Peter Drucker once said that “the purpose of business is to create a customer” and named the two “basic functions” of any business as marketing and innovation. According to Drucker, “marketing and innovation produce results… Marketing is the distinguishing, unique function of the business”. And yet, we see that in the current environment, innovation is praised as the core function of the business, while marketing is increasingly coming under attack.
There have been a number of key shifts in marketing:
- The ongoing emergence of Big Data
- The shift of power to the consumer
- Increasing pressure on Chief Marketing Officers and other marketing executives to do more with less
- The recognition that customer loyalty drives performance
I speak to CMOs every week, and the challenges they tell me about are the same across industries: feeling unprepared for the explosion in data coming out of their businesses, being unsure of themselves around social media, and a feeling that traditional forms of advertising simply aren’t cutting it in a time of rapidly changing consumer behavior and quickly evolving technological capabilities. Retailers and restaurant operators face increasing pressure to deliver measurable ROI and find new customers, but today’s consumers are multichannel – making traditional, mass-audience brand interactions difficult – and price-conscious, albeit frustrated by the difficulty of paper and digital coupons, check-ins and loyalty cards.
In response to these challenges, many retailers have introduced loyalty programs – the number of them has increased by 22%, according to Bond Brand Loyalty’s 2015 Loyalty Report. However, as more consumers sign up to loyalty programs (often at the point of sale to receive an instant discount) the number of programs they actively participate in has dropped by 14%. Loyalty programs are effective, but they aren’t a silver bullet.
What does work to generate real customer loyalty is using data and analytics to drive marketing performance. I like to say that traditionally, businesses used marketing to influence customer behavior; but now, we have to use customer behavior to influence marketing. Marketers have to put their loyalty data from customers to work in order to make effective advertising decisions and divine deeper trends in their business.
For a consumer, it’s not enough to be satisfied. I compare the customer experience to a relationship:
- A satisfied customer is “dating” – transactions meet their expectations, but there is minimal emotional connection and no guarantee of future business
- A loyal customer is “engaged” – there is some degree of emotional attachment, the retailer gains a greater share of wallet and better retention, and there is higher purchase frequency
- An advocate customer is “married” – they are passionately attached to the brand, will definitely purchase again in a long-term relationship, will recommend the brand to others and want your business to succeed
In order to create advocates, retailers must deliver a personalized experience that gives the customer a feeling that they are in control, and also that the company cares about them. This includes recognizing the customer by name and purchase history, proactively reaching out with relevant information and deals, and allowing the customer to decide when and how interactions with the company take place.
We all know that there can be a great discrepancy between what people say they do, and what they actually do. People will tell you that they eat healthily and only shop on-sale, but only by analyzing loyalty spend data can we learn that actually, they have a daily coffee and donut habit and are prone to making weekly online clothing purchases. Loyalty programs, combined with data-backed insights, can help us ferret out the truth about our customers, so that we can adjust our marketing accordingly, providing the most effective results from advertising.
– See more at: http://loyalty360.org/loyalty-management/october-2015-online-issue/keys-to-data-driven-marketing#sthash.WNSbA7lx.dpuf