Recently we were delighted to welcome Sir Keith Mills, founder of Air Miles and Nectar card, for a discussion on customer loyalty. Sir Keith drew on his experience not only as founder of Air Miles and Nectar, but also more recently his roles as CEO of the London 2012 Olympics bid and as Deputy Chairman of The London Organising Committee of the Olympic and Paralympic Games (LOCOG ), to discuss how marketing and customer loyalty are changing in a digital age, the importance of data – and using it responsibly – and why some of the basic rules on loyalty will never change. Here are five things we learnt:-
The Golden Rule: retaining customers is more effective than seeking out new ones
Despite new channels, technologies and marketing strategies, one rule has remained constant: retaining existing customers is always cheaper and more effective than chasing new customers. This is particularly true when it comes to price promotions. By and large, the customers most responsive to price-promotions will also be the least loyal and least profitable as they will switch allegiance depending on the cheapest prices. As a result, too many price-led promotions produce diminishing returns and become a race to the bottom. When it comes to boosting your bottom-line, the best strategy is keeping your most loyal – and most profitable – customers happy. It may seem simple, but it is all too often forgotten.
The Power of Technology: knowing your customer
Technology has allowed retailers and brands to understand their customers better than ever before. This is no longer confined solely to online shoppers as new tools and technologies are emerging which can be used to effectively track and analyse in-store customers too. This links back to the golden rule described above: if you know who your most loyal (and profitable) customers are, what they buy and how they interact with you, it is easier to give them what they want and keep them happy. Quite simply, brands retain customers by serving them well and you serve them well by knowing what they like.
The Power of Technology II: increasing reach, cheaply
It might be easy to think that technology has made marketing more expensive because there are more channels you have to engage in and more data to make sense of. But the reality is that the cost of marketing has greatly decreased due to tech. Old form direct marketing such as mail-outs were often incredibly expensive, but now brands can engage directly at very low cost through mobile and online. This means brands can now reach more of their customers than ever before, especially now that new technologies have emerged that can identify and communicate with customers’ in-store as well as online. But to avoid alienating customers, it’s important to make any communication with them relevant to them.
Customers in control
When it comes to what marketing people are exposed to, customers now have more control than ever before with advancing technology a key driver. Whether through their choice of reading, social media or apps, consumers increasingly have control over what they see and engage with. However it shouldn’t be forgotten that this itself can provide useful information to marketing departments because it lets you know what people are interested in – and therefore what they might like to see more of.
Data protection: business needs to get on the front foot
One clear area of risk with the advance of technology is data protection. As consumers are becoming more aware – and more wary – of how their data is used, there are worries that it won’t be long before there’s either a consumer backlash or a clampdown from regulators. Legislation is currently struggling to keep up with the pace of change and it may result in a heavy-handed reaction if things go awry. But if companies are proactive in addressing concerns – the Drinkaware alcohol campaign was cited as a good example – and come together to agree on minimum standards and procedures for handling and using data, it will help to stave off future issues.