The digitalization of businesses has become a win-win situation for customers and businesses. For customers, it has brought convenience, transparency and better deals and price points. On the other hand, businesses have benefitted from a huge expansion in market size, an easier reach to the customers, and reduction in transaction costs and improved efficiency in business.
One of the pitfalls of the digital world for businesses has been to remain competitive in the market place. Any new business model that is created can easily be replicated by another person in this technology savvy world, thereby diminishing the competitiveness as business models are no longer rare or non-imitable. Further, numerous aggregators are making life tougher day by day. From product, to quality, price, customer sentiment and service quality, every parameter that impacts the buyer or buyer’s decisions, is easily measured and compared to the competition. Every touch point with the customer is duly scrutinized by the digital world. While the business models will continue to be re-invented, companies will have to invest in gaining and retaining the trust of their customers. Minimizing customer acquisition costs, improving customer retention and harnessing maximum life-time value (CLV) remains a challenge for businesses.
With similar products and offerings, the most important element that differentiates companies is customer loyalty. Customer loyalty comes as a result of consistent emotional experiences, perceived economic value and functional aspects of the product and services. Often companies correlate customer loyalty to customer experience. Furthermore, customer experience has been inadvertently taken as UI experience. But each of these are distinctive elements of building customer loyalty, which goes much beyond including elements of mutual trust and respect. Customer consider convenience, transaction security, transparency, and depth and breadth of products as guaranteed. The key ingredients of a holistic approach for building customer loyalty are as follows:
- Customer engagement: Right from customer acquisition to customer retention, engaging efficiently with the customer pays-off. One cannot be transactional in nature to push the sales. Engage with your customers to better understand their needs and their perception about you and your business, and his/her sentiment about transacting with you. All these elements help to plan the entire business model from profiling, defining product catalogs and target marketing, to customer retention and referrals. Post-delivery surveys and ratings are just the beginning. A post sales feedback, particularly once the customer has already experienced the product sufficiently, perhaps 1 -3 months down the line, can be a great channel to engage and collect an honest perception and to discover future needs of the customer. Get the best of both worlds from the activity. Pay particular attention to the challenges and grievances of the customer. Furthermore, explore the world of gamification, harness brand strengths and digital marketing to engage your customers regularly.
- Personalization: The next generation needs to be pampered with personalization that adds emotional experience. Gone are the days when everything was cookie cutter. Right from content, campaigns, marketing, promotions, customer service and even loyalty programs have to be personalized. Integrate social media not just to discover the entire universe of buyers, but for personalization. Understand the reviews of friends and family members, who can be the trusted advisors for the purchaser. Big data, customer profiling, including sentiment analysis, will play a big role. Pull strategy has to be replaced with push strategy in a digital world.
- Loyalty program: Often loyalty programs are said to be misnomer for the apex point in customer loyalty, but this is just an initial step in building loyalty. Businesses, like travel and hospitality, have mastered the art of loyalty programs, but other businesses are yet to embrace the potential of this. A distinctive loyalty program that rewards frequent buyers through step up rewards based on value, products, customer sentiment analysis, life-time value and social quotient will attract the loyalty of millennials. Companies should incentivize customers to embrace new technologies, payment methods and offerings to build trust and loyalty. Imagine the positive impact of offering same day service automatically to some loyal customers, or for high value transactions, rather than relying on a premium paid service. Loyalty programs are a great medium to enhance emotional experience and enhance economic value of the services.
- Customer service: One of the most unsaid area is customer service for both pre-sales and post sales experiences. In small ticket and impulse buying pre-sales, customer service may not play an important role. However, post-sales experience is one of the most important aspects in any purchase decision and will greatly enhance customer lifetime value. In a market place model, need for friendly and customer centric service even becomes even more important. And this is one of the areas where most companies are losing the plot. Poor product quality, incomplete product information, and even fake products are some of the burning issues in the market place. These are just some of the areas where customer service teams have to constantly hear customers, analyze customer sentiments and offer support services seamlessly. If you win the customer during hard times, you have won his/her loyalty forever!
- Omni-channel experience: Companies have to build omni-channel experiences with the brands they embrace. This is different from omni-channels built with devices and retailing formats. Digitalization will limit customer touch points through devices. So how can one embrace the strength of the brands? Companies have to build sales and service synergies with brands. Can the customer buy from the e-tailer, yet directly walk in to the product brand store for service, warranty, or even returns? This would add many levels of confidence in your customer. If brands don’t own you, your customers are likely to dis-own you as well.
- Device based strategy: Device strategy is one of the hottest topics around. Many companies have embarked on a mobile only strategy, while many others are contemplating the same model. Whatever technological advancements have been made, there is no better device than wide screens to browse and search products and services. On the other hand mobile devices provide added convenience to the customers for repeat buys. Evaluation of a device strategy may pose a problem, as it is difficult to determine the origin of purchase decision. Was it specifically through the mobile device or had the customer already browsed the product through other devices before buying through mobile? In today’s world, more than one third of customers buy from laptops and desktops. Furthermore, there is an entire eco-system to support the devices and inter-operability. Conversion rates are bound to fall with limited options if email campaigns, banners, SEM are confined only to single device strategy. Ensure that you are offering more options for customers to reach out to you. After all, it is the customer who is the king and your strategy should be based on what your customer wants and not what you have to offer to your customer.
Customer loyalty is key to driving stickiness with customers and improving profitability. Business models are best when the profitability of the customer is more than the customer acquisition price. Can customer loyalty drive the business competitiveness in this digital world? Take your bets!