Research with 2,000 customers by eBay Advertising UK highlights an average of six touchpoints along a typical shopper journey and finds that brand loyalty does not differentiate between a person’s online and offline worlds. So the customer experience created by brands must be seamless and consistent across all channels to reduce the likelihood of switching.
“Price comparison sites have a role to play but only 12 per cent of consumers actually start their purchase on this type of site,” says director of eBay Advertising UK Phuong Nguyen. “It will vary by product type so each brand must identify and consider which channels to focus on during this ‘consideration’ phase.”
The research says nearly one-third of shoppers (30 per cent) can be classed as ‘switchers’ who move between brands as they progress along the purchase journey. Thirty-three per cent are brand agnostic and only 37 per cent brand loyalists.
“There are things brands can do to prevent switching and increase loyalty,” says Nguyen. “These include being available to your customers when it matters to them, not you; creating targeted and tailored ads showing they can access your products quickly and easily when they want to; and understanding what your competitors are doing.
“On average, ‘switchers’ consider three brands so it only takes a small swing to tip the scales in your favour – or, in fact, against you.”
People will search for the best price but it is the claims process that is the moment of truth for customers
While consumers may be larger in number, the value of a relationship with a business customer can be much greater.
This is where schemes such as incentives programs can help. According to The Loyalty Guide, manufacturers that directly reward the sales staff of companies that resell its products can reap the rewards of doing so.
Doing so will encourage staff to understand products better and therefore generate more sales – indeed Indian telco Nortel increased channel sales by 40 per cent after a year of running an incentive scheme.
Some brands, such as insurer Direct Line, refuse to use price comparison websites, choosing to focus on improving other elements of the consumer experience, such as customer service. Direct Line Group marketing director Mark Evans says insurers must rebuild trust lost across the financial services sector and loyalty cannot be earned by focusing on price alone. He says if consumers buy on price but suffer a poor experience when making a claim, they may believe they were missold the product, which causes long-term damage to brand loyalty.
“Comparison sites have challenged brands to work harder to be different because many people have basic needs when buying insurance and will search for the best price and move between brands,” says Evans. “However, consumers have no idea what a brand is really like until they go through the claim experience. That is the moment of truth in our industry and if that service is excellent, people can stay loyal.”
Evans wants comparison sites to include customer reviews about the claim experience and outline more clearly the cover obtained for a particular price. Direct Line plans a relaunch in September, when it will put claims and customer service at the front of its marketing strategy.
Aviva Direct Insurance also avoids price comparison sites and marketing director Heather Smith says its Quotemehappy.com online-only insurer brand is a deliberate attempt to focus more on customer service to win loyalty. Customers are invited to leave reviews on the website and the Aviva Advantages loyalty programme is promoted across different touchpoints, offering customers the chance to win tickets to the Aviva Premiership rugby, which the brand sponsors, and receive discounts on services such as car hire.
Meanwhile, on the B2B side, it is strengthening its product range for small businesses, with new products for health and retirement. It is rolling out a ‘customer thesis’ to help improve loyalty and runs its SME Pulse biannually to identify trends and challenges for small business owners.
Smith has watched with interest the move by some large UK brands, including Tesco and Asda, to follow the US trend of appointing chief customer officers to, among other things, bolster loyalty. The US-based Chief Customer Officer Council says 70 per cent of brands answering a recent Gartner survey on marketing budgets have a CCO or equivalent. This trend is accelerating in the UK as big brands try to rely less on price, which can discourage loyalty. The council says a CCO can help create a customer-centric culture.
Yet Smith sees no need for such a role at Aviva. “Everyone should be thinking about the customer, whatever function they are leading,” she says. “Some people will be closer to the customer than others, but such a specific role can be limiting.”
Nevertheless, CCOs could appear in greater numbers in fiercely competitive industries. In travel, for instance, much of the online marketing activity remains price driven.
Ferry company DFDS Seaways regards price comparison sites as simply another distribution channel but acknowledges that persuading people via these sites to use its ships rather than Eurostar or an airline can be a struggle.
Loyalty comes from a series of small gestures that means someone has a relationship with your brand
Head of marketing and strategy Pete Akerman says the challenge is in explaining the overall brand and sailing experience. He likes to describe how people can leave their car and move around the boat, enjoy the fresh air and take as much luggage as they can fit in their car.
“Loyalty is built through a combination of brand and price and by promoting the customer benefits across different touchpoints,” he says. “We refer to ‘guests’ rather than ‘passengers’ and have a retention rate of more than 50 per cent.”
Akerman says this is partly due to loyalty promotions such as selling multi-trip tickets, which encourage people to book direct on the DFDS Seaways website or call centre.
The business has an overarching strategy to improve its focus on customers, whether they be B2B companies shipping freight or consumers going on holiday. It runs an annual freight survey and is working on new solutions for business.
The retail sector too has experienced an effect on loyalty from price comparison sites. While some mainstream chains appoint CCOs, more specialist high-street stores are adapting their marketing to boost loyalty.
Vitamins and minerals retailer Holland & Barrett has had to respond to the discount retailers introducing their own ranges and to the consumer perception of the brand from comparison sites such as Google Shopping. This site compares only headline prices of products from various online and offline retailers but most of Holland & Barrett’s promotions are multi-buys.
