If your customer retention strategy is based on “buying” loyalty with rewards, sales, or discounts, you have to know that you are paying a high price. And these days, it could also mean that you're giving up something priceless: its relevance.
That is because the "era of loyalty" of marketing, as we know it, is fading. It was built in part on the notion that consumers will continue to buy the same things if you have the right incentives. However, according to recent Kantar Retail consumer research, 71% of current consumers claim that loyalty incentive programs do not make them loyal at all. Instead, in this new era of digital competition and customer control, people buy more and more due to the relevance that a brand has in their needs at the moment.
In fact, the consumer research we've worked on at Accenture shows that only in the US market. USA Companies are losing $ 850.800 trillion (about € XNUMX billion) in annual revenue to their competitors because they are not consistently relevant. Loyalty is still important, but this finding indicates that the future of the marketing (and, in general, from many companies) depends on meeting the most relevant customer needs at the moment. In this way, companies must become more like living businesses, building and maintaining symbiotic ties with their customers as if those relationships were with a janitor, butler, or friend.
A new definition of relevance
To become this kind of live business, with a new understanding of customer needs, we need a new definition of relevance. Abraham Maslow's “hierarchy of needs”, first published in 1943, offers a good introduction. Maslow tried to map the psychological needs of humans and their motivations. However, its framework also offers a model for rethinking the traditional four 'P's of the marketing: product, price, place (place in English) and promotion. Most companies today are guided by these four facets of engagement.
The problem, however, is that brands that use all four 'Ps' exclusively target a static customer archetype (for example, a noble customer for an organic supermarket or a value-conscious customer for a discount chain) . The reality is that there is no such archetypal client. Each person's needs vary according to time and context. And with current technologies, companies now have the ability to see and act on these fluctuations on the fly. Customers increasingly expect all companies to do exactly that, both in their efforts to marketing as in the experiences they offer.
To become a living business, companies must expand their ideas to include the following five 'P's: purpose, pride (pride in English), association (partnership in English), protection and personalization. These form a simple and complete test of relevance. The first four extend from the top to the bottom of the psychological hierarchy, from what Maslow called "self-actualization" or the full exploitation of its potential, to security, a more basic need. The fifth, personalization, enables companies to connect with customers around any of these needs.
- Purpose: Customers feel that the company shares and promotes its values.
- Pride- Customers are proud and inspired to use the company's products and services.
- Association: Customers feel that the company relates to and works well with them.
- Protection: Customers feel safe when doing business with the company.
- Customization : Customers feel that their experiences with the company continually adapt to their needs and priorities.
Soul Cycle provides a good example of what the five 'P's look like in practice. By creating a community for indoor cyclists and fitness buffs, SoulCycle's purpose aligns with customer health values and a positive environment. This experience creates a feeling of pride for customers who want to participate in a high-end cycling experience (given the Prices and the tendency of instructors to be young and fit). Customers also feel that SoulCycle is an association dedicated to the lifestyle they want to achieve; They feel like they are treating themselves with clean new facilities, exclusive bath products, and custom playlists from SoulCycle on Spotify.
SoulCycle customers also feel that their purchase is protected, that it is expensive for a 45 minute gym class compared to the price of a traditional gym, because they trust that the staff will help them with their needs and will also help them take advantage of to the maximum each class. Finally, the SoulCycle experience becomes totally relevant when a client has an instructor who personally inspires them, creating personalization.
Many companies will be challenged to satisfy all five 'P's at the same time. The following three principles, however, should help you in your efforts to connect with customers on these fronts:
Get out of your comfort zone
Many companies have been using the traditional four 'P's for decades and many of them with great success. Often this means that companies will need to extend out of their comfort zones to position their brands in these new expanded ways.
Consider Yoplait, the international yogurt brand owned by food giant General Mills. Consumers often associate large food companies with mass production methods and plastic packaging. Companies like these are more used to using traditional four-P approaches, like Prices and promotions, to attract and retain customers. However, Yoplait recently found itself competing with an influx of newer brands, including the Greek yogurt brand Chobani, which emphasizes and competes in meaningful connections with authentic food traditions.
In response, Yoplait pivoted toward a focus on customer relevance. Yoplait found that consumers often pride themselves on using products that are related to an authentic national tradition, be it Italian olive oil or Greek or Icelandic yogurt. Recognizing that his long history of making French yogurt could become a market advantage, he adopted a traditional French method in which yogurt is grown and sold in individual small glass containers. As a yogurt executive at General Mills noted, "The simplicity of this idea, which is a French method coming from a French brand with a French name, that's authenticity." It is also something that Yoplait and its customers can be proud of.
