The Loyalty Gap: Difference Between Repeat and Loyal Customers

 Customers considered 

The Loyalty Gap: The Difference Between Repeat Customers and Loyal Customers

By Shep Hyken -March 16, 2023    in Customerthink

Or, The Loyalty Gap.    In a recent Shepard Letter, I discussed the Trust Gap, which is the difference between an organization’s belief that their customers trust them and the percentage of customers who actually do. I’ve covered different gap concepts in the past, and it’s time to add yet another to the list, and that is the Loyalty Gap. 

By the way, this is a perfect time to mention International Customer Loyalty Month, which happens every year in April. It is a time to focus some extra care and attention on your loyal customers. You can learn more at www.CustomerLoyaltyMonth.com.   

So, back to the Loyalty Gap. This is the gap between the percentage of customers you think are loyal and customers who actually are loyal. If you’ve been following my work, you may remember that I preach there is a big difference between a repeat customer and a loyal customer. A customer that comes back again and again could be mistakenly labeled as a loyal customer. Before we can call someone a loyal customer, we must find out why they keep coming back and buying from us. And there are many reasons why customers might return that have nothing to do with being loyal. For example:  

The Price Is Lowest – Customers who buy based on low prices aren’t loyal to you. They are loyal to the price. The moment a competitor has a lower price, the customer disappears. And you thought they were loyal!  

The Location Is More Convenient – Does the customer buy from you because you are closer than your competition? You don’t know if you don’t ask. As soon as a competitor moves into the area, if their location happens to be more convenient, the customer moves on. Again, you thought they were loyal! 

The Customer Is Satisfied – This one is super important. There’s a big difference between a satisfied customer and a loyal customer. Satisfied customers are just … satisfied. The experience is good, but not great. It’s enough to get them to come back until they find another brand or organization that satisfies them just a bit more.  

A loyal customer not only comes back but also spends more than a typical customer and evangelizes your brand by sharing word-of-mouth referrals. This is because there is an emotional connection. Maybe it’s the way the customer is treated. Maybe there is an employee the customer loves to work with. Or, maybe it’s the confidence that’s created when a customer interacts with the brand. There are many reasons, but they all evoke an emotional connection.   ... ' 

Wal-Mart Fights Amazon Prime with Walmart+

Not so quiet really,  have seen several notes on this in the past week.  Details will be interesting.  Amazon has the really broad reach here with embedded channels.   And brand recognition too.  Wal-Mart needs to make a big splash to get our there.

Walmart is quietly working on an Amazon Prime competitor called Walmart+    Amazon Prime has devastated traditional retail. Walmart is about to fight back.

By Jason Del Rey@DelRey in Vox Recode

When Amazon launched a funky membership program called Amazon Prime in 2005, Walmart boasted larger profits than Amazon had revenue. Fifteen years later, though, Prime is the key reason for Amazon’s dominance over Walmart in online sales.

That pressure has pushed the traditional retailer to burn tens of billions of dollars to fight back while its executives have cycled through various stages of reaction to Prime’s ascent: denial, followed by meek competition, followed by a reversal that seemed to signal Walmart wanted to stick to a free, no-membership strategy.

But Recode has learned that over the past 18 months, the world’s largest brick-and-mortar retailer has explored creating its own paid membership program that would include perks that Amazon can’t replicate, in part to avoid a direct comparison to Prime. Amazon now accounts for nearly 40 percent of all online retail sales in the US, according to eMarketer, and Prime is a huge reason why. Walmart is a distant No. 2 with only a little more than 5 percent of the US e-commerce market. .... "

Saying No to Loyalty Offers

This came to mind as I shopped in the last week.   No clear offers for my time or data were offered.  Lots of  'apparent' offers that were easy to see through.  I often do a simple forward forecast of the offer to see that it costs, in my given context.  If it significantly changes my context, my reaction is a need to do a better forecast.   As it says below .. lack of perceived value ... but your perception should be sharpened.

Why do so many people say ‘no’ to retailer loyalty programs?  in Retailwire.   by Matthew Stern

A significant number of customers are just not interested in joining loyalty programs, according to a new study, a fact that to some suggests how retailers might engage that cohort.

