Recent research from Direct Marketing Association (DMA) has found that nearly two-fifths of consumers feel more disloyal to brands than they did a year ago. Many companies are now rethinking how they can incentivise customers, including O2, the National Trust and Virgin.
The DMA suggested there are many factors at play, including consumers becoming increasingly skeptical of big corporations and dismayed at a lack of quality or rewards. The report also found that other factors include cost, choice expectation, distrust and deal sensitivity.
A growing 79% consumers admitted to spending time researching items in order to get the best possible value.
When it comes down to people’s favourite brands, the research found consumers either to be habitual in their purchasing behaviours - a behaviour driven by the uncertainty in the current economic landscape - or loyal to brands because they genuinely liked them.
The key to securing ultimate customer engagement is the ability to attract both types of loyalty. The report found that the majority (14%) of consumers named Amazon as their go-to brand due to its ability to deliver both great convenience but also gain genuine appreciation.
When looking at drivers of both habitual and genuine loyalty, functionality came out top.
Brands who deliver on 'function', making things more convenient for the consumer, whether that be providing the best quality, making things easy to use, or offering exclusive promotions that are personalised to them, which thus drives brand loyalty.
Although functionality is a crucial factor, the report shows that other emotional led drivers can be influential.
The National Trust membership scheme
Indirectly, The National Trust's membership base equates for 75% of all supporter income and so getting its acquisition strategy right is crucial.
In 2013, The National Trust asked media agency MediaLab on board to help it freshen up, what Ian Oxley, head of membership recruitment, described as "a mature programme, or even a tired programme."
The membership programme, which was started in the 90’s, was in a rut. After enjoying a consistent stream of income over the years, Oxley admitted that "it was facing into a problem. We were seeing declining response rates, increasing costs for acquisition, media saturation and overall a lowering of the return on investment."
Although it was still bringing in large numbers of members, it was doing so less successfully.
After testing a number of variables, the organisation decided to move away from price promotions for the first time.
MediaLab's group planning director Will Davis said the clean findings were that “consumers wanted an incentive, but that didn’t need to be a discount.”
According to DMA's research, there is a gap in demand for things like free gifts/treats, location-based discounts and game-like rewards.
Although consumers are still prone to comparing offers Davis said, “the heartening thing is that free samples and gifts are also near the top on incentives, and we started to think about how a combination of different incentives could work for the trust.”
After removing its 25% introduction discount, The National Trust instead offered a free gift card, that could be used in any of its shops. The new form of incentive increased acquisition rates considerably, and the free gift not only incentivised customers to sign up for membership but also encouraged people to start using their membership straight away by visiting the National Trust's sites.
O2 upgrade journey
As a subscription-based business model, encouraging customers to remain loyal and re-sign contracts is a business imperative. But the mobile world is changing with increasing numbers of people holding onto their handsets for longer and the greater choice available means people aren't making decisions as quickly as they used to.
O2's advertising agency, Lida, has been tasked with helping the brand negotiate this terrain and drive loyalty in a sector where customers are becoming increasingly disloyal. Claire Cootes, managing director, said at the root of the problem is that “phone manufacturers are still talking to themselves,” bamboozling customers with functional, tech-talk on amounts of megapixels or shutter speed.
In response, O2 has changed its approach from functional to emotional. Recognising that the contract date is the ultimate test of loyalty, O2 adopted a simple strategy to take each customer on their own personal upgrade journey, to ensure they stay loyal to the brand.
Stating that they didn't want "personalisation for the sake of personalisation", Cootes said "it’s a very delicate balancing act, finding the right level of personalisation that will deliver a maximum business impact... it’s not about volume of data points that they use, it's about the quality that they use.”
Flipping the conversation from product to customer they analysed each customer's usage and engagement with the brand, including how they responded to offers it had already sent them. A valuable source of data was how customers interacted with O2 priority and their rewards scheme, which displayed each individual's main interests and passions.
Through this data collection, O2 was able to connect with their customers at the appropriate time to incentivise them to upgrade, offering handsets that reflecting their different needs through personal web pages and personalised videos.
Virgin Autonomy AI
It is Virgin’s belief that the secret to a loyal customer, is a happy staff member.
As brand advocates, Virgin believes its employees can increase a consumer’s trust in a company and it is trying to harness artificial intelligence to help them deliver a better customer experience.
Yet, bridging the gap between virtual and real assistants is not without its problems, and Virgin brand director and head of customer experience Clare Willetts warned of when it can go very wrong from companies.
Willetts said: “We have to be careful with autonomous AI, because some not very nice things can happen,” referencing mishaps on Google Translate and Nikon when glitches in the AI technology sent out a bad message to consumers, which was definitely not their intention.
Without human insight, AI has the potential to lose the customers trust.
“Everyone has inherent bias, but the data that sits behind all of these sets has massive inherent bias and we need to challenge that and think about that,” she said.
She spoke of how Virgin took a big deep dive into the area, to scout out the present landscape and determine where is it going. Virgin has found a way to utilise AI to increase brand loyalty, by monitoring it with human insight, to ensure it was delivered with a Virgin perspective, centred on their values.
The comments came from the DMA's Customer Engagement event in London on 18 September.