At the recent Checkout Retail Conference in Dublin, Naomi Kasolowsky, Director at Dunhumby, gave an interesting presentation on defining and measuring customer loyalty. Before analysing the realms of information that shopper reward and loyalty cards now offer, Naomi pointed out that loyalty is about the trust and value shoppers place on your brand and that it makes them feel good about their purchase choice.
The key to building shopper loyalty is understanding customer motivations. Also, loyalty is dynamic in that it is based on past, present and future experience of your brand. Loyalty can be measured along four key dimensions:
- Stated preference for your brand vs. competitors
- Actual purchasing behaviour
- Talking about your brand (i.e. on social media)
- Engagement with your marketing activities
Understanding what will trigger customers along these four dimensions is the key to developing loyalty. Naomi also emphasised that retaining loyal customers, and understanding how they may be lost, is key. One loyal customer can be the equivalent in value of twelve uncommitted customers across categories.
To maintain that loyalty, all decisions in relation to the brand must be made in the best interests of a customer. To reflect this strategy, a personalised approach is required, one which translates across all plans and tactical activity to maintain and incrementally build loyalty.
