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CUSTOMER LOYALTY | Loyalty Marketing Guide 2013

12 | April 2013 | dmnews.com

By Sarah Shearman

T oday’s empowered customers are more likely to be loyal to companies that best understand their needs, goals, and prefer- ences. Doing so means listening—and listening well means a comprehensive voice of the customer (VoC) program that’s

closely aligned with marketing. Additionally, marketers must stay attuned to marketing’s infl uence on

the customer experience; for example, communicating a brand prom- ise that their company can deliver on or sending relevant, timely of- fers rather than impersonal blast messages. Customer experience has a strong correlation to loyalty metrics, such as repurchase intent, rec- ommendations, and retention, according to Forrester Research. Again, customer listening is imperative; it will amplify customers’ satisfaction or dissatisfaction with the customer experience.

“Too often, companies struggle to hear what the customer is actually saying about them. There is a disconnect between brand perception and brand promise,” says Larry Freed, CEO of customer experience analytics fi rm ForeSee. “They need to hear it from the voice of the customer themselves to build loyalty.”

Some marketers think that a customer loyalty program will suffi ce in terms of their efforts to help build customer loyalty. However, as important as those programs are, they’re not enough now that the cus- tomer journey has become more complex. “I always recommend [that

companies] focus much more on a sustainable and systemic approach, where you’re actually treating customers in a way that they want to be loyal, rather than a points program where you’re trapping them in to a relationship,” says Andrew McInnes, director of product marketing at customer service and experience solutions fi rm Allegiance.

Freed agrees that marketers must not assume that customers enrolled in a loyalty rewards program are loyal to their brand over its competi- tors. “Companies that have loyalty schemes have to look at the new customers joining and see if they’re making a decision because of your loyalty scheme, or whether they would have made this decision any- way,” he says. “Through VoC we can start to fi nd that out.”

Does VoC measure up? In fact, VoC initiatives can inform whether points programs and other loyalty marketing efforts are effective. “If you don’t have that measure- ment it’s almost like running your business with your head in the sand, because you’re doing these programs and you’re getting false positives and negatives,” Freed warns.

Of course, the defi nition of loyalty differs for different brands; some focus more on behavioral loyalty, while others care more about attitu- dinal loyalty. This means that success measures will vary, as well. For Julie Kaplan, executive director of marketing and customer experience at Healthy Directions, a natural health and supplements fi rm, loyalty

Customers are more likely to be loyal to companies that meet their expectations. Doing so means aligning the voice of the customer with marketing.

Loyalty Takes Listening

93%81% 89% 20% 18% THE NUMBERS | The Customer (Experience) Is King

Source: Oracle Corp.

➜ Customers willing to pay more for a superior customer experience

➜ Customers who switched brands after a poor customer experience

➜ Annual percentage revenue losses due to poor customer experiences

➜ Executives who say that improving the customer experience is one of their top-three business priorities

➜ Expected increase in spending on customer experience technology over the next two years

12_Feature_Loyalty_v8.indd 12 3/12/13 4:23:11 PM

dmnews.com | April 2013 | 13

equates to repurchase. “When we mean loyalty it’s not an emotion or feeling, it really means the customer comes back over and over again,” Kaplan says. “Loyalty is the biggest revenue driver for our business.”

Healthy Directions started its VoC program two years ago, working with Allegiance, by emailing a weekly product survey that included Net Promoter Score questions on likelihood to recommend. A key insight that arose early on was that customers repurchase from Healthy Direc- tions if they notice that the products are making a difference to them.

Kaplan notes that rather than having to make major changes to the company’s marketing, the feedback was “great confirmation” that it already had the right loyalty strategy in place to generate repurchase.

One of the changes customer feedback catalyzed, however, after the company discovered that product efficacy drives repurchase and re- duces return rate, was to make its product labels and inserts easier to read to ensure that customers know whether to take the supplement at a certain time, because usage impacts efficacy.

