There has been a lot of buzz recently in the market from brands and technology providers alike that the customer loyalty industry is changing. This change is creating challenges for some in the market to “keep up.” While transactional programs remain common, brands have been strategizing ways to differentiate themselves. Still, the challenges of what to focus on, how to focus on it, and how to measure it persist, and in many cases they are getting harder.
One of the main ideas marketers have hit upon is customer experience. The brand that can offer more interesting and relevant experiences to its customers in a simple and personalized manner will create deeper emotional connections. Not long ago, Loyalty360 sat down with JR Slubowski, Sr. Marketing Strategy Director at Maritz Loyalty, to discuss this very issue.
Maritz Loyalty helps global companies build strong brands and stronger ROI by designing programs that attract, engage, and retain their best customers through the lens of behavioral science. Maritz Loyalty offers a full-service solution combining strategy, decision sciences, rewards and creative communication to achieve results. Today, more than 100 million people participate in client programs representing industries including hotels, airlines, pharmaceutical, automotive, and financial services.
How has customer loyalty changed over the last few years?
In a word? Immensely. You’re seeing the legacy programs of old—the kinds of programs that made the loyalty industry an industry in the first place—start to seriously question and revamp their structures. Banks are wondering if they need to do a complete overhaul. Hospitality programs are looking for new ways to innovate, making it less about points and more about experiences. At the same time, you have companies who traditionally wouldn’t have been great targets for a loyalty strategy feeling compelled to put one into place. From commercial businesses looking to inject loyalty at every step of their distribution chain to those gig economy companies looking at loyalty as a way to gain a competitive advantage.
So how has it changed? New players are emerging, with loyalty becoming less "me too" and more "me first." At the same time, mature players are evolving, recognizing the importance of moving their loyalty programs from a dark corner of the marketing department to center stage as part of the company's overarching business model and strategy.
What is “next big thing” for customer loyalty?
I’m not sure there’s going to be a next big thing. I think we’re at the point where there are a number of small things that are coming into the market that are going to add up to something big. AI, AR, cryptocurrency, blockchain, and conversational commerce are just a small part of the list of innovations that will shift our approaches to loyalty.
Another significant change will be in the interaction that loyalty programs have with members. We’re at the beginning of an evolution moving from a transactional state of “do this, get points” to more of a relational state where the program understands and knows you and delivers a more relevant experience.
Another shift I’m personally watching for is in the retail space. In recent years, many retail loyalty programs have been charged with driving and incenting more online behaviors. But with the retail experience changing so significantly—becoming more experiential, allowing products to be customized and literally created in-store, virtual mirrors so you don’t have to try on clothes, etc.—I anticipate seeing a surge of interest in loyalty programs focusing on driving customers back into the brick-and-mortar stores.
How sophisticated are most brands’ customer experience and customer loyalty initiatives?
They’re definitely getting there. More and more companies are recognizing the importance of moving to an omnichannel model when it comes to delivering customer experience. We sometimes call it an omni-experience, a subtle but important shift in wording. Whereas omnichannel only focuses on channel integration, more companies are now working towards what I would call experience integration, recognizing that not all customers deserve the best of the best when it comes to the experience. Sure, you need to deliver a great experience to all customers, but your best customers deserve something more than great.
We’re also seeing more companies recognizing that the oft-mentioned generational cohort we know and love called millennials are more like their generational predecessors than we have thought. They actually want to connect to the brands they like, admire, and buy. This includes the people representing those brands. But they expect their connection to actually be connected. Integrated. They expect frontline employese to know what they looked at online three days ago and what they almost bought and how they responded to that survey they sent a month earlier. All so that brand can deliver an omni-experience regardless of channel.
Should all brands strive to have the brand recognition of Apple or Amazon? Why or why not?
While Amazon and Apple are certainly brands to be admired, but not every company should strive to be them. It’s about figuring out what your brand means to your customers and leveraging that meaning in ways that drive loyalty. If your brand has a “I was a customer before it was cool” kind of vibe, then there’s probably a strong argument to be made for actively not trying to be an Amazon or an Apple, brands which seem to seek to be all things to all people, especially Amazon. That overly broad focus can confuse customers and can lead to disengagement, or worse, disillusionment. If a customer buys into your values as a brand and wants to see those values mirrored in the customer community you’ve created, you’ve achieved rare air when it comes to loyalty. Becoming too broad, or big, can undermine that kind of connection.
What does the phrase “customer journey” mean to you?
The phrase customer journey is a bit of a misnomer as it suggests something finite. After all, all journeys theoretically have a beginning and an end. The phrase “customer journey” is usually another way of saying that you want to better understand the aggregate impact of elements of the customer experience. But that journey as a whole for most of your customer relationships can be really broad and extensive. So, we’ve taken a different approach to mapping that journey. We look at those key moments that highlight areas of friction (both bad and good) and focus our energy on which “micro-journeys” are the most influential in driving loyalty among your customers, particularly your best ones.
What is the future of customer loyalty?
The future lies in seeing loyalty not as a program, but as the comprehensive experience that customers have with your brand. At Maritz we refer to this as LX, or loyalty experience. And LX differs from CX in that it is focused not just on optimizing the current moment in the customer’s interaction with the brand, but in fostering a future intention for that moment. When this is done right, the customer will always be seeing their brand interactions in terms of the legacy of past interactions and the anticipation of interactions to come. Connecting all of that together seamlessly will be the challenge, one that will require more than our tried-and-true tools like points, miles, rewards and bonus offers. This next evolution of loyalty strategies will require us to amp up our game in disciplines like AI and behavioral science, so we can design amazing experiences that continuously get better.
Conclusion
Our conversation with JR Slubowski has some significant takeaways. First, if the future of customer loyalty lies in experiences, rather than transactions, then it is up to brands to determine how to deliver those experiences. They will also need to understand the customer journey and begin to look at it more holistically, rather than as a strict narrative with a beginning, a middle, and an end. Lastly, they will need to scale their efforts to their customer bases; they should grow as big and as recognizable as their customers want them to be. We expect that brands that take on these strategies will see greater chances of success as the loyalty space evolves.