Loyalty for Lovebrands

Introduction

Customers buy their cosmetics online today and in stationary retail around the corner tomorrow. If one product is not in stock the brand with comparable appeal is grabbed. At the same pace at which product loyalty is waning, retailers and branded companies must target the positioning of their products to reach distinctiveness. Within this shift in customer behavior, consumers are the driving force and brand loyalty is becoming the new gold.
As market niches are narrowing, the importance of consumer insights increases significantly for both corporate and marketing practices. Brand loyalty is crystallizing into one of the most important target variables of brand management. Customer empowerment meets love is the new magic strategy and means strengthening the relationship through more emotion and engagement.
This article describes future-proof loyalty marketing. It takes a look at side issues such as brand standing and metaverse and identifies stumbling blocks and observations.

Brand & loyalty, chicken & egg

A bonus card in the wallet, an app on the smartphone, and the handover of personal data for the loyalty program – today, this is somewhat like an accolade for every brand.
With an increasing number of loyalty programs available, customers will only agree to join if they trust the brand unreservedly.
Otherwise it’s a matter of: Not another app, not another card, and do not touch the creepy line!
Consumers increasingly want to know what a brand and its products stand for. Sustainability, regionality, fair working conditions and socio-political attitudes are becoming increasingly important.
Brand standing and value-oriented marketing determine the success of marketing activities.

This applies to all channels, but especially continuous and consistent communication in social networks determine the success and credibility of a company. What can be derived from this in
regards to brand loyalty: loyalty activities will be more effective the clearer the brand core and the more visible the values are to customers.
People have changed their routines so fundamentally that no one expects a return to old habits. In addition to the loss of traditions, new demands have emerged: recent studies on the subject
of loyalty show that the top brands are united by a focus on sustainability, for example with organic foods, environmentally compatible ingredients or fair conditions for employees and producers.
Commitment of companies to ethically responsible conduct guide customers increasingly in their choice regarding their favorite brands. They favor “purpose-driven companies” that, for
example, support charitable projects or place recognizable value on climate protection.
According to a survey by communications service provider Twilio, the majority of all German companies are now igniting online channels for direct customer communication as a turbo to
increase loyalty: Meanwhile, 82 percent of midsize companies and 88 percent of corporations in German-speaking countries believe that digital customer engagement already plays a very large role in the company’s success nowadays. Two-thirds of the companies also attest to the growing importance of the digital customer approach – and state that they have anchored digital customer engagement in their corporate strategy.

Customer love in metaverse

After online comes the metaverse, and that is much more than Mark Zuckerberg’s meta – future and brand research agree on that. It is the further development of the Internet and with it the
acceleration of omnichannel, the unstoppable virtualization of our spheres of life. The pace determines the future of digital marketing.
It is not yet clear when marketers will be able to derive concrete campaigns from these visions. What is clear, however, is that the topic of commitment and loyalty, and with it corresponding
loyalty programs, will not disappear. On the contrary!
Some observers compare the Metaverse with the “Second Life” project that failed years ago. But nowadays people are at a completely different point when it comes to accepting virtual shopping
and meeting spaces. So we’re talking about a virtual space in real time that is never closed and in which brands, companies and their fans operate their own economy. The boundaries between
the digital and physical worlds run fluidly. Goods such as sneakers can already be found in both worlds today: in physical as well as in digital experiential spaces.

Metaverse as a digireal brand space that remains empty without a loyal fan base

The blurring worlds of experience for consumers are a challenge for branded companies, store brands and other companies.
The challenge is to address, excite, incentivize and thus retain customers in the metaverse in the future.
Brands would do well to make their boundaries between retail, online channels and new virtual spaces fluid. Communication should be extended into all areas, including the metaverse. Like
the Internet, the metaverse will be filled with content, opinions, and shared experiences by consumers and companies. But in real time! This is an ideal place for brand and store communities, which can redeem bonus points for digital products or send designers wishes for upcoming collections, which then can implemented in real time.
Brand and store communities should find each other here, pick up their customers with clever marketing measures and move communication back into their own reach. Because the entire interaction takes place on an outsourced digital platform without a connection to your own data management and is not GDPR-compliant.
Nevertheless, individual marketing activities for customer loyalty can also take effect here. For example: brand or store communities redeeming bonus points from real purchases for digital
products and vice versa.

Loyalty programs – benefits and stumbling blocks at a glance

Clever loyalty management offers deep insights into the structure and behavior of target groups. It binds consumers through exclusive memberships and bonuses and accelerates the change
from interested buyers to brand ambassadors. Surveys within the member community can provide “aha” moments across departments, including product management. All these benefits are selfevident when brand owners skillfully adapt campaigns, benefits, channels, and loyalty program measures to target groups. So in the first phase, it takes time to find out which gifts and bonuses are particularly attractive and how the campaign in question also pays off in economic terms. Key message: Get to know your customers!
If companies report too high costs for setting up a loyalty program, these are usually attributable to five points:

• A too low degree of automation and thus too much manual action or personnel expenditure
• A lack of a digital hub in which 360-degree customer profiles are available
• Too little networking within the IT system landscape
• Lack of customer interaction due to incorrect offers
• No personalized approach

The loyalty toolbox

For the past two years, after all, spoiled consumers have been accustomed to using all channels available to them anytime.
Whether it’s a physical store, an online store, or social media, it depends on the target group’s mood, time of day, or everyday situation such as vacation or the office. A contemporary loyalty
program therefore links both POS checkouts and web stores.
At the heart of the loyalty system, profile management plays a key role in determining the success of the measures – as the number of participants and thus profiles in the central data hub grows, the overview can be lost due to the flood of information. Excellent profile management keeps order and ensures high data quality. If a registration for the loyalty program or newsletter takes place, the program automatically sends the double opt-in e-mail and saves all consents and legal texts after confirmation. If a profile already exists for a customer, for example because she already has subscribed to newsletter communications, the duplicate is automatically recognized and merged. To ensure that data quality remains King, the software regularly checks the data in the profiles, corrects errors and deletes unused data. The goal of loyalty software must be to obtain 360° profiles with the highest possible relevance. Reducing the data stored to the lowest possible denominator incidentally lowers the cost per profile. A loyalty program should not cost more than necessary. In addition, a complete assignment of customer cards to persons and accounts forms a supporting pillar in loyalty.

The approach: Loyalty is not a stand alone

The relationship between customer and retailer has been digitizing at a rapid pace since the last few years. Digitalization is increasing the amount of data available to marketers to analyze
target group segments and their behavior. If you want to tame the flood of data, you would be well advised to have a central customer data hub that stores and enriches customer data, automates marketing campaigns, and integrates holistic loyalty programs.
Loyalty should be seen as an integral part of the retail ecosystem, linking CRM with marketing automation, retail analytics, in-store marketing and owned media. The system integrates point-of-sale systems, online stores, apps, websites, and other touchpoints with minimal effort via APIs.

Data sovereignty is data protection

Integrated into all processes as described above, brand owners are gaining an increasing amount of first party data. Every customer interaction from this data pool requires the written consent of the participant. Following this core statement, loyalty programs must grant legally compliant management of all permissions and legal texts and already carry this in their software’s DNA. This means that for each profiles in the central data hub, the temporary
version of the consent provided by the customer via the DOI process has to be available. All functionalities as well as all data are integrated into the central database and are controlled from
here. This is the only way to ensure compliance with the GDPR.
It stands to reason: the fewer different tools and systems are used, the greater the overview of compliance with current data protection regulations!