The initiative now includes relationship surveys, touchpoint surveys, and text analytics, and is moving towards a more automated listening system. Kaplan says the program has proven to be a “great success” to the business and has helped her team discover actionable insights that are used across the business every day.

Based on the marketing initiative’s success, Healthy Directions’ cre- ative execution of promotions, creative direction, and target market- ing now reflects specific insights gleaned from customer feedback, both qualitative and quantitative.

The boon and bane of social listening Asking customers for feedback like Healthy Directions does is impera- tive, but “listening” to their input through external channels has become unavoidable for companies due to the growth of social media. The

rise in popularity of blogs, forums, and social networks provides fertile ground for marketers to track conversations about their brands and an opportunity to respond in real time. “The customer is more em- powered online and can voice their opinion on Facebook or Twitter, meaning, if they’re frustrated it’s likely that will end up in the public domain,” says Evan Klein, founder and president at customer feedback firm Satrix Solutions. “The cost/value equation that measuring VoC in an online environment creates is also much improved.”

Forrester Research shows that, in 2011, 29% of consumers used a so- cial channel to complain. The research firm expects this figure to grow as younger generations age and new generations of highly social con-

sumers enter the marketplace, making VOC in social media of high importance for marketers.

Listening to complaints and compliments on social media gives marketers another source of feedback that they can analyze to give a wider perspective on customer experience. The nature of social media means feedback can be gained more readily and from a wider audience, meaning agile companies can respond to it promptly, which ultimately drives loyalty. It’s possible to take social insight a step further by opening a

conversation with customers in that channel. Marketers can use social networks or online communities to start a dialogue on spe-

cific topics, like launching a new product, and then use customers’ input to design the product, explains Azita Martin, VP of marketing

at customer engagement platform Get Satisfaction. This type of cocre- ation can positively impact loyalty because customers feel that they’re involved and being heard.

“Companies underestimate how much consumers care about giving product feedback,” Martin says. “Loyal customers love to be recognized and have their own voice on your website and other places. The ability to respond to it builds amazing brand loyalty.”

Martin explains that it’s possible to build dynamic VoC content, such as product reviews, right into an online forum or product pages on a brand’s website. This is a boon to marketers because customers share detailed opinions in context, which increases their engagement while creating better informed buyers. She cites as an example Morrison- owned baby e-commerce store Kiddicare, which saw an 8% drop in cart abandonment and a 5% increase in search traffic to the website after taking this approach.

Closing the loop Marketers must not fall into the trap of listening to only the vocal mi- nority, says Foresee’s Freed. “The squeaky wheel can get a little bit too much attention sometimes, and if you ignore the silent majority you won’t get a truly representative audience,” he says.

To avoid this “extreme bias” in the data, Freed recommends that marketers focus on gathering VoC insight over time and from across channels, not just one-off direct feedback. “You need to listen on a con- tinuous basis and understand how internal and external [factors] can influence your customers’ expectations,” he says.

Understanding, tracking, and measuring those influencers can be a great asset to marketers in their loyalty-building VoC efforts—when they take action on what they learn. Listening without taking action can be perilous.

Loyalty Takes Listening

“Loyalty is the biggest revenue driver for our business.” Julie Kaplan, Healthy Directions

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“An area most companies struggle in is responding and reacting to feedback,” Freed says. “It’s a common complaint among customers that having spent the time completing a survey, it goes into a void, never to be heard of again.”

Although paying lip service to listening to customers’ views and failing to act on them could signifi cantly erode loyalty, not all input requires action, notes Satrix Solutions’ Klein. However, all feedback should be acknowledged. “Demonstrating commitment to customers is one of the most signifi cant aspects of a successful [VoC] program,” he says. “But one fallacy associated with customer feedback programs is that man- agement may feel obligated to do everything customers want.”

