switch core customer loyalty.

Loyalty Cannot Be Bought (for long): attempts to purchase consumer loyalty without explicit linkage to the personal value that gives birth to true consumer loyalty are frequently doomed to failure. An increasing slope of financial incentive and discount “heroin” may fuel short term purchases but results in easy switching when the financial incentive is withdrawn, and little or no sustainability of future purchases.

Lack of Differentiated Offerings: Starbucks versus CVS: just reflect on the difference between Starbucks and CVS brand image. Starbucks’ offering and experience say something positive about the customer as a differentiated PERSON and re-enforce positive self image.CVS sells items that are available from every drugstore let alone most other general merchandise stores.

These external challenges are exacerbated by many customer loyalty programs being strategically disconnected from core marketing and sales activities, with limited dynamic synergy or interaction.

In light of these Tsunami marketplace upheavals there is a need for a new customer loyalty paradigm  - a means to use customer loyalty programs as a leading and not a lagging strategy and to develop approaches that provide on-going customer loyalty without as heavy reliance upon the heroin of financial incentives and discounts.

In our next blog we will outline a strategic approach to help companies optimize their loyalty strategies and programs.

If you have any comments or suggestions, you can contact us via e-mail at or follow us on Twitter at

The Win-Win Solution to the Revenue Dilemma

Monetizing Social Media: The Win-Win Solution to the Revenue Dilemma

Recap: Credit Card institutions are under siege, from political and regulatory quarters, to reduce the fees they charge to merchants when consumers use debit cards. Many of the credit card institutions are positioning to recoup lost revenue through additional consumer fees for the use of debit cards – increasing these same external pressures.

Strategic Solution: Less of the Same: Implement a solution that provides high value added to both merchants and consumers that is NOT fee or rate based and so is NOT subject to these intense external pressures.

The image below illustrates some of these key related issues facing credit card institutions, their merchant and manufacturing partners and their consumer customers.

What Challenges Commercial Companies Today: Optimizing Their Consumer and Channel Portfolio: the acceleration in the growth of end consumer buying behavior segments and the massive growth in global manufacturing and distribution competition and co-opetition has made it increasingly difficult and risky for commercial companies to dynamically determine their optimal portfolio of products and services, customers and ecosystem partners.

What Frustrates Consumers Today: Proliferation of Choices: the single greatest challenge facing consumers today is the overwhelming array of choices of products and services, retailer and etailer sources and increasingly coupons and deals. The sheer volume of descriptive information is staggering – yet there is virtually nothing available that helps consumers DECIDE what is best for them.

The image below provides an overview of a solution that would provide all three sets of interested parties with a high value adding solution.

What Would Commercial Companies Value: a service that provides them with explicit real time RECOMMENDATIONS of those products and services, consumer and ecosystem partner segments that take optimal advantage of their competitive strengths and minimize their competitive weaknesses.

What Would Consumers Value: a service that provides them with explicit real time RECOMMENDATIONS based on those product/service/distribution/terms that best fit their specific needs.

The Unified Field Solution: All of the above goals can be achieved through the innovative use of quantified consumer social media data, embedded into intelligent decision support modules, and sold in a SAAS fashion by Financial Institutions to their customers.

Future topics will include:

Approaches for coupon companies to generate additional revenue sources using social media data.

     a. Offer coupon company subscribers tangible custom recommendations about specific products and services.

     b. Convert quantified buying experiences of coupon company subscribers into new revenue sources.

For more details on this innovative solution, please contact applez2applez by e-mail at or follow us on twitter