How to find customer loyalty…without buying it

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This month, we’ve been helping a start-up ecommerce firm to develop its proposition.  The business is launching into a crowded market, and to be successful in the long-term, securing repeat customers will be critical.

Not for the first time, we were asked how consumer insight could help identify their ideal target market – defined to us as “a group of potential customers whose profile represents those most likely to spend plenty and return often”.

Our advice was that such customers should not be targeted on behaviour alone. So-called loyalty schemes may offer ‘rewards’ to induce shopping behaviour with points, discounts or exclusive offers. But are the shoppers who take up these schemes truly the source of a loyal, sustainable customer base or simply ‘magpies’ attracted to the shiniest deal-of-the-day, whoever is offering it?

Instead, we offered a process to explore what customers might value most, and the key steps are outlined below:

  1. Start by opening conversations with a variety of your customers – perhaps those that buy different types of products/services, or choose different sales channels.
  2. Ask them about their lives, not your products or your brand. Treat each conversation as an individual-segment-of-one – don’t try and analyse yet, just listen.
  3. Gather together the clues that appear, and test them further using a simple quantitative survey (design it so you can cut the data different ways to represent your customer base)
  4. Now look for themes across the clues that demonstrate what unites customers rather than splits them apart (remember a theme can have two opposites which may appeal to two distinct customer types)
  5. Next, explore how these themes fit with the overall proposition – how can they be applied, either to communicate/position the business to help build loyalty, or to add features and benefits that support the themes
  6. With all of the above in place, use the clues and themes to create sets of benefits that encourage repeat engagement (not just brazenly bribing for spend) – these should be things that command respect, illustrate your brand values, offer interest and detail, the foundations of a loyalty bond far deeper than price alone.

For most new businesses, competing against existing brands with huge buying power is hard enough without making ‘lowest price’ the main battleground.  Even for mature firms, the competitiveness of today’s economy should make the fight for market share about customers faithful to the brand and its fit within the context of their lives, their business, rather than simply margin-slicing deals.