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articles | 24 January 2018 | KPMG Limited

Is brand loyalty feasible in today’s digital world?

Being creatures of habit, one would assume that customers would prefer to remain loyal to the brands they have been using, instead of switching to competitive brands. According to Nielsen, 78% of consumers are not loyal to any particular brand. Considering that customer loyalty has long been recognised as the magic ingredient in the recipe for business success, this figure could lead us to question whether loyalty really exists in the digital era.

Price, quality and service were traditionally considered the main pillars on which consumer loyalty was built. These days, the tendency of consumers to switch between brands, is driven by the factthat transactions are rather web-based. An inclination towards experiential loyalty seems to appear, aiming to engage consumers with brands while establishing long-term relationships.

We have learned over time that it costs less to pursue further sales to existing customers than to explore new customers. Therefore, maintaining existing customers in the longer-term is what every business should be aiming for. Those customers, which in essence are “satisfied customers”, spend higher, buy more often and recommend their brand(s) of preference to friends and family regularly.

Now, adding the digital world in the equation, we must admit that things get tougher. Building and maintaining brand loyalty in the digital world is not easy, especially when prices and product comparisons are no further than a click away. The surprising thing isthat although 80% of businesses claim that they are providing exceptional customer service, only 8% of customers feel that they are receiving such level of service. In the digital era, satisfaction is more than joining the dots between product quality, price and delivery speed. It is a combination of touchpoints (such as the speed of responding to customer feedback) each of which is an opportunity to drive loyalty.

What makes things even more complicated is the fact that earning loyalty online is an ongoing process. Being great once or twice and then failing to fix a mistake, is what will drive customers out the door. Taking that in mind, one would assume that customer loyalty is short-lived, however that is not the case at all. For organisations that do it right, loyalty – and the bonds that tie consumer and business together – can be very strong.

In order for that to happen, businesses need to change their definition of what loyalty truly is. Loyalty, once businesses get it right, is a very powerful thing. It is not about selling more, more often. It is a result of continuous excellence, cultivation of relationships and creating an environment that makes individuals want to buy more, more often.

Taking the above in mind, there are a few steps that any business could adopt in order to create more engaged customers.

1. Utilise Social Media Effectively

As a first step, it is essential for brands to develop a strategy for effectively engaging customers, leads and opinion leaders on social media. Considering that social channels influence shopping behavior and enhance brand loyalty, the effective management of customer comments and complaints will play a vital role in the development of long-term loyal followers.

2. Let customers do the sales for you

Customers trust other customers much more than they trust brands, so why not leverage that dynamic and let your customers do some sales for you? This kind of experience can be a make-or-break factor in consumers deciding to give their business to one brand over another. Thank and reward your customers when theyleave reviews for your brand, emphasize and project the best things that consumers say about your business and foster your presence on review sites.

3. Get personal

Being personal and getting into your customers’ shoes lies at the heart of any business success. To do that, you need to deeply understand the people that you are communicating with. This means making sense of the information you have and gaining insight about the people who could end up being your future loyal clients.

Building brand loyalty in the digital age may certainly present some new challenges to business owners, however it is by no means impossible to achieve. Although nowadays consumers are much more likely to shift from one provider to another than they were ten years ago, they will not, as long as a brand continuous to offer impeccable quality and makes an effort to identify to whom is truly selling to.

Author: Andrie Penta, Senior Manager, KPMG Limited

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