Defining The Future of Customer Loyalty

Twenty years ago, the retail industry was evolving to meet the eagerly anticipated expectations of a new millennium — it was just doing so at a much slower pace than what we're accustomed to now. Today, thanks to the rapid rate of advancing technology, a lot can change in just the blink of an eye. In order to stay relevant with their customers, brands need to be looking ahead, planning and preparing for what's just around the corner.

Omni is shifting from an experience that, in the past, has hinged on channels. Now, it's more about a customer journey that stretches across all channels, one that creates a single, holistic experience for shoppers, regardless of where they are. In the future, being "always connected" is going to be critical to gaining and maintaining customer loyalty. As shown in Alliance Data's Understanding Customer Loyalty study, Millennials and Gen Xers consider loyalty to be going out of their way to shop a brand. As brands continue to focus on being wherever their customers are in this channel-less environment, earning and maintaining loyalty will require them to implement uber-personalization to take it to the next level. With the introduction of IoT and connected devices, the customer's mobile device will start to have competition from some unexpected places: the voice assistant, the car, even the refrigerator.

That technology is propelling the overall customer experience forward. It's changing the way shoppers interact with brands. It's raising expectations. So it's the brands that best meet the customer's ever-changing needs that have the best shot at building and maintaining long-term loyalty.

Great expectations
Baseline expectations are those functional "musts" that brands need to offer to even be considered. In Alliance Data's most recent consumer report, The Generational Perspective, there are a few functional standard expectations that top all customer lists, regardless of age — things like payment security, easy brand interactions, and transparency in promotions.

Looking ahead, brick and mortar will still be alive and kicking; however, it will have changed drastically in the way it meets the needs of customers – and how it helps engender loyalty. We have already seen how technology is impacting consumers' buying behavior and at this very rapid pace, it will have more fully infiltrated the retail experience. Robots, chatbots and the IoT will be embedded in retail stores. Customers will still come to the store, but will expect that it delivers an exceptional customer experience. This will mean retailers must think about which technologies to invest in that create a channel-less environment.

Clearly, brands that embrace and champion digital initiatives are the ones making their customers' lives easier, and customers see and value that effort. They want in-the-moment connectivity, and seek out digital enhancements that will take the hassle out of their long list of life's to-dos.

But beyond that, there's an increasing need to connect with customers on an emotional level. Functionally, the easier the customer experience is, the deeper the connection with the brand will be. But emotionally, that connection between customer and brand comes from relevant, authentic touch points.

Customers are people, too
It's time for brands to focus on the customer journey — to understand the "where, why, when, and how" of a customer's behavior to drive long-term loyalty. Whether they're online or in the store, customers are more engaged than ever before. And they're more than willing to share their personal data — as long as brands, in turn, make it worthwhile through relevant, meaningful messaging and experiences.

It's becoming increasingly important for brands to tap into data sources that will give them a 360-degree view of their customers. Using that data for personalization will allow brands to move from a one-size-fits-all rewards structure to one that delivers more individualized, and therefore more meaningful, benefits.

Consider this: on the surface, two customers may look exactly the same. The differences may be tough to spot from the outside, but they're critical to know and understand. The intricacies of how they think, how they want to be communicated with and how often, and what evokes a positive or a negative reaction  are the differences that brands simply must be attuned to in order to connect with them in the not-so-distant future, and to hope for any long-term relationship.

Data as a driver
The data accessible to brands today is extensive, and it will only continue to grow in the future. That data will help paint a more complete customer picture, uncovering psychographic differences that will alter how messages are received and acted upon. Again, customers are open to providing a tremendous amount of data when it provides relevant benefits to them. In return, they'll give their loyalty to those brands that can use their data to build a relationship that's right for them, and meets both types of their needs. In essence, brands need to become an extension of the customer, knowing them as well as they knows themselves.

Brands must lean on, and invest in, the technology and digital influences that will ensure their customers' needs are met. Addressing one side, functional needs versus emotional, might win a few purchases over the next few years, but to earn enduring loyalty, brands need to address the whole customer, needs and wants alike.

Lasting loyalty
Consumers have more choices than ever and a greater need to be understood – it's why we're hyper focused on helping brands know more about their customers in order to build closer connections with them. In the next decade and beyond, utilizing unique customer insights will be paramount to building and reinforcing relationships with shoppers along the entire customer journey, from introduction to long-term loyalty.

Shannon Andrick is vice president of marketing advancement at Alliance Data's card services business, and focuses on emerging trends in the retail landscape. With 18 years of retail merchandising experience, her areas of expertise include CRM, patterning and competitive analysis, deepening customer loyalty through innovative products and services, and growing credit sales penetration.

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