Building the Advocacy-Based Customer Loyalty Roadmap

In a world where it is quick and seamless to switch allegiance to another provider, companies must offer customers the holistic, fulfilling experiences they desire.

Your customer loyalty program is an important facet of your customer experience, one that can significantly boost – or detract from – your customer's experience. Companies in industries such as airlines and car rentals traditionally approached loyalty programs as a simple points–earned system in which customers receive perks or rewards commensurate with their spending. Simple, yes. But effective? Often, not at all.

That's because the mere act of joining a loyalty program says nothing at all about real loyalty. Every consumer has a wallet or purse full of loyalty cards, but most will go to whatever provider is least expensive or offers the best perk at the moment. Participating in the battle of the discounts does not lead to higher profits. Nurturing real loyalty, therefore, involves recognizing customers with the greatest lifetime potential, as well as current status, and providing perks that address their personal desires with a strong “social” element.

From Loyalty to Advocacy

At its peak, loyalty is a two–way street. You provide your most valuable customers the value they desire, advocating for them by operating honestly and responsibly, while on the other side of the aisle, your customers become advocates for your products and services. A customer who becomes an active advocate for your company is a true treasure. This person can talk about your brand, engage others in discussions about it and influence more people to buy your products and services using social environments like Facebook as his or her platform.

Social media has transformed the way people shop. With the exception of a small number of markets and demographics, customer loyalty no longer exists separately from online social interaction. According to the Edelman Trust Barometer for 2011, people are much more likely to use a search engine (29%) than a corporate Web site (11%) for information, where they are just as likely to find peer opinions as corporate–controlled information. Most people – nearly 60% – need to hear something about a specific company three to five times before they believe it, according to the Trust Barometer, making advocates' frequent communications that much more valuable.

Under the new definition of loyalty, a loyal customer is one who is delighted with your services and, therefore, talks about his or her experience on social channels, thereby increasing equity for your company and brand.

If you can capture the loyal base of such customers through a membership program and provide them recognition and relevant rewards, this generates more good feelings and conversations about your product or service on social media and elsewhere, producing advocates for your product or service. In theory, at least, customer advocates will increase their consumption of your organization's products and services, resulting in more satisfaction and greater loyalty. Thus, this virtuous cycle repeats.

The key to enhancing loyalty is building social advocates. To do this, you will need to increase your interaction and engagement with your customers in general and loyalty program members in particular.

Make it Fun

The use of game dynamics, coupled with rewarding loyal behavior through the use of achievement systems, is an increasingly popular strategy with leading-edge organizations. For example, PepsiCo recently used the social networking site Foursquare to pinpoint loyal consumers and reward them with “Gold Tickets” to a Big Boi concert. According to a campaigner blog piece, the Golden Ticket was unlocked by 2,400 people, and there were more than 2,000 Foursquare check-ins at the Big Boi concert, giving the Pepsi campaign extra fizz.

The application of location–sensitive and mobility technologies can also enable organizations to engage with consumers at the point of presence, increasing the frequency with which they interact with timely and relevant offers.

Building Advocates via Social Media

Creating advocates for your brand and company will be the key to competitive advantage going forward. But attempting to drive loyalty without the addition of social capabilities will marginalize your efforts. At the same time, you will need to integrate unstructured data acquired from social platforms into your structured CRM system and other back-end systems to generate a holistic view of the customer.

Given the power of online influence today, it is critical to target and reward your loyal brand advocates via social capabilities. In this way, you can help your advocates plant the seeds that will grow new advocates for your brand, adding up to higher sales, lower cost of customer acquisition and less inclination to switch to another brand.

For more information on how to build true advocates for your brand, read the full white paper, Building the Advocacy-Based Customer Loyalty Roadmap (PDF) or learn more about Cognizant's Customer Solutions Practice.