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How The Pandemic Is Igniting Customer Loyalty And How You Can Too

A CCW Digital Analysis



Matt Wujciak
07/24/2020

Identifying CX trends in customer loyalty 

According to the Harvard Business Review, loyalty leaders—companies at the top of their industries in Net Promoter Scores or satisfaction rankings for three or more years—grow revenues roughly 2.5 times as fast as their industry peers and deliver two to five times the shareholder returns over the next 10 years. 

Loyalty leaders are the one’s prioritizing creative ways to elevate the customer experience and retain customers, primarily through two key areas - emphasizing design thinking (i.e. how do we make a process smoother or our customer’s lives easier), and the right metrics (i.e. how do we use customer data to personalize experiences and increase retention scores).  

As Dow Jones’ Head of CX Design, Alison Lichtenstein told me:

“I think personalization is probably the greatest thing that we can have happen to experience design. Based on the data that we have on what people want, we can then create tailored experiences all the way throughout a customer’s life-time.” 

Read More: Special Report Series: Retail Customer Experience Trends

Unfortunately, the vast majority do not fall under this category of tailoring personalized experiences through design thinking and key metrics.

To collect data for our latest Market Study, CCW Digital conducted a survey in May and June of 2020. The survey attracted global respondents responsible for overall leadership, contact center, customer experience, marketing, operations, sales, human resources, information technology, and product development.

Of the many trends we uncovered in the wake of COVID-19, a staggeringly low 1 out of 4 (25.74%) are adopting new metrics/expectations for CX (such as customer loyalty or lifetime value), and only 13.86% emphasize design thinking (such as innovative ways to retain existing customers). 

To cut labor costs, many contact centers have given agents incentives to reduce standard metrics such as average handle times - in hope of increasing efficiency while e-commerce sales (and along with it) customer inquiries increase. To reduce operating costs, restaurant chains are often cutting down fresh and made-to-order food ingredients and substituting them for precooked inventory. To drive revenue, many software enterprises are increasingly charginging regular update fees to pre-existing technologies and products. 

The resulting profits may look good on the income statement and may even lead to short-term earnings growth. But they also reduce customer retention rates, encourage defection, and make the company vulnerable to poaching by customer-centric competitors who are prioritizing design thinking and better metrics. 

Several years ago, you might have been able to lean on foot traffic and volume to help make up for customer churn. Now more than ever, it’s important to remember that satisfying and retaining existing customers is exponentially more profitable than acquiring new ones. In fact, attracting new customers will cost your company 5-25 times more than keeping an existing customer. 

Capitalizing on the digital shift 

Today, your customers are shopping from home more than ever before, and you can expect them to continue doing so even after the pandemic passes and a vaccine is developed. 

Software Advice recently surveyed more than 550 U.S. consumers to gain insight into how COVID-19 has affected their priorities and preferences. That survey revealed that 60% of consumers have been shopping online more or significantly more since COVID-19, and among those online shoppers, 73% plan to continue to shop online at that increased frequency even after the pandemic has passed. 

Not to mention, according to CCW Digital research, nearly 75% of companies say remote work will be a permanent option for at least some employees, which has contributed to a shift from brick-and-mortar to digital commerce and online sales, as consumers and employees spend more time at home, engaging more on digital channels, whether it be SMS, social media, chatbots, or a brand’s app.

Capitalizing on customer loyalty programs

Earlier this week, Starbucks announced improvements to its popular Starbucks Rewards program. This fall, rewards members will be able to collect “stars,” or points they can use to earn rewards, no matter how they pay for their beverages or food. Customers will also be able to save their payment methods, preferences, and other useful data in the company’s mobile app.

Starbucks’ move follows Wendy’s introduction of its Wendy’s Rewards program, and follows Taco Bell’s announcement late last month of a planned loyalty program this summer. Panera Bread, meanwhile, generated strong loyalty program member growth during the pandemic after it introduced a coffee subscription program. Panera’s MyPanera program now has 40 million members.

For restaurant chains specifically, loyalty programs have become a must to keep customers and encourage them to come in more often, and numerous chains have generated desirable sales results. It also gives companies more insight into customer behavior, which can guide marketing departments. 

Domino’s Pizza late last week, for instance, noted that more than 75% of its orders last quarter came through digital channels, at points hitting 80%. That has helped lead to a rapid increase in membership to its Piece of the Pie loyalty program, which generated more members than at any point since the first quarter of last year. 

“We know that once customers are in our loyalty program, [they] will order a couple more times every year than the average customer,” CEO Ritch Allison told analysts last month, according to a transcript on the financial services site Sentieo.

Customer-centric enterprises, such as Costco, AMC Entertainment Holdings, Humana, and American Express have been increasingly reporting various types of customer value metrics that are heavily dependent upon subscription models and customer loyalty programs. 

Read More: Special Report Series: Building Better Caller Experiences

Most telecommunications companies—including Verizon, AT&T, and T-Mobile—do as well. The utility company E.ON reports year-over-year customer counts in its audited financials. Its 2018 annual report noted a decline of 200,000 customers in the UK and an increase of 100,000 in Germany, while other regions were flat. “As a customer-focused company,” E.ON noted, “we see our ability to acquire new customers and retain existing ones as crucial to our success.” E.ON began tracking loyalty metrics in 2013 and is seeing dividends. 

Building a loyalty program

Building a gamified customer loyalty program that is operationally efficient through design thinking and innovative customer metrics is imperative to the future of consumer retention. 

Unless you want to use primitive punch cards, any customer loyalty program requires your customers to turn over some form of personal contact information that should be recorded. Once you have a customer’s contact information and the channels that they spend the most time on (whether it be a phone number, Facebook account, email address, Instagram handle, etc.) depending upon your target market, it becomes a matter of keeping track of customers purchases from your business, and rewarding or gamifying those purchases with cashback, free products, discounts, and more. 

The easiest way to do this is to offer a digital receipt along with an opt-in for future communication. But an even more effective method is to offer something in return, which is essentially a sample of your customer loyalty program or service as a whole, as you may have noticed with many fortune 500 companies such as Zoom, Uber, Amazon and more. 

Read More: How Commerce Is Shifting Towards "Uber Style" Service

This is a time when the world is vulnerable, where every person and organization is adapting to life with a live virus in their midst, where no one is operating from a best-in-class pandemic playbook. Brands, including marketers and customer service departments must become the very people they’re trying to reach. This means that among innovation, compliance, time and technology, humanity must become the greatest application. 

For media coverage, lead gen, and digital marketing inquiries, contact me at matt.wujciak@customermanagementpractice.com, or connect with me on Linkedin at Matt Wujciak.

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