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The Power Of Customer Loyalty

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(Posted on May 27, 2014 at 04:02AM by William Cosgrove)
Which customers are most profitable for you and what marketing tactics work best to attract them and encourage customer loyalty? In a recent survey, Huzzah Media found there’s a big gap between what marketing methods small business owners use and the ones they’d like to use if money were no object.

By far the top way small business owners engage with customers is their websites, cited by more than 80 percent of entrepreneurs. Next is the Yellow Pages, cited by more than 65 percent, followed by social media, used by nearly 55 percent.

Attracting new customers means nothing, of course, if they don’t buy anything, so the study also asked small business owners where most of their sales come from. Repeat customers were by far the biggest source of revenue for more than 43 percent of entrepreneurs, while new customers accounted for about 19 percent of revenues.

Interestingly, “word-of-mouth” was cited by 36.39 percent. In other words, new customers driven by existing customers’ recommendations are the second-biggest source of revenue—more than new customers who come to a business from other sources.

Along the same lines, when asked what marketing method is most successful for them, a whopping 52.22 percent of small business owners cited “friend referrals.” In comparison, just 33.23 percent say advertising is their most effective marketing method.

Clearly, most small business owners have a baseline online presence (that is, a website), and most are also using social media (although there’s definitely room for improvement there). But few are taking their online presence to the next level by using tools such as customer loyalty programs and mobile apps to their fullest extent. These can be great ways to increase word-of-mouth, retain existing customers and drive new ones.

So why aren’t small businesses using them? Primarily, they don’t have the budget (42 percent) or time (27 percent) to deal with expanding their online presence. In addition, about 18 percent admit to confusion about mobile apps, loyalty programs and social media—they’re either “overwhelmed” by the idea of doing more digitally or “don’t know where to start.”

Small business owners in the study are clearly aware that mobility is the hottest trend going right now. If they had the budget and time to make a change, more than 40 percent would like to add a mobile ad campaign while 21 percent would optimize their websites for mobile use. In reality, optimizing your website for mobile users doesn’t have to be costly. Finally, consider adding a loyalty program of some kind. With so much of the average small business’s revenue dependent on existing customers, it only makes sense to reach out to your customer base with rewards. There are more options than ever before for loyalty programs, from simple punch cards to sophisticated (yet affordable) mobile apps that make it easy to track customers’ shopping habits.

By Rieva Lesonsky is CEO of GrowBiz Media

Also Read Social Networking At Its Best
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Customer Loyalty Restarts With Every Experience

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(Posted on May 8, 2014 at 04:49AM by William Cosgrove)
Many articles like the one you are about to read by Dave Evans have been written on this subject and one of the best solutions is in implementing and onsite community on your site. Follow the link at the end of the article to start understanding why….

There is no better way to create measure and maintain customer loyalty than by having an onsite social community. An onsite social community offers benefits that no other medium can match and is the most economical way to maintain and grow a loyal customer base.

Customer Loyalty Restarts With Every Experience

Allegiance to your brand begins again with every experience, from word-of-mouth mentions to small social objects like status updates that are passed around and shared.

Customer loyalty is an essential component in the business equations of most firms. After all, loyalty translates directly into a clear return on investment (ROI)-related benefit: lower churn (lower cost), higher renewal and upsell likelihood (more sales), etc. So beyond the obvious - do things that make customers happy, and don't do things that drive good customers away - what are the actionable steps you can take to systematically build and measure gains in loyalty?

Whether in a digital or "real" context (and note that for an increasingly large demographic segment, digital isreal), beneficial word-of-mouth is one of the most important marketplace signals that indicates the development (or erosion) of loyalty. Word-of-mouth and the small social objects - status updates, posts, videos - that are passed around and shared become part of the conversations that define contemporary brands, products, and services. Each of these can be systematically earned and nurtured, and related back as a precursor to loyalty.

As a starting point in assessing these precursors to loyalty consider Touchpoint Analysis, the discipline of measuring customer satisfaction at each and every point where a customer comes in contact with your product or service. Each of these interactions generates a conversation: as my colleague Xavier Jiménez put it, "Loyalty restarts with every customer experience." Although it may sound a bit like "what have you done for me lately" it's important to recognize that all interactions count, not just the outstanding (positive or negative) ones.

