Loyalty space today: Q&A with Forrester’s Emily Collins
I recently sat down with guest speaker, Forrester’s Emily Collins, to discuss digital engagement in a post-COVID world. As lifestyle shifts such as staying at home impact buyer mindsets, and ultimately, demand for certain goods and experiences, the loyalty space is fundamentally changing. How do companies maintain brand connection during these tumultuous times?
As a follow up to that talk, I wanted to dive deeper into Emily’s perspectives on loyalty. In our Q&A below, we cover a range of topics on the state of loyalty, including roadblocks to loyalty, what’s missing from the current loyalty landscape, and its potential future.
Clay Walton-House: As brands seek new arenas to leverage loyalty, and new industries come online where the principles of loyalty can apply, where are you seeing the white space in loyalty today?
Emily Collins: Over the past two years, we’ve seen many organizations overhaul their loyalty programs with customer experience improvements, new rewards and benefits and enhanced branding. These efforts extend beyond the “typical” loyalty industries of retail, travel and hospitality and financial services. We’ve seen increased interest in loyalty from QSR, CPG and manufacturing, telco and even industries with infrequent purchase cycles or low-engagement verticals like automotive and insurance. But there is still work to be done. The white space is in the gap between where companies are today—loyalty is impacted by programs and multiple but disconnected efforts—and where they need to be with loyalty as a key part of the corporate strategy for driving growth.
Clay Walton-House: Even the best loyalty programs encounter challenges that can create discord in the customer and brand relationship. What do you see as the biggest roadblocks to successful loyalty programs and strategies?
Emily Collins: The biggest roadblock to success is a failure to strike the right balance between customer-obsession and business objectives. This often leads to programs that focus too much on “getting more” from their most valuable members (usually through promotions) and not enough time delivering differentiated experiences and meaningful value that reinforces the quality of the relationship. Some of this may stem from internal challenges, such as a lack of a clear definition of loyalty, siloed execution and limited customer understanding. Ideally, loyalty should be treated as an enterprise responsibility, not a singular marketing program.
Clay Walton-House: When a loyalty initiative falls short, what are some of the causes you’re seeing?
Emily Collins: Many loyalty initiatives are too focused on program mechanics and increasing short-term quantity (of members, transactions, basked assortment, etc.) and not focused enough on the long-term quality of the relationship. Loyalty has emotional and behavioral components, but for most brands loyalty equals retention. This combined with a lack of understanding of who loyal customers are and what they really value stunts program and strategy potential.
A big benefit of loyalty programs is the fully-opted-in relationship they establish with consumers and the insights that can be developed from all of the profile, preference and behavioral data collected. This is especially valuable right now when more and more consumers are taking active measures to limit the data brands collect for marketing and advertising purposes.
Clay Walton-House: In our own work, we’re finding that more and more brands are seeking to add a paid program to their loyalty offering. In your opinion, what are the biggest pitfalls of paid programs and why do some work better than others?
Emily Collins: Including a paid tier or adding a payment requirement to a program ups the ante for the consumer and asks them to invest in the brand-relationship upfront. As such, the program value proposition needs to be commensurate (but not necessarily literal). Launching a paid program must be a strategic structural decision, not a bandwagon one.
When thinking about the value delivered by a paid program, look beyond economic value (though that is part of it). Consider: experiential and symbolic (as in community, achievement, and status) value and access to new ways of buying or exclusive benefits. With paid programs, it’s even more important that you reserve the best of your brand for your best customers, or in this case, customers that are willing to pony up the membership fee.
Clay Walton-House: I realize we’re in a period of extreme uncertainty. But looking into your crystal ball, what consumer behaviors or expectations do you foresee changing significantly in the next five years?
Emily Collins: In the short term, the ongoing COVID-19 pandemic will shape much of what consumers do and how they feel. In 2020, we’ve seen it cause US consumers to feel measurably more fragmented and disconnected, doubtful that people and organizations will follow through on their promises, distracted, and vulnerable to the rapidly changing conditions in their environment. Next year, emotion will play a key role in influencing priorities, decisions, and behaviors. And social divisions and continued isolation will push them to consider new kinds of experiences enabled by augmented and virtual reality.
Long term, we expect consumer attitudes and behaviors to evolve in three key ways. First, they will care about the values reflected in what brands do, not just what they advertise or say in their marketing messaging. Fifty-five percent of consumers make purchases from brands that align with their values, and the pandemic has only intensified their feelings. Values-based consumers want to see authentic commitment, not just a marketing message that fits the cause of the moment.
Second, they will be more experimental with products and services. Consumers today are much more willing to try new brands and products than they were 10 years ago. Brands pivoting to product trials and curated subscription boxes feed consumers’ appetite for innovation and condition them to expect more experimentation. Third, consumers will have even higher expectations from both digital and physical buying experiences. Even as consumers experiment in new modes for discovery and acquisition, they continue to use the tried-and-true channels—and demand consistent and high-quality experiences across the board.
About the Experts
Clay Walton-House serves as Managing Director of Integrated Loyalty Solutions at PK. He helps Fortune 500 companies create and implement new customer engagement strategies that accelerate growth and build loyalty. His expertise lies in understanding consumer behavior and translating it into actionable customer insights. Clay has a proven track record of successful loyalty program design and optimization, helping uncover ways to build retention and loyalty strategies into a company’s broader business model.
Emily Collins leads Forrester’s customer loyalty and communities coverage. She leads a team of analysts who help clients develop marketing strategies that drive customer obsession and growth. Her team focuses on omnichannel advertising, social marketing, content strategy and intelligence, marketing measurement, and loyalty. Her research examines loyalty strategy; loyalty programs; consumer trends; and the tools, skills, and processes B2C marketers need to manage and measure loyal customer relationships.Tags: Brand Loyalty, Customer Loyalty, Loyalty