Loyalty is not a program, but an outcome

As inflation continues to impact how consumers spend, loyalty has never been more important.

However, Adam Posner, founder, The Point of Loyalty said brands need to understand that loyalty is not a program but an outcome.

Posner told Digital Nation that loyalty is a behaviour, belief and sense of belonging with a brand.

He said, “If the loyalty outcome is purely transactional, i.e. customers spend more and more often over the longer term, then in the era of inflation when typically there is less discretionary income, this transactional loyalty is key to sustained growth for brands.”

Inflation is set to dampen spending, according to the recent Australia Post Inside Australian Online Shopping report. This means that brands need to do more than provide discounts to consumers.

Posner explained that brands need to be smarter about adding more utility to the spending behaviours of their customer, rather than purely driving prices down.

“Inflation anxiety is a real feeling. Prices are without a doubt increasing in many categories of everyday living,” he said.

Brands can reduce their customer’s inflation anxiety in several ways, Posner explained.

“Brands can find opportunities to reduce the mindset of ‘spend more with us’ to a mindset of ‘we can help you be smarter with your spend’ with their customers, helping customers get the most from their purchases or helping them shop smartly to live within their means,” he said.

“It’s not only about maximising spend, it’s also about giving more utility and guidance on how to spend wisely, enhancing the relationship over the longer term.”

Posner explained that connecting customers to a community or the purpose of the brand is a strategy brands can take to build a sense of belonging, however, it is category and audience-specific.

“As an example, a beauty retailer and pet retailer have a greater opportunity to build community as their customers have a personal and passionate reason to connect,” he said.

“Where there is this heightened feeling of connection, customers will be more emotionally engaged which augments their direct transactional relationship.”

Mary Pilecki, VP, Principal Analyst at Forrester said building emotional connections with customers must be a critical component of a brand’s loyalty strategy.

She said, “Forrester’s data shows that when consumers feel appreciated by a brand, 76 percent of them say they’ll keep doing business with the brand.

“Show your appreciation for your customers through these challenging times with personalised messages and offers that reflect your commitment to your customers’ well-being.”