Financial crises are rarely seen – if ever, in any positive light. They are at the crux of despair for global markets, social development, educational faculties and other aspects of our lives. They always seem to harken back to the bad times and create an overall heightened level of uncertainty, anxiety and negative energy. This directly translates into consumers buying less and suppliers being unstable, cascading into a loss of revenue which further deepens the perceived crisis. Firms reduce investment and start gutting their departments in an attempt to cut costs, which further adds to the ongoing crisis. The global economy itself is like any other ecosystem, it is made up of an interconnected set of variables and systems that eventually all lead back to the market participants, i.e – the consumer.
In recent memory we have already witnessed several economic disasters including the 2008 mortgage crisis, the Russian financial meltdown of 2014, Greece’s almost economic collapse and to add further insult to injury, we are all currently facing the COVID-19 crisis. With bated breath, we all are looking around and wondering how this will affect the global economy in the long term. As we have seen previously all of this sort of crisis do have ever lasting effects and their waves have only begun to strike our shores. Many companies are asking themselves: “How will we continue to sell out products and services if another crisis appears on the horizon?”. Taking this into consideration and analyzing sales as a stand alone entity we quickly arrive at the conclusion that customer loyalty is where we should be focusing our attention. It is and has been one of the most strategic mechanisms for increasing corporate revenue growth, especially during a recession. Moreover, loyalty programs possess resource rich customer bases and huge communication possibilities. The question is how to use them effectively.
In this article we are going to disseminate tips for those looking to bond with their customers in tough times through the use of loyalty programs:
Customer values instead of a valuable customer
Firstly you have to ask yourself several questions regarding your customer base;
– What is important and vital for your customers now in difficult times?
– Why did they trust you before the crisis?
– Why would they continue to stay with you now?
– What exactly are loyalty programs and the concept of “loyalty”?
It is said that customers should be loyal to their brand, and the opposite is also worth considering. The brand should also be loyal to customers by offering them values that are not generally available on the mass market, or important in crisis conditions. You need to talk to loyal customers differently than you communicate with the marketplace in general to create a sense of personalization. They trusted your brand by joining the program, now is the time to communicate with them more personally and come out with options and solutions that provide help. This can be in the form of specific advice on how your product / service can make their life easier in a crisis.
Focus on your most loyal customers
You need to set priorities and enact a plan to utilize every aspect of your customers’ trust. Brands realize that keeping an existing customer is cheaper than attracting new customers for their products and services. Taking care of a regular customer should be set as the highest priority. A common mistake in crisis situations is to search for new customers who are attracted only by lower prices and do not create an emotional bond with your brand. Unfortunately, this leads to the company not being able to guarantee that the same customer will continue to shop with them when and if prices increase. So it is best to solidify and strengthen your bonds with existing customers.
Changing consumer behavior during and after the crisis
What will definitely change after the crisis is consumer behavior which focuses mainly on being more careful about spending and purchases. Customers will be more focused on building savings than on extensive consumption. Don’t worry, your customers will continue to buy, just in a smarter, largely conservative and considered fashion. Having a loyalty program where you gather customer data, such as history and purchase cycles of your customers, you are then able to predict what and at what time your customers need by strict analysis. This is paramount and can not be understated as customer data is at the very foundation regarding customer knowledge. You will see changes in the purchasing preferences of specific customer segments. This can already be observed by various trends, for example in the FMCG industry – larger purchases at longer intervals, resignation from small packages in favor of large capacities, selection of classic flavors, low sales of impulse products.
Emotional bond
Through a loyalty program, you give your clients access to the best possible promotions and exclusive actions/services that are only accessible via membership. But the most important insight you receive is the ability for your brand to create an emotional bond with your client. The client wants to feel appreciated and important, but above all, feel as if they are in active participation with you. This is done through welcome emails, personalized offers, birthday greetings, social engagement. The customer should feel that their opinions are important to your brand. The difficult economic times make this relationship with the customer particularly important, as they wish to maximize their commitment to your brand. It is also an opportunity to convey emotions by communicating how your industry is helping others in the crisis, which further increases positive attitudes towards your brand, further increasing customer loyalty and cohesiveness.
Taking advantage of communication lines
Communication is key! Companies that have built a base of loyal customers with the ability to have direct dialog and contact them can confidently say that communication is the most valuable resource for difficult times. Moreover, devise actions on how you can help your customers (i.e., contacting them when the essentials are back in stock or any of their need-based purchases have special pricing or promotional sales) and ship them by the route they agreed to.
This is not the time for point-based offers, but for invaluable news based on services that customers find relevant and useful. Most of all, brands need to maintain their marketing and communication during times of crisis as suffering a communication breakdown can have devastating effects.