Klein explains that some customers may express frustration over the fact that a company’s products or services are too expensive, for exam-

ple, but it might not necessarily be the right business decision to align with such customer requests. On the

other hand, if marketers are communicat- ing a specifi c brand promise that their company’s products or customer ex- perience aren’t delivering, then either the brand promise or the products or experience need to change or customer loyalty may suffer. Consequently, VoC shouldn’t be a silo

within marketing, but integrated across the entire business to ensure the greatest

positive impact on loyalty. “One of the biggest challenges is mind-set,” McInnes says. “To do [VoC] well it needs to be accepted as part of every function in the business, not handled by marketing alone.”

Kaplan explains that when Healthy Directions launched its VoC pro- gram it was a complex undertaking. “The diffi culty was how we went about installing it in the organization, amid all the ordinary day-to-day things we have to do.”

As it turns out, convincing the organization of the worth of the VoC initiative didn’t take long. “We were fortunate that we quickly surfaced quality insights that we use in our organization every single day,” Kaplan says. “The VoC program became embedded in the organization very quickly, with people across the business using its insights.”

It’s clear that setting up a comprehensive VoC program requires time, commitment, and resources, but with ever-increasing customer expec- tations, ignoring the voice of the customer is no longer an option for marketers who are charged with building customer loyalty. “It’s really all about creating a culture in which understanding customers’ needs is part of the organizational DNA,” Klein says. “This commitment should not be underestimated; it offers a tremendous way to differentiate your business and build loyalty.” ■

14 | April 2013 | dmnews.com

CUSTOMER LOYALTY | Loyalty Marketing Guide 2013

Having a robust listen-

ing system in place to

drive loyalty among its

customers and part-

ners is nothing new

to networking soft-

ware giant Cisco Sys-

tems, which set up its

customer satisfaction

function in 1999. But

it was over a year ago

that the company de-

cided to strengthen its

approach to voice of the customer (VoC)

by creating the Listening Services Center

of Excellence to centralize the various lis-

tening posts from across the business.

“At Cisco all of the employees carry a

badge that has our company values on it.

One of those values, which is part of our

DNA, is customer success,” says Karen E.

Mangia, director of Cisco Systems’ Listen-

ing Services Center of Excellence. “We use

VoC to measure how we’re doing against

that cultural value and make it real to every

single employee in the business.”

The 34-member strong listening center

consists of three teams that are respon-

sible for listening, analyzing, and integrat-

ing VoC learnings back into the business. “I

like to think of them as a group of people

who are so brilliant they could tell a senior

[executive] something about the business

that they don’t know already,” Mangia says.

“To me, it’s not just about saying we have a

program; the real value is it is about what

we can learn from it.”

Easy does it Mangia explains that Cisco’s listening posts

gather input from customers and part-

ners globally, making it possible to iden-

tify themes. For example, the company

learned that the “ease of doing business”

with Cisco is a loyalty driver. It also learned

through VoC, however, that the business

wasn’t delivering as well as it could in that

area. So Cisco launched a formal action

plan that included everyone across the or-

ganization, including the CEO. It ties spe-

cifi c projects to drivers that impact the

ease of doing business with the company.

It also launched custom online dashboards

that staff can use daily to monitor ease-of-

doing-business results. Executives also re-

ceive a weekly email highlighting customer

comments specifi cally regarding the ease

of doing business with Cisco.

The company has also made a signifi cant

effort in the introduction of its programs

to “close the loop” with customers and

partners about how it’s using their feed-

back. “When we connect back with them,

it builds future loyalty,” Mangia says.

Another initiative that the listening center

led based on VoC input was the streamline

navigation of Cisco’s support website, al-

lowing customers to more quickly access

information and resolve problems. As a

result, 81% of technical support issues are

now resolved online, leading to cost sav-

ings of hundreds of millions annually.

Cisco Listens and Learns

Karen E. Mangia, Director of Listening Services Center of Excellence, Cisco Systems

“Most companies struggle in responding to feedback.” Larry Freed, ForeSee

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