A full 38 percent of consumers are not interested in joining loyalty programs due to their lack of perceived value, according to a study conducted by CFI Group and Radial. 

The study suggests that to get hesitant customers on board, retailers should offer faster delivery, personalized customer service options and more flexible returns. In the study, 63 percent of survey respondents said that the option of speedier delivery influences them to sign up for a loyalty program, 41 percent said that recognition as a loyalty member from a customer service associate would incentivize them to buy more and 55 percent said that multiple exchange options made them more likely to repeat purchase.  ... " 

AI and Loyalty Marketing

A non technical look at the idea, with expert opinion.

What does artificial intelligence mean for loyalty marketing?    by Bill Hanifin with further expert opinion.

Through a special arrangement, presented here for discussion is a summary of a current article from Bill Hanifin, managing editor, Wise Marketer, first published on Forbes.com.

https://www.forbes.com/sites/forbesagencycouncil/2019/10/03/what-artificial-intelligence-means-for-customer-loyalty-marketing/#7bd77bfb7fe0

In our experience, the one-to-one relationship aspect of true loyalty marketing isn’t possible to create at scale, nor even sustainable at present levels, without the disciplines and tools that are central to artificial intelligence (AI) and machine learning.

At its most basic level, AI can automate simple, repeatable tasks and accelerate pattern recognition. This opens the door to marketing efficiency and hastens the fulfillment of the promise to provide “the right offer to the right person at the right time, in the right channel.”

It also delivers personalization, meaning practical ways that a brand can demonstrate that it is listening to its customers across their digital footprints (website visits, purchases, searches, posts, reviews, etc.), learning more about what they want and formulating offers for products they actually want instead of what the brand wants to sell. This is the essence of how data-driven marketing can build trust with customers and long-term loyalty.  ... "

Amazon to Soon Shut off All Dash Buttons

Amazon will shut down all its one-push dash ordering buttons by the end of August, lliked the idea, thought it was novel and interesting.   Used it for several years, for several products, we had discussed similar concepts.   A bit surprised.  It seemed that Amazon had too soon cut off the marketing of the idea.  Or perhaps just too mechanical?   So did they build loyalty on CPG products at all?

Amazon is going to kill your Dash button in CNet

The online retail giant says all Dash buttons will stop working at the end of the month.   By Ben Fox Rubin

If you're dying to test out the features of Amazon's Dash button, it's now or never. Amazon said Thursday it will turn off the capabilities of all its Dash buttons worldwide on Aug. 31.

This decision follows Amazon's move in February to stop selling new buttons. At the time, the company let folks with existing Dash buttons continue to order stuff with them, but an Amazon spokeswoman said usage "has significantly slowed" since then, resulting in the company pulling the plug completely on the program.

The Dash button, the ultimate single-use device, lets you buy an item on Amazon with one click. There was a Dash button for Tide detergent and one for Gillette razor blades and another for Sheeba cat food. Dozens were created, as brands quickly saw the buttons' value as a way of building customer loyalty and creating tiny ads in people's homes. ... " 

Kroger Pay Launching

Seems like a very late launch, Kroger is linking its loyalty card with smartphone based systems.  Starting in Columbus Ohio.  From the Kroger company:

Kroger Pay FAQs
What is Kroger Pay?

Kroger Pay is a new, fast, safe way to pay and save using your mobile device at participating locations in the Kroger Family of Companies. Kroger Pay generates a one-time use quick response code (“QR Code”) that securely transmits payment information from your mobile phone at check out. In addition, your Kroger Pay wallet is linked to your Kroger Co. Family of Stores Rewards program loyalty account, enabling you to automatically accrue loyalty points when making an eligible purchase using Kroger Pay. Simply scan the Kroger Pay QR Code at any time during checkout for a faster, more convenient experience. 

Where can I use Kroger Pay?

Kroger Pay is accepted at participating in-store locations* in the Kroger Family of Companies in the United States. Kroger Pay is not accepted at Kroger Fuel Centers, certain independent merchants within Kroger stores or online and cannot be used at stores outside of the Kroger Family of Companies. ... "

*Currently, Kroger Pay is accepted in stores in our Columbus division, with more stores coming soon.  .... "

Consumer Loyalty and Amazon Dominance

Hmm, quote something to worry about for big CPG.    All that money they have spent over the years in establishing loyalty can be overridden, depending on product category?  Meaning of band equity?