Support local communities and those in need
If you run a points program, be sure to introduce a reward that will allow you to exchange points for help for those in need in a crisis (e.g. support or a charitable action for groups in need). This is also a great way to drive emotional attachment to your brand as you are seen in a humanitarian viewpoint which further can deepen positive emotions to your brand. A perfect example of this is the action of Żabka, which introduced the exchange of points to help hospitals. This was also honored by the application as whatever points you spend on charity was also added back to your point bank. Within just 48 hours from the launch of the action in the żappka application, users, together with the Żabka network, collected over one million zlotys to help fifteen regional infectious diseases hospitals.
Increasing benefits in the program
To keep your program as dynamic and active as possible it is important to keep increasing benefits, or changing the loyalty services for your customers during a crisis. Focus on changing the redemptive portfolio to services that may actually interest participants in these times, e.g. free delivery, e-coupons for e-commerce, cancelation of fees in subscription programs, automatic transfer to a higher segment (if you run a segment-based program), offering digital rewards (e-books, e-coupons for subscription services). It is also a good idea to resign from periodically extinguishing points.
Improve customer experience with your brand
Unfortunately, in the current situation, some clients act under the influence of emotions such as anger, aggression, and stress. This has to be taken into account during a crisis whereby customer interaction should be managed accordingly. You should actively behave in a manner that reminds your customer base that you are an oasis of peace and reliability, but more so, you are rock solid. Customers crave stability during a crisis and your brand should always be there at any moment to support them. To ease the emotional tension take care of easing contact with aggressive customers by increasing the help desk’s working hours, faster problem solving, effective teleservice or faster communication via chatbots.
Predict the future
Thanks to your program having insight to your customers behavior and trends is vital in looking into the future and beyond the horizon. You are more easily able to observe loyalty indicators presenting why some of your products stopped being purchased by a specific customer segment. Such an indicator for example is the customer’s life cycle. Knowing exactly the changes in the frequency of purchases – you can rebuild not only new channels of reaching the right offer, but also change the entire company’s strategy (withdrawing products that are rarely bought by the weakest segment of customers). Thanks to the mechanisms built into the loyalty program, you can effectively stimulate the behavior of customers by directing them to offers they will be interested in, thus increasing repurchase.
E-commerce!
Direct your activities to online sales (if you have not been forced to do so yet). If your program is still not in omnichannel mode, do it as soon as possible. This is imperative! Even after the crisis, e-stores will have more traffic than physical stores before everything returns to normal due to the easing of social distancing. This is where you can direct your main loyalty activities, such as ‘coming back’ coupons or ‘we are open again!’ sales.
Remote customer management
Unfortunately, this is not and will not be the time when an assistant/seller in a store will persuade a customer to increase the basket or buy more expensive products. Not only will it be difficult to return to the normal purchasing process in physical stores, but also the subsequent “social distance” associated with interaction with another human being is very much at the forefront of everyone’s zeitgeist. It will depend on you in what other way you present the product to the client and how you connect with him/her. This will not be a process as easy as a shop window or a billboard in the city, but a well-built base of a loyalty program with a wide portfolio of communication channels (push, mobile application, SMS, e-mail).
This is a good time to clean up
It is now that you have the opportunity to examine the quality of your current program database. During and after a crisis the entire dynamic of the marketplace is completely different. With that in mind, you need to prepare for your new realities and how your next few actions will affect your business model. You will need a high-quality database to communicate with your clients even more efficiently (taking care of marketing consents, removing duplicates, asking for missing data). What’s more, now you can try to expand your database with data from questionnaires addressed to participants – titled as essential feedback, which may result in some further knowledge about your customer that you did not previously know. This gathering of data allows ample opportunities to create better programs and offers for your customer base – further increasing repurchase and emotional attachment.
Remodel your processes
My teachers always told me to look for opportunities in times of predicaments and crises. As we all know after the COVID-19 pandemic, the world as we know it will change for a very long time. Bearing that in mind, you should review all processes in your loyalty program and in your company, as it is imperative to adapt to the new surroundings we are faced with. Some things you can consider are:
– Eliminating the need for physical contact, changing the customer registration process from paper to electronic forms: web, mobile applications.
– Eliminate plastic cards, replace them with virtual cards on mobile phones.
Adapting to the new marketing conditions is pivotal in continuing your success in your company. In times of economic slowdown, it is worth being a loyalty leader and showing that leadership by being ahead of the curve. At a time when many companies are looking for benefits to be capitalized on in a difficult situation, retaining loyal customers should be decisive priority number one. It is worth thinking of loyalty as a tangible growing entity that requires care, attention and effort. This entity is something we use for long term gains and not just for the purpose of a quick profit, therefore it is necessary to invest your time and effort as much as possible so it is able to be resilient, whatever the cost.
