Customer Loyalty

In a time of economic uncertainty—with customer trust eroding and purchase behaviors growing harder to predict—mastering this ability has become even more critical to staying relevant, competitive and profitable.

Intensifying competition and growing customer expectations have made it increasingly difficult in recent years for companies to keep their customers and do it profitably. Now, new economic concerns pose new threats to breakdown the bonds of customer loyalty even further. Trust is an essential component of loyalty; as consumer confidence wanes, so too does the basis on which loyalty can be fostered.

To survive and even thrive in today’s difficult economic environment, many organizations should take a fresh look at their strategies and methods for retaining customers—and if necessary renew their commitment to customer centricity.

Some companies will survive the current cycle; others will thrive because they made this an opportunity to renew customer focus. By making smart near-term decisions based on strong analysis and a long-term perspective, they will optimize investment in marketing and sales; preserve trust in relationships with valued customers; and benefit from the clear opportunities for growth available even now.

In fact, our research shows that a key characteristic of high-performance businesses is their ability to create loyalty by delivering a customer experience that is tailored to the preferences, expectations and intentions of specific segments, and is consistent with the brand promise.
 

• Begin at the Beginning—The factors that create and influence customer loyalty begin to take effect even before a customer becomes a customer. The relationship a customer develops with the brand during the acquisition stage strongly influences customer value and retention.
   
• Recognize Every Kind of Loyalty—Loyalty is not necessarily an emotional connection to the brand. True brand evangelists—or even potential evangelists—are at best rare and possibly non-existent. Companies need to recognize, develop and manage more than one kind of customer loyalty: conditional, emotional and passive—using more than one kind of strategy.
   

• View the Entire Value Chain—Third-party channels and routes to market also affect customer loyalty—and can destroy unless they are managed effectively. Analysis and decisions concerning such factors as offers, sales incentives, pricing, service delivery—all dimensions of the customer experience—should include all the trading partners who contribute to the customer experience.
   

• Manage Complexity—Products, service bundles, channels—these and many other factors have grown exponentially more complex in recent years, making customer loyalty more complex to manage as well. Providers must retain the ability to react quickly to changing customer needs and market conditions.
   

• Know What to Look For—Most companies know a lot about their customers, and comparatively little about the factors influencing acquisition and retention. Achieving high performance in customer retention means aligning activities throughout the relationship lifecycle—including acquisition—and using econometric and return-on-investment analytics to study and maximize conversion rates and other customer behaviors across channels and throughout the lifecycle.
   
• Know What to Measure—Companies often measure the wrong things when trying to measure customer profitability and loyalty—loyalty indicators are far more involved than customer satisfaction scores. Establishing and managing cross-functional key performance indicators throughout the customer lifecycle helps prevent the loss of current and potential customer value.

Woodruff “Woody” Driggs is the managing director of the Accenture CRM management consulting service line. Mr. Driggs advises companies in a wide range of industries on creating and maintaining profitable customer relationships by building superior brand value and fostering greater customer satisfaction and loyalty. He has authored numerous articles on CRM-related topics, which have appeared in a range of publications, including CRM magazine, The Harvard Business Review and Outlook, the Accenture journal of high-performance business. Mr. Driggs joined Accenture in 1988, and since then, he has held a variety of leadership positions within the company, leading the development of innovative CRM business strategies and new market-making opportunities across diverse industries.

Naomi Kasolowsky is a senior manager with the Accenture CRM management consulting service line, where she advises companies on marketing strategy and marketing process improvement. Ms. Kasolowsky specializes in helping companies improve customer loyalty by developing and applying customer knowledge to the customer experience. She is also one of the primary designers of Accenture’s customer loyalty offering and helps lead Accenture’s customer loyalty group in Europe. In addition to authoring and contributing to Accenture publications on customer loyalty, she is frequent guest speaker on this topic. Her work in this area has been recognized in Accenture’s Innovation Award program.