How can brands drive loyalty in the face of digital disruption?

by Garrett Ilg

Posted on 11-08-2017

What hap­pens when your cus­tomers and their needs are con­stant­ly changing?

There’s been much dis­cus­sion on the impact of dig­i­tal — par­tic­u­lar­ly — how our behav­iours are chang­ing in the face of vast choice, with increased expec­ta­tions that we should be able to get what we want, when­ev­er we want it and how­ev­er we want it. But, for busi­ness­es, the reper­cus­sions of this are far and wide. How can brands fos­ter loy­al­ty from a con­sumer who can — and will — switch to a dif­fer­ent prod­uct or ser­vice with­out a sec­ond thought?

Adobe has been work­ing with Gold­smiths, Uni­ver­si­ty of Lon­don, over the past few months to find out. You may have already seen Part I in the Rein­vent­ing Loy­al­ty: Under­stand­ing Con­sumer Behav­iour in the Expe­ri­ence Era report. In this, we found that half of con­sumers are over­whelmed by choice (46%) and would buy from an unknown brand that offers a bet­ter expe­ri­ence (50%). And when it comes to who they’ll spend their mon­ey with, con­sumers first ask:

Using these insights, the researchers devel­oped a new strate­gic frame­work for loy­al­ty. The old loy­al­ty mea­sures of respon­sive­ness, rec­om­men­da­tion and reten­tion still apply, but to achieve new loy­al­ty brands need to be think­ing about four new dimen­sions: pre­dic­tive, preva­lent, choice and experience.

Now armed with a view of what the con­sumer wants, Adobe & Gold­smiths spoke with enter­prise mar­ket­ing lead­ers around Europe to see how they’re per­form­ing against these new mea­sures. The results of which are now includ­ed in our report, Rein­vent­ing Loy­al­ty — The New Loy­al­ty Expe­ri­ence.

The find­ings are sig­nif­i­cant and have big impli­ca­tions for brands and marketers.

Brands need to know the cus­tomer much better

The major­i­ty (75%) of mar­ket­ing lead­ers admit­ted that they don’t under­stand the chang­ing con­sumer and were neu­tral or neg­a­tive about how their busi­ness per­forms against the new loy­al­ty frame­work. And only one in four feels pos­i­tive about their under­stand­ing of the consumer—there is huge room for improve­ment when it comes to imple­ment­ing these loy­al­ty dimensions.

Data is dri­ving loy­al­ty through pre­dic­tive experiences

Almost two thirds (61%) of con­sumers in this report are loy­al to brands that adapt expe­ri­ences to them. Arti­fi­cial Intel­li­gence (AI) tech­nolo­gies can be a great tool to help brands achieve per­son­al­i­sa­tion at scale. How­ev­er, mar­keters aren’t quite there yet—only a third (32%) are using AI to enhance cus­tomer expe­ri­ences. As AI becomes increas­ing­ly sophis­ti­cat­ed, abil­i­ty to use it in cre­at­ing smart and adap­tive expe­ri­ences will be a game chang­er for businesses.

The new loy­al­ty frame­work: Good for business

To test the effec­tive­ness of the new loy­al­ty frame­work, we asked mar­ket­ing lead­ers about their aware­ness of the new dimen­sions and how well they were per­form­ing. We found that those fol­low­ing these loy­al­ty mea­sures may be out­per­form­ing those using tra­di­tion­al loy­al­ty tac­tics by as much as 14%.

As exter­nal fac­tors and dis­rup­tive busi­ness­es place increas­ing­ly more pres­sure on brands, the abil­i­ty to use data to improve the bot­tom line should be wel­comed by most marketers.

But how should brands incor­po­rate the new loy­al­ty dimen­sions to cre­ate great expe­ri­ences? The fol­low­ing best prac­tices should be con­sid­ered by all mar­keters as they devel­op strategies:

More than any­thing, the research showed that the impact of dig­i­tal dis­rup­tion has been broad, but there are oppor­tu­ni­ties for brands that can cre­ate tai­lored expe­ri­ences. Thanks to data sci­ence tech­nolo­gies, this is eas­i­er than ever. Brands can scale at speed and approach their cus­tomers on a more tar­get­ed basis. Devel­op­ing a cul­ture that puts the cus­tomer front and cen­ter of every expe­ri­ence is guar­an­teed to dri­ve loy­al­ty and busi­ness performance.

To read the full report, click here.

Topics: Digital Transformation, UK, UK Exclusive, Digital EMEA