3 factors critical to customer loyalty

Cheap. Fast. Good. Pick Two. These five words are on a 1950’s era sign at my Texas barber. Every time I see the sign I chuckle. I smile partially because this sign essentially describes my barber to a T, but also because I don’t want to pick just two, I want it all. That’s the thing about consumers; consumers will choose a brand to work with based on essentially three factors:

  • Value
  • Convenience
  • Service

Whether they (really “we”, I’m a consumer too!) know it or not, consumers put all of the known factors into their heads and do a simple calculation that results in a psychologically prompted impulse – to buy or not to buy with you. To give you a shot at a bat. And for brands that really over-deliver on any one of these three dimensions, they will be able to skimp on one or both of the other. This is why Spirit Airlines is successful despite providing fewer services and more inconveniences to flyers. Where else can you fly halfway across the country for under a $100? The value is incredible. The headaches with gate paying/checking bags and expecting absolutely nothing above and beyond a seat – not so much (or so I hear – full disclosure, I’ve never flown Spirit).

This brings us to why consumers come back, and even of more valuable to us marketers, why consumers advocate for our brands to their friends. Of course they will do it based on the three factors above; but they will enjoy doing it if they FEEL special. People love to feel special. That’s where the secret sauce comes in:

  • Gamification: Consumers are special because they achieved something
  • Personalization: Consumers are special because we recognize them
  • Awesome Customer Service: Consumers who receive extra special service will return that favor in kind. They feel gratitude. An emotional bond. This is the best ingredient by far.

In the absence of feeling special, consumers will continue to use a product or service because they have confidence from past experience. It’s easy. It’s a known entity. Done and done.

And companies that can deliver on these ingredients well over and over generate stickiness, customer advocacy, brand advocates, and most important to us marketers – brand loyalty.

These three values explain any competitive differentiation in the market place. It explains why Costco does so well even though their ecommerce and in-store experience is disconnected – they over deliver on value and service. It explains why business travelers are loyal to companies like Epsilon client Marriott, because they are recognized and get increasingly richer value the more they frequent Marriott properties.

To drive competitive differentiation and consumer preference – one of my favorite topics – in the absence of a monopoly, brands have to move the needle on the above factors. In my job, I see clients who ask questions like “should I add gamification to my program?” or “should my program be points or punch card?”. These are good questions but ones like the latter are just the tip of the iceberg. Absolutely we need to come up with a loyalty program structure. But more importantly, we need to come up with the value prop for consumers that is going to drive top line sales growth and share movement. This is a nuanced but incredibly important distinction. Winning is not going to be guaranteed solely by new marketing technology. Yes, the technology is a critical enabler. But it’s not a panacea. Marketers must solve for the business and marketing outcomes that will drive brand preference among consumers.

At Epsilon, we bring together multiple disciplines to help clients solve for the right objectives and outcomes, across:

  • Loyalty program design
  • Marketing and business strategy
  • Process and workflow optimization
  • Technology strategy and, separately, technology integration
  • Analytics, data, and measurement strategy

This way, similar to solving for a Rubik’s CubeTM, we help our clients bring together the right strategies and resources to solve for the entire solution – not just stand up a new tool or loyalty program.

At the end of the day, your customers who are people that make emotional and rational decisions, will be thinking about value, convenience, and service when choosing to trial or be loyal to your brand. And your brand can only win by being better than everyone else.

My barber gets this by the way. He knows that I keep going back because I like him. Regardless of his humorous sign, the reality is that I don’t just ‘pick two’, but instead I get a consistent great experience that is fast, good, and cheap (enough for me) all in one along with some other things. Not every business is as simple as a barber shop. For those of you looking to figure out how to deliver it all to your customers, we at Epsilon are here to help you.