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Loyalty Programs

6 characteristics of next-generation loyalty

If the playing field is leveling out in terms of convenience, what will take its place? The answer is loyalty,

6 characteristics of next-generation loyaltyPhoto by

| by Pete Stein — President of Merkle Americas and leader of the dentsu Customer Experience Management (CXM) Service Line in the Americas, Merkle

Product quality and price have long been the two most persuasive factors in consumers' minds when making a purchase. It is still true that they are top of mind for many when buying from a brand, but if they are at the summit of consumer demands, other factors are continuing to climb closer up the mountain.

Merkle's own consumer research has found customer service, personalization, and digital experience are all rising year over year in terms of the number of people who would rank them as the most important quality when engaging with a brand.

These are the areas that have transformed the most over the past two decades. And for most of that time, the reason for that transformation has been convenience. The goal was to make marketing and the transaction faster, easier, and more intuitive.

But convenience is becoming table stakes. Not only are we on our way to maximizing those benefits of speed and ease, but also most brands have adopted these benefits already. Two-day shipping is no longer the differentiator that it was in 2005 when Amazon launched its Prime subscription.

The question then becomes, if the playing field is leveling out in terms of convenience, what will take its place? The answer is loyalty, and not just in an earn-points-through-a-loyalty-program way.

Customer service, digital experiences, personalization, and other factors must be used to drive emotional loyalty that has longevity, rather than just task-based perks. Because winning a transaction is nice, but building a total customer experience that can win a lifetime of transactions is the only path to long-term success.

What do long-tail emotional loyalty experiences look like? Here are six key characteristics.

1. Consistency
Consumers remember the bad experiences as well as, if not more than, the good ones. You only get so many opportunities as a brand to meet expectations before a consumer moves on to one of the countless competitors ready to swoop in to take your place. There is no loyalty without trust. When a brand consistently delivers what it promises, the trust that develops forms the basis of long-term loyalty.

2. Dialogue
Most brands are great at talking to (or rather at) consumers. Fewer have a talent for listening. But a healthy relationship requires two-way communication. Building mechanisms that facilitate dialogue, whether one-to-one or across community platforms, is key. Because you cannot expect loyalty from someone who doesn't feel heard.

3. Creativity
Consistency is important, but not at the risk of feeling boring. Remember, your brand is competing with countless others for attention. How can you entertain as well as educate? Or be innovative while still relevant and useful? Creativity is the spark that separates loyalty leaders from laggards.

4. Transparency
Brand transparency is more important than ever, especially among younger generations who are taking over a larger share of the market. Transparency around the product is certainly an aspect. Tell customers what is in stock, where their product is, and how long it will take to reach them. Delivering what you promise builds trust. But more and more, consumers also want to brands to be open and authentic (more on that in a bit) in areas such as product sourcing, labor treatment, and their stances and actions on social issues.

5. Service Mentality
There was a reason I called out customer service at the beginning. Loyalty is not just the total of a series of transactions, but rather the cumulative impact of your interactions with the customer. And service is a powerful force in this area. Recognize that it's not the customer's job to show up and ring the cash register. It's the brand's job to solve a real-world problem for the customer. So every interaction — every moment — is in essence a service experience. And we should design, deliver, and measure them accordingly.

6. Authenticity
Your brand doesn't need to have been a family-owned business for 150 years to be authentic. You just need to be clear and open about what your values are and what you stand for. And don't underestimate your customers. Merkle recently found 55% of consumers can tell when a brand is not being authentic. Misleading the public in the area of authenticity is an easy way to quickly lose all of your hard-earned trust.

Embrace the emotional side

Consumers are humans, and humans don't just shop with their heads or with their wallets. They shop with their hearts, which is why they seek brands that align to the values that live within them. Consumers want curiosity, gratitude, inspiration, and shared passion. They want to know the stories behind stores, the people behind the products, and the values of the value chain.

That's why the future of marketing and the customer experience will require brands to focus on creativity, collaboration, and emotional resonance in addition to convenience. This is the essence of next-generation loyalty.

Pete Stein

Pete Stein is President of Merkle Americas and leader of the dentsu Customer Experience Management (CXM) Service Line in the Americas. He oversees all aspects of Merkle’s Americas regional operation, including sales, account management, solutions, services, and marketing. He is responsible for driving the P&L for Merkle Americas, representing more than 70% of the company’s global revenue and employee base.

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