The latest UK Customer Satisfaction Index (UKCSI) published earlier this month shows that after declining for the past couple of years, customer satisfaction has now plateaued. The research shows a very strong link correlation between customer satisfaction, growth, and market share.

Customers that score a company 9 or 10 (out of 10) for satisfaction are much more likely to trust, recommend, and remain loyal compared to companies that score 8. The insight from this research is extremely important for any manager responsible for customer service. It demonstrates a proven link between caring for your customers and greater business success.

To my mind what this really demonstrates is that we are entering a relationship economy where loyalty is only created through the interactions a customer has with a brand – not through the use of a loyalty club and some discount vouchers.

An interesting article published recently in Internet Retailing explores this change in how customer loyalty is functioning and contrasts how some companies are still clinging to the loyalty card as others are building their brand into the lifestyle of the customer.

With a brand like Apple it is easy to see why customers remain loyal. The products are always best in class, innovative, and retain a certain level of cool when compared to rivals. They might be expensive, but customers keep returning to buy more.

But with a supermarket things are different. For the past couple of decades supermarkets have used loyalty schemes that analyse your shop and issue vouchers based on the type of products you purchase. Twenty years ago this was astonishing, but the target now needs to be managed in two distinct ways:

  • Rewards for any loyalty programme now need to be addressed to the individual, not just a broad segmented approach based on demographics, such as ‘this customer is a young mother’ … there is now a target audience of one.
  • Individuals engage and expect interaction far more than ever before. It’s common to see people tweet questions about food to supermarkets. Brands need to engage and interact with their customers. Customers expect to have a relationship with the brands that want their cash.

The UKCSI data shows exactly how important it is to get a great loyalty strategy in place. Getting this right is not just about improving profits, those who fail may not have a business in future. The technology and systems are available and understood now, allowing a much deeper insight into customer behaviour and needs.

It just requires a different approach. Loyalty today is not about cards, stamps, and a free cup of coffee now and then. Loyalty today is about knowing your customer better than ever before and building a relationship together.

How do you think loyalty programmes and systems are changing? Leave a comment here or send me a message via my LinkedIn profile.


Image via Vic on Flickr.