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Creating Loyalty Through Digital Marketing

Companies that settle for customer satisfaction only are falling short. With today’s digital marketing, loyalty is the goal — building relationships, inspiring gratitude and encouraging advocacy.

Remember when digital marketing was all about search engines and social media? That era is over, replaced by a new age of building digital brands, according to Mark Bonchek, founder and Chief Epiphany Officer of Shift Thinking. Savvy companies now have myriad opportunities to expand their customer base, but they cannot do so using traditional methods. Those methods may satisfy the customer, but satisfaction is not enough, says Bonchek in a recent global conference call with members of YPO’s Digital, Marketing & Media Network. In this era of digital marketing, companies must create customer loyalty.

Bonchek shares four reasons why loyalty matters and how a company must transform its marketing to achieve it.

Transition from transactional loyalty

Loyalty to a company is traditionally defined as the likelihood of previous customers to continue to buy from a specific organization. However, Bonchek points out a flaw in that definition: It focuses solely on transactional loyalty, not human loyalty. What is the difference? Think about the loyalty we, as individuals, bear toward our friends. If we have an argument, we do not abandon them and go find new friends; we work through it because of our loyalty to them. Companies need to engender the same sense of loyalty in their customers.

Some may consider this impossible, pointing out that companies are not people. Our brains prove that conclusion wrong. Tests have been done in which people’s brains are monitored by an MRI as they are shown pictures of the faces of people they care about and brands they care about. The same areas of the brain light up for both, showing that humans can feel a human sense of loyalty to a company. That matters, because 94 percent of consumers say that consistently good experiences with a company engender their loyalty to that company, which — returning to a transactional view — translates to repeat sales.

Brand is not everything

Despite customers’ brand loyalty, brand is not everything. In digital marketing, ratings have an immense impact. Imagine you are shopping online for a vacuum. You have consistently bought Company A’s vacuums over time and have been satisfied with them. However, when you go online you see that Company B’s vacuum is rated 4.7 out of 5 stars, while the Company A vacuum’s rating is only 3.2. Would you abandon your loyalty to Company A’s product in the face of this evidence that Company B’s vacuum is more thoroughly delighting customers? Very probably — proving the need to encourage customer advocacy.

Field a team of advocates

Advocacy is critical to building a brand. Research from Nielsen shows that 92 percent of people consider a friend’s recommendation as their most trusted source, followed by online consumer opinions (70 percent) and editorials (58 percent). Advertising falls well below these sources — generally in the 40 percent range.

Customers can be loyal without being advocates but, ideally, the company will find a way to move them to advocacy. This requires a change in how marketing thinks and behaves. Traditionally, communication has been a one-way exercise — from the company to the customer — based on marketing activities such as segmenting the audience, running campaigns, setting targets and aiming for incremental impacts.

Then customers started talking back. Companies realized they have to change their interaction with them, from talking at them to persuading and promoting, listening and learning, and enabling and empowering. When that happens, things change dramatically, according to Bonchek. Incremental growth becomes exponential; intermittent, broadcast communication with and among customers becomes continuous and networked; one-dimensional relationships become multi-dimensional, and content is subsumed by context.

Use big data to create little data

Bonchek urges companies to use their big data to discover little data, which he defines as “what you know about your customers you don’t necessarily know you know.” The benefit of little data comes from sharing it with your customers — telling them something about themselves that is useful to them. For example, some utilities companies tell customers how their power usage compares to that of their neighbors, highlighting potential opportunities for customers to conserve (to benefit the environment) and save money (to benefit themselves). Providing customers personally useful information inspires their gratitude, which, in turn, builds a very human kind of loyalty.

Connect with Mark Bonchek

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YPO is the premier global leadership organization for more than 27,000 chief executives in over 130 countries and the global platform for them to engage, learn and grow. YPO members harness the knowledge, influence and trust of the world’s most influential and innovative business leaders to inspire business, personal, family and community impact. Today, YPO member-run companies, diversified among industries and types of businesses, employ more than 22 million people globally and generate USD9 trillion in annual revenues.