Why experiences are the key to brand loyalty
News | 28 September 2016
Hattie Whiting, Managing Director, Kitcatt Nohr
Let’s be frank. CRM has long been the ugly duckling of our industry. Direct response briefs made many break out in hives, talk of data sent people to sleep, test and learn was the preserve of the geeks. Not any more! In a world where every CMO in the land understands the power of data to unlock business growth and where consumers are increasingly discerning, CRM has come of age. It’s time to start thinking about CRM as more than a marketing communications channel that’s best kept out of sight. It’s breaking free and creating the very experience that sits around products and brands. This is how some brands are now starting to build emotional relationships with people. Emotional relationships which we know to be the most important driver of loyalty.
It turns out that market share isn’t just a volume game. 55% of brand growth for FMCG brands is driven by increased customer loyalty, according to a recent study by GfK.* It’s main point? ‘The emotional quality of the relationships a brand has with its customers is every bit as important as the number of relationships it holds’. The success of businesses isn’t built solely on getting new customers. Shit just got emotional.
At Kitcatt Nohr we regularly talk to people outside of our industry about the relationships they have with brands. Relationships which are purely functional in nature are, unsurprisingly, highly fragile. The moment a newer, shinier, slightly more convenient model pops along the incumbent is consigned to the ‘exes’ bin.
Now we need to be obsessing about the creation of end to end experiences which wrap around products and brands. For brands to play a lasting role in people’s lives both today and tomorrow they need to offer both must-have functionality with added value service. It’s these kind of experiences which will drive emotional connections, genuine preference and loyalty.
Brands are starting to cotton on. Particularly those operating in price sensitive, commoditised categories. We’re beginning to see FMCG brands start building their own relationships to defend against the supremacy of the big retailers. And those relationships they’re building are based on an experience wrapped around the product. It’s no secret that Unilever has just paid $1 billion to acquire the smarts and the enthusiastic customer base of the Dollar Shave Club. What should surprise us isn’t the value that’s been put on the business, but the realisation that none of the big businesses thought to create this kind of brand experience in the first place. And guess what, if you create a truly great experience people won’t just be loyal to your brand. They’ll happily pay more for it. Think of Amazon Prime and now Amazon Dash. Charging it’s most loyal customers more money to get a better service, so that they end up spending even more money. Hello Fresh taking the effort out of measuring and storing food with prices closer to takeaways than supermarkets.
For brands to play a lasting role in people’s lives, they need to offer must-have functionality with added-value service
So consumers are getting used to having what they want, when they want it. Experience is king. But high cost to entry and long ROI times have sometimes put brands off investing in CRM. It doesn’t have to be like that any more. Even for brands which aren’t yet in a position to invest in a large-scale marketing platform, there are smart ways to start to create personal and hyper-relevant brand experiences.
So, while you don’t necessarily have to throw money at the problem you must understand the role that your brand plays in people’s lives. Because that way of thinking, coupled with a CRM approach which understands how to nurture, evolve and grow individual relationships is the way to create your version of the Dollar Shave Club.
This isn’t just about email or direct mail. If we limit our thinking to channels, we’re limiting the potential of what CRM can do. Because in a world of data, personalisation and real-time analytics, the experiences we create between brands and people will become the point of differentiation.