“We have had to look closely at the wording of our online offers to ensure we have consistency between what people can buy online and what they can purchase in-store,” says chief marketing officer Lysa Hardy. “Many of our customers only buy in our shops.”
Whatever the sector, chief marketing officers will find long-term loyalty almost impossible to secure if competing on price alone because the brand becomes commoditised.
Honda Motor Europe marketing director Martin Moll says the tactic makes brands prone to attack because they have only one front on which to defend themselves against the competition. He says: “Focusing too much on price is highly risky and can lead to a downward spiral in loyalty.”
Moll says that although online lets consumers shop around and challenges brands to add value, when it comes to buying cars, most people are still wooed by the ownership experience, service and quality. He says: “A car means something to them and they have pride in being associated with a particular brand. Loyalty comes not from one big action such as a low price but from a series of small gestures that means someone has a relationship with your brand.”
Keeping business customers happy is also something ongoing for Honda and it provides dealer incentives that are passed on to customers, including low-interest rate loans. It also gives dealers discounts.
Additionally Honda uses what it calls ‘acts of kindness’ to boost loyalty. For example, it sent a Valentine’s Day card to a sample of customers on its retained database, thanking them for their love of Honda. They were given three gift options: a free car health check, money off an MOT or Marks & Spencer vouchers.
“The response was great and we received letters and emails from customers saying how nice it was to get something in the post that was not just trying to sell them something,” says Moll.
When selling online, loyalty is earned by much more than low prices and customer service. It can quickly be damaged if the delivery experience is poor, for example, which is why a number of retailers including Asos , John Lewis , Marks & Spencer and Boohoo.com have invested in an ecommerce delivery management platform. They employ a system from MetaPack that provides retail intelligence data and allows consumers to choose from various delivery options, including next day or click and collect. Retailers can also respond quickly to customer complaints using tracking software.
How people shop has changed hugely over the past 15 years, with consumers expecting value, convenience and good customer service. It is a triple whammy that chief marketing officers must achieve to not only win new customers but retain them.
Case study: Match.com
The world of online dating is extremely competitive with numerous sites facing a challenge to build loyalty. Even established players such as Match.com – launched more than 10 years ago – are under constant pressure to differentiate themselves.
“We need to provide customers with a quality, seamless experience across all devices to ensure loyalty,” says marketing director Jeremy Corenbloom. “Our core product started online but the evolution of technology has revolutionised the way people access dating sites to find potential matches.”
About half of single people access the site via a mobile or tablet and that figure has doubled in just one year. Corenbloom says any loyalty strategy must take account of how people access the site and the numerous touchpoints across which customers interact with the brand. “Ensuring our social networking channels are closely monitored is an absolute must, but it goes further than that. Twitter has opened an invaluable channel for us to engage with people in real time,” he says.
Match.com recently gave its followers the opportunity to have their personal dating story written up by a well-known romantic novelist. “We posted instalments every day and it allowed us to engage with people in a new way that showed empathy in a fun and personalised manner,” says Corenbloom.
The brand hosts Match.com nights and social events for singles. These were a response to feedback from customers who wanted the dating agency to facilitate meetings in more informal settings.
“We maintain loyalty by listening to our members and responding with new services that better suit their needs,” says Corenbloom, adding: “Brands must use insight to really understand their customers.”
Sponsored viewpoint – Adam Poole
European & UK marketing business strategy director, Canon
Customer service and customer loyalty have returned to the domain of the chief marketing officer (CMO) in recent years as the marketing function makes more use of sophisticated technology and has access to an increasing volume of data.
In the world of B2B, loyalty used to be the responsibility of account managers, supported by help desks and call centres. Yet today a CMO needs technology like never before as customers continue to access a business and its brands in so many different ways.
It is crucial the CMO works closely with the chief information officer (CIO) and that they think jointly about what insight their organisation really needs. They must agree when they will have access to it and how that insight will be analysed to genuinely benefit the business.
A CMO must be careful not to make isolated technology decisions but to link choices to long-term business objectives.
Technology has given power to the customer, but it has also allowed marketing to drive commercial aspects of the business to increase an organisation’s share of wallet and improve retention rates. Companies can use technology for simple tasks to boost loyalty, including automating questionnaire collection or communicating with customers across different media platforms.
Many customers will have direct links to an organisation while others will interact with its brands via social media or third-party websites. Price comparison sites might not be as prevalent in B2B as they are in B2C, but customers will still compare products and services within their peer group. Ultimately they want to interact with a brand on their terms.
The exceptional CMOs in 2014 harness information and technology to build intelligent connections with existing and potential clients through personalised content.
They appreciate how data equals valuable insight into customers they can reach directly and instantly. They can also track campaigns in real time and exploit the fact that return on investment can be measured more clearly.
A modern business is one which exploits insights rather than simply collects data and drowns in it. It is one where the CMO and CIO work closely together to deploy technology effectively. It listens to its customers whatever the touchpoint so that any communication during pre-purchase, buying and the after-sales cycle is relevant and appropriate.
Despite the changes and challenges technology brings on an almost daily basis, the focus always remains the same – understand your customers as best you can and always give them what they want.