Written by Zayd Hussain

Customer Loyalty in the Digital Age

Jun 24, 2021 · 3 min read

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20% of marketing engagements represent 80% of positive outcomes, and 80% of online traffic is generated by 20% of posts. This is the Pareto principle or the 80/20 rule. Likewise, 80% of a company’s sales come from 20% of loyal customers. Loyal patrons are the key to driving revenue, and loyalty programs are incredibly influential in the new digital world.

ROI for Loyalty

Loyal customers spend money, engage frequently, and expect a ‘business class’ treatment. While frequent engagement amplifies the impact of positive change, it also makes customers more susceptible to negative experiences. However, for loyal customers, a positive experience is not a privilege, but that which they expect in return for loyalty. Negative experiences can have a disastrous effect.

Business-class boards the plane first

In its latest article on customer loyalty, Harvard Business Review noted that when loyal members encounter service failures—shipping issues, problems with returns, stock-outs, and the like — they get more upset than customers who are not members of the program.

Understanding this is a no-brainer. Loyal customers will see their continued patronage as an investment into the service, and as return customers, will also be more heavily impacted by shortcomings. That is the price of loyalty. 

The pandemic had a wide impact on consumers and businesses alike. Businesses that prioritized e-commerce saw a sharp rise in sales, and the customer journey was significantly altered. One thing that did not change is loyal customers’ expectations for a ‘seamless experience’ and preferential treatment. Hey, the logic is simple - ‘business class boards the plane first!’

Customer experience is king

Another factor to consider is the ‘ease of use’ of digital offerings - it’s a double-edged sword. Customers can browse through online catalogs, look at thousands of products, and order with just the click of a button. But that also means that a disappointed customer is just a click away from a competitor that promises a stronger customer experience. Essentially, impressing and retaining the digital customer boils down to one idea - consistent and superior customer experience is king.

“To win in the next normal, companies need to identify the current behaviors that will define customer experience in the near term. They must then ensure that these opportunities are aligned with their business strategies and capabilities.” - As quoted by Constance Emmanuelli, Partner - Customer Experience Practice, McKinsey & Company.

Businesses must focus on prioritizing CX for their loyalty program membership holders. An efficient loyalty program should now go beyond transactional rewards and create extraordinary experiences that touch every aspect of new behaviors to keep long-lasting loyalty.

Go the extra mile

Retailers of the digital age should be ready to adapt and innovate their programs regularly. Keeping a real-time pulse on changing customer preferences, examining customer journeys, and recalibrating satisfaction metrics will help businesses position themselves at the forefront of the longer-term shifts in consumer behavior. Businesses that aim to thrive in this era of rapid change need to go the extra mile and make their loyal customers feel valued and appreciated with the singular aim of retaining the 20% most loyal customers who drive 80% of revenue. 80/20 rule, remember?

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