The company is, at the same time, improving its relevance to customers in other ways. For example, he also recognized the desire of customers to feel protected. Her new French yogurt product "Oui" is completely natural, non-GMO and promotes her simple list of ingredients.
It is still too early to say whether this targeted initiative will lead to increased sales. However, it is a notable example of a company deliberately pivoting toward an approach that goes beyond its standards to be relevant to customers.
CVS Pharmacy, CVS Health's retail pharmacy, offers another example. CVS Pharmacy is going beyond a purely transactional retail model in which customers fill prescriptions; instead, the company is focusing on helping its clients on their path to better overall health. In this way, customers share the company's purpose. It also helps satisfy their desire to feel cared for and helps build the relationship of trust that most customers have with their pharmacist, an example of what we have called protection.
Extending far beyond the traditional retail paradigm, CVS is embracing technologies that include Insights predictive, artificial intelligence (AI) and machine learning to send your customers personalized reminders to refill or take their medications, in a spirit of partnership. And, the company has partnered with AI giant IBM Watson to anticipate patients' needs, even when they may require the most urgent care. These new paths and practices will increase value for customers by maintaining an active engagement with a pharmacy retailer and making the CVS brand more relevant in the moment by protecting their health and well-being.
Timing is everything
If the first four 'P's are additive, the last customization is multiplicative. A key component to becoming a live business is getting the right message, experience, or offer exactly to customers in the right context. It is a level of personalization that few companies achieve.
Car rental giant Hertz has worked to develop a "just-in-time" approach to deliver highly relevant offers at the exact moment that the customer evaluates the offers through the channels they prefer, either through agents of a call center, counter terminals, portable devices or the Hertz website.
Through the Insights predictive, Hertz suggests deals based on a client's propensity to accept certain offers over others. For example, a potential customer for a “buy one get one free” offer might receive a different (perhaps even less profitable) proposal if they neglected similar offers in the past. The company understands that a promotion can only be as profitable as a customer's willingness to take it, and an unwanted customer is a missed opportunity. That's why offers are calibrated based on customer behavior in a way that all marketing channels can use simultaneously.
Don't be loyal to status quo
To be successful in this age of relevance, vendors and businesses must be continually willing to abandon the old. As new technologies change customer experiences and expectations, they can (and should) also improve companies' abilities to interact with customers in a more relevant way. Often the biggest obstacle is a company's unwillingness to transform its processes,, organizations and mindsets as needed.
To overcome that barrier, some companies have shifted from a product-centric mindset to a platform approach.
Under Armor, Inc. offers a good example. Rather than simply thinking of itself as a sportswear manufacturer, the company has developed a “connected fitness” ecosystem. In 2015, in fact, it spent more than $ 500 million (more than € 425 million) to acquire two popular fitness measurement services in a bid to become the world's largest fitness information tracker. The two services, one based in the United States and the other in Europe, had 100 million combined subscribers when purchased.
Under Armor intends to allow these platforms to grow independently, while obtaining aggregated data that can inform and expand their apparel designs. Ultimately, the goal is to link customers to new services, such as innovative startups that are developing integrated sensors and biometric readers for apparel. In the words of CEO Kevin Plank: "Brands that don't evolve and offer consumers more than just a product will have a hard time competing."
Similarly, automaker BMW has embraced partnerships in a broader ecosystem to help its customers navigate their urban environment, with or without their car. Customers can now view their brand engagement as an ongoing relationship, rather than a one-time purchase. To provide its customers with a seamless transportation experience, the automaker links them to a broader ecosystem of rental and car rental companies, parking devices, electronic vehicle charging stations, and mobile lifestyle apps based on The ubication.
Today's consumers, equipped with mobile devices, constantly evaluate and reevaluate their strategic shopping. They will choose the most relevant brands for them at an ever faster rate. And they will pay a premium. Live companies (those that reach this degree of relevance) will have the power to fix Prices and will boost purchases repeated. Those are the ultimate goals of loyalty, now newly acquired, when relevance matters more than ever.
I am a dreamer and in my dreams I believe that a better world is possible, that no one knows more than anyone, we all learn from everyone. I love gastronomy, numbers, teaching and sharing all the little I know, because by sharing I also learn. "Let's all go together from foundation to success"
Last entries of MBA Yosvanys R Guerra Valverde (see everything)
- 9 types of wine bottle openers - Use Guide 2021 - April 1, 2021
- Restaurant Design Guide - 2021 - March 31, 2021
- How to create a wine list in a restaurant this 2021 - March 31, 2021