How Amazon’s dominance in consumer packaged goods can help score brand loyalty  By Tomi Kilgore in MarketWatch

Consumers are most loyal about laundry and diaper brands, least loyal about trash bags and paper towels  ...  

Amazon.com Inc.’s dominance in the consumer packaged goods space can teach Wall Street a lot about brand loyalty in a e-commerce world, with search trends suggesting consumers tend to stick with their favorite laundry, diapers and adult continence brands, according to AllianceBernstein.

Where consumers are least loyal, is when they look to buy trash bags, paper towels and cat litter.
Amazon’s AMZN, -0.05% retail platform in the U.S. is estimated to have driven about 80% of online consumer packaged goods growth. With that in mind, analyst Ali Dibadj said Bernstein firm developed a way, using some outside sources -- “and an excellent millennial summer associate” -- to track search volume of keywords and brands. A “Relative Search Volume” score was created, he said, to gauge how important a specific brand is to shoppers in a broader category. .... "

Reactions to Images, Packaging as Password?

So could we use this differently?  Could your reaction to a product change its price,  or be a kind of loyalty connection?  Integrated with product detection in an automated checkout, 'Amazon Go' type interaction?

Your Reaction to Pics of Leonardo DiCaprio, Animals Could Unlock Your Next Smartphone   University of Buffalo   By Cory Nealon

Researchers at the University at Buffalo (UB) School of Engineering and Applied Sciences are developing a new type of password that "measures your brainwaves" in response to a series of pictures. The "brain password" would require users to wear a headset and could have potential applications in banking, law enforcement, airport security, and other areas. Says UB's Zhanpeng Jin, "To the best of our knowledge, this is the first in-depth research study on a truly cancelable brain biometric system." The group refers to the technology as "hard cancellation," meaning the original brain password can be reset without divulging the user's identity. The work is described in a study that will be presented next week at ACM SIGMOBILE’s MobiSys 2018 mobile computing conference in Germany. ... " 

Keep Your Customers Coming Back

Good piece.  Not at all technical, but worth repeating what you need to get done.  The tech people I talk to don't seem to know these obvious things, and are always looking for some other tech magic.  But if they don't get these things right, it doesn't matter.

How to Keep Your Customers Coming Back    By Mike Dupuy in CustomerThink

In today’s competitive marketplace, how can you encourage customers to stay loyal to your brand and products when there are so many choices available? You have to provide an outstanding product, of course, and it must be appropriately priced, but there are a lot of companies that can do that. What will set you apart and build brand loyalty, however, is your customer support. .... " 

Investing in Loyalty

Convincing the CFO to Invest in Loyalty
 by Len Llaguno

In my previous articles, we talked about the biggest struggles for loyalty finance professionals along with the challenges being faced by accountants when booking loyalty program liabilities.

Moving on, loyalty marketers also have a significant hurdle they must overcome – convincing the CFO to invest in loyalty. This article examines the progress that loyalty marketers wish to make as well as detailing the many struggles they encounter along the way. .... " 

Loyalty and Retention

Good idea, with emphasis on good experience design to make this happen.

A Loyalty Program Becomes a Retention Hub
Written by Alex McEachern | @alexmcea

 .... Today’s top ecommerce sites are using retention to battle increasing digital marketing costs and stagnating growth. There are a number of retention tools at your disposal, but it can become tough to manage those tools. The solution is to use a loyalty program as a hub for your retention marketing tactics.  .... " 

Brands According to Byron Sharp

World According to Byron Sharp.  Former correspondent.   Read by many in the CPG space.   In Adage: " ... In the years since Byron Sharp published  'How Brands Grow,' his unorthodox theories have taken root with major marketers and begun changing how they buy media. Among the new rules: Loyalty is a crock and broad reach can be more productive than surgical targeting. ... " 

" ... Byron Sharp would like you to know that almost everything you've learned about marketing is wrong.

