Customer loyalty builds brands

One of my favourite branding blogs is truly deeply from Australia and I recommend it to anyone even if you are not based in Australia.

This morning the author David Ansett Tweeted a link to a post from last year called customer loyalty, the holy grail for brands. It’s a short, thought provoking post.

We want to be part of all the brands we live with
We want to be part of all the brands we live with

It never ceases to amaze me that despite all the stats pointing to investment in retention and loyalty are key to building a profitable brand, most brand owners invest the majority of their marketing dollars in acquisition tactics that belong to a world that no longer exists.

The belief that advertising can build a brand in the social economy is laughable yet where do brand owners go when they want to build a brand? The nearest advertising agency. it’s ludicrous because if all you have is a hammer, everything looks like a nail. Advertising agencies only have advertising so all roads lead back to advertising and the problem with advertising is that NO ONE IS PAYING ATTENTION.

And this is where I disagree with David’s comment that “It is increasingly difficult to build long term relationships with hard won clients and customers”. I disagree because it has never been easier!

We know where everyone is, physically and digitally, we have their names, their addresses, both digital and physical, we know what they like, what they dislike, we know who their friends are, who they like, who they don’t like, who influences them, we know what winds them up and most important of all, we know that they want us to be part of their lives.

Yet most brands ignore building loyalty or give it a cursory nod in the form of generic, meaningless loyalty programmes that often provide ‘deals’ that are worse than what the customer can get himself.

Good customer service builds brands
Good customer service builds loyalty

Firms prefer instead to focus on acquisition and then, when there is a problem and brands fail to address the issue or worse, ignore the customer completely or address it in an amateurish, arrogant manner, brands wonder why those customers leave and angrily share their frustration across social media.

It has never been easier to build long term relationships with our clients and customers to improve loyalty, it’s just that most brands are going about it the wrong way.

Customer retention is not the same as customer loyalty

I read an interesting post on The Free Malaysia Today website about customer loyalty and you can read the full article here

It’s a useful article that any Malaysian business owner should pay attention to. But as often happens, it blurs the lines between customer loyalty and customer retention. They are not the same thing.

A retention program is not the same as a loyalty program because a retention program is normally price driven and those customers acquired as a result of a retention program can often be lost to competitors.

A loyalty program on the other hand will help increase share of wallet by encouraging more purchases, often of more premium products and, more pertinently in the social economy encourage customers to become brand advocates and communicate positively about the brand and experiences with the brand.

A case in point for me personally is MAS. I am a member of the MAS frequent flyer program but it does not buy my loyalty. MAS retains me as a customer but I am always looking for a better deal with other carriers.

If another carrier were to invest in building a relationship with me I would switch in a heart beat. I also tend to talk negatively about MAS and even when it delivers a positive experience I tend to take it for granted.

Whilst I’m on the topic of MAS I should mention that one way MAS could improve its business is by investing in its loyalty program and in particular software that can mine the database more effectively. As it is, all the loyalty program does is try to blanket sell all offerings to all members.

Loyalty is no longer about personal relationships and how often you take someone to karaoke or for teh tarik. Customers also expect you to know their industry, the challenges they face, who are their competitors and crucially, who are their customers, potential customers and who are the influencers of those customers.

If you understand and integrate a loyalty program into your brand strategy you will be on the way to building a strong brand. But if you mistake a loyalty program for a retention program, you may do more harm than good.