The value exchange: how to successfully cultivate a loyal consumer base

Brands that can build long term relationships with consumers will reduce churn, acquisition cost and increase profitability. But nurturing loyalty requires a strategic approach and a value exchange that rewards customers for giving brands their most valuable currency - data

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Last year, an 85 year-long study by Harvard University revealed that people with strong relationships live longer, happier and healthier lives. 

High-quality relationships are also essential to the long-term health of brands. The European 2024 Consumer Trends Index (CTI) report from Marigold, a global martech leader in delivering relationship marketing solutions, surveyed 7,343 consumers across Europe (including Denmark, France, Germany, Spain, Sweden, the United Kingdom, and the Benelux Region) and found that 65% were willing to spend more to shop with the brands they are loyal to. 

Brand loyalty is defined as the tendency of customers to continue buying goods from the same brand rather than a competitor. But companies measure it in different ways. “Engagement is a key metric,” says Georgia Gkolfinopoulou, marketing strategist at Marigold. “Are they engaging with you across all of your messaging? Do they engage with your social media channels? Are they contributing to your community hubs? Conversion rates are key, too. How often do they buy from you? What’s their average order value?” 

But measuring loyalty is an easier task than building it. Human relationships are built over time and evolve in their form depending on the wants, needs, values and behaviours of the individuals involved. For brands, their starting point for forging genuine connections with consumers should follow the same rationale. “Brands need to treat their consumers as individuals, from acquisition all the way through to building a dedicated loyalty programme. This is how they’ll begin to build brand advocacy and loyalty,” says Gkolfinopoulou.

Individualisation is the compass that guides a relationship marketing strategy, but the needs of consumers aren’t currently being met. Half of those surveyed in Europe said they’re unhappy with being served irrelevant content or offers in just the past six months, while 41% have been frustrated by messages that failed to reflect their wants and needs. Gkolfinopoulou says part of the problem is the failure of brands to recognise the evolving needs of consumers. “Personalisation is often based on past purchases and behaviours,” she says. “But what I liked 6-12 months ago could be very different to my tastes now. The same goes for my hobbies and interests. Personalisation must be dynamic and not a fixed variable.”

But dynamic personalisation can only be achieved if customers are willing to part with their data. Previously, brands were able to collect vast amounts of information about consumers via third-party cookies, which tracked their activities from one website to another. But it’s fast becoming a turn-off. When asked which brand interactions were ‘creepy or cool’, 62% of people said that brands displaying adverts based on indirect tracking tools, like third-party cookies, were ‘creepy’, while 64% said adverts from brands they don’t recognise using geographic location tools were also in the same bracket. 

What’s in it for consumers? 

Technology companies are aware of growing unrest from users around online privacy. Google has announced it will disable third-party cookies by the end of 2024, while Yahoo and Apple are also intensifying their own user privacy efforts. This means brands are having to rethink how they collect user information, with a shift in emphasis to zero-party data. This is information that consumers willingly give up about their behaviours, preferences and motivators. 

But they won’t give it up for free. Increasingly, customers expect to take part in a value exchange, in which they are rewarded for giving brands their treasured data. Gkolfinopoulou says that communication is key. “We always encourage clients to be 100% transparent,” she says. “Let’s assume that you’re launching a campaign to acquire new email subscribers. You need to make sure you explain to consumers that, by opting in, they will receive very personalised curated feeds, tailored to their interests.” Transparency should be delivered with simplicity. “It doesn’t have to be an essay on why they should give you their data or why they should subscribe, but it should be enough to make it very easy for them,” she adds.

For brands, there are a host of tactics they can use to tempt them. The CTI report revealed that more than nine in 10 consumers find discounts or coupons to be a valuable exchange for their personal data, with loyalty points or rewards trailing closely behind. But the value in the exchange doesn’t have to be monetary. Exclusive content, like previews, eBooks, guides, recipes, or other free offerings that are specific to a brand’s niche, can create a VIP experience. Creating communities and inviting consumers to exclusive events is another compelling initiative that appealed to 54% of European respondents. 

In return, there is a cost of entry for current and potential consumers. Landing pages that collect data on preferences and interests are a good starting point when learning about new prospects. Surveys are another useful tool for uncovering insights into the evolving desires of customers and prospects. Questions about preferred products or services, forms of communication, goals, career and hobbies can all yield powerful data. This information can then be leveraged by placing customers into hyper-specific segments and sending them triggered, personalised messages. These could be special birthday offers or rewards for shopping with a brand for a prolonged period.

Choosing the right channels to target the right consumers at the right time, with content and offers aligned with their preferences, is the next challenge for brands employing relationship marketing strategies. Social media remains a key channel - in 2023 worldwide global sales via social commerce topped £448 billion and are forecast to reach £549bn this year. But there is increasing pessimism around social media. Roughly half of consumers don’t trust platforms with their data, while 63% don’t trust the advertising they see. 

But brands needn’t worry, because another channel remains king. Over the past year, more European consumers have made a purchase from an email (50%) than from a social media ad (48%) or post (44%), SMS/MMS message (24%), or a banner ad (21%). “It’s the one channel where brands can easily provide a highly personalised feed without having to go into significant technological advancements,” says Gkolfinopoulou. “If you want to do the same thing with an app, it’s going to take you longer.” 

Smartphone optimisation is also critical. “Mobile is a great channel to elicit urgency,” she adds. “We see this a lot with push notifications, if something on your wish list becomes discounted or your abandoned cart is going to expire.”

The art of the win-back 

Marigold client, Smartbox, has successfully used relationship marketing to build loyalty and sales. The company is one of Europe’s largest providers of experience gifts and wanted to drive engagement and sales outside of its usual busy periods. It had four key aims: to create unique, engaging content across multiple channels to remain top of mind, increase newsletter subscribers by incentivising sign-ups, learn more about customer behaviour to enhance personalisation and drive brand loyalty by building positive associations between the brand and summer.

Marigold used its advanced Grow technology platform to create and implement a series of contests and games across multiple channels that appealed to customers’ diverse interests. Surveys, special discounts and opportunities to win experiences were built into the games to extract data collection and incentivise newsletter subscribers. Smartbox saw a 28% increase in business volume, 2.6% conversion on their interactive experience and a 58% increase in order value. 

For brands that haven’t yet enjoyed the same success, the end of a relationship can provide an opportunity for a fresh start. “We often hear that if a customer lapses then they’re gone for good, but that isn’t true,” says Gkolfinopoulou. “No interaction is still an interaction, it tells you that something isn’t working.” The first step to win them back is to understand why they left. “Were they no longer interested in your products? Was your messaging not resonating with them on social media or via email? The next step is to understand how they interacted with you before. Were they a loyalty member? If so, invite them back and remind them of the benefits or offer them an incentive to get them back into the funnel.” 

For brands at the beginning of their relationship marketing journey or lacking the budget to implement a full-scale loyalty programme, Gkolfinopoulou recommends a three-step plan. “Step one, look at your data,” she says. “Understand where your users are most active and what they interact with. Step two, create a segmentation strategy to encourage interaction with different segments in unique ways. Step three, recognition. Every time someone engages with your brand, either via a purchase or like, acknowledge it. This will give you an understanding of whether you’re ready to introduce some gamification as the first step to building loyalty.”

If brands continue to evolve over time, in sync with the wants and needs of their consumers, they will be well-placed to develop loyal and flourishing long-term relationships. 

Download the 2024 State of Loyalty report to better understand what drives consumer loyalty nowadays.