Here's the real truth, according to the University of South Australia marketing professor, whose 2010 book has recently grown surprisingly influential among top brands: 20% of your brand's biggest buyers don't really account for 80% of sales. These "loyal" consumers aren't really that loyal. The best way to grow is to get more sales from people who care even less about your brand than the loyalists.  ... " 

Effectiveness of Retail Loyalty Programs

Good piece, and especially discussion on use and effectiveness of retail loyalty programs.

How can retailers make loyalty programs more effective?     by Tom Ryan
According to the 2017 COLLOQUY Loyalty Census Report, growth in memberships in customer loyalty programs slowed to 15 percent during the census period versus 26 percent in 2015.

“The membership growth slowdown signals the U.S. loyalty market is maturing and retailers need to up their game on how to attract and retain members within their loyalty programs,” said Melissa Fruend, LoyaltyOne partner and COLLOQUY Census author, in a statement. .... "

Humans not Chatbots

Loyalty and Chatbots.   Customer Think writes about human interaction being the key to loyalty engagement.  " ... In a world where people are continuously connected and able to share good and bad experiences, customers have more influence on brand reputation than ever. They have a closer relationship and emotional investment in the companies they select, and with more ways to interact with a brand; it’s critical to keep customers satisfied. So, what’s the secret to increasing loyalty and ensuring customers use their networking power to recommend your service to a friend? Superior human service. .... " 

Loyalty Cards

In Customer Think.   Are loyalty cards dead?  A discussion.  Hardly dead because I have several in my wallet.  But the only ones that work are connected to some significant and periodic, but not annoying,  promotional message online.

IBM Announces Watson Marketing Insights

Just announced, looked at this in beta form.  IBM continues to apply Watson learning to different expertise domains, following retail applications.    Likely to continue see such specialized applications in the future, a reasonable way to start applying cognitive AI methods that augment human approaches improving marketing analysis.  Note the mention of Loyalty in particular.

IBM Introduces New Cognitive-Powered Cloud Offering for Marketers
Watson Marketing Insights Helps Marketing Professionals Drive Customer Loyalty

ARMONK, N.Y., April 23, 2017 /PRNewswire/ -- IBM (NYSE: IBM) today announced IBM Watson Marketing Insights. Available on the cloud, Watson Marketing Insights has cognitive capabilities that can study the behavior of customers and reason how they might impact the success of the business. With this insight, marketers can launch targeted campaigns designed to cultivate customer advocates and enable long-term business success.

IBM Watson Marketing features proven cognitive capabilities that can uncover key predictors in customers by examining their interactions with the company, whether it's in the store or on email, digital and social media. By continuously updating this data, Watson Marketing Insights reveals new audience profiles and customer segments as the relative importance of their behavior predictors changes.  .... " 

End of Brand Loyalty?

Of much importance to my former employer and all of CPG.  Still don't see its involved with culture. just the channels that cultures currently use for information.   Those channels can be selected by marketing.  In Forbes: 

The Death Of Brand Loyalty: Cultural Shifts Mean It's Gone Forever   by Kathleen Kusek

On Loyalty Miles

Looking at loyalty points, customer miles as a liability.   In CustomerThink.

Changing Customer Loyalty

Thoughts on changes in customer loyalty.

Customer Loyalty Isn’t What It Used to Be

Instead of relying on points programs and clever marketing, companies have to listen carefully to customers and adapt products and services to their changing expectations.

by Beth Benjamin and Ann Graham   ... " 

Machine Learning and Customer Loyalty

Integrating data and linking it to real business process is always key:

How Data Integration and MachineLearning Improve Customer Loyalty - Part 1 and Part 2  By Bob Hayes 

In this Big Data world, a major goal for businesses is to maximize the value of all their customer data. Most customer data, however, are housed in separate data silos. While each data silo contains important pieces of information about your customers, if you don't connect those pieces across those different data silos, you're only seeing parts of the entire customer puzzle.

The integration of these disparate customer data silos helps your analytics team to identify the interrelationships among the different pieces of customer information, including their purchasing behavior, values, interests, attitudes about your brand, interactions with your brand and more. Integrating information/facts about your customers allows you to gain an understanding about how all the variables work together (i.e., are related to each other), driving deeper customer insight about why customers churn, recommend you and buy more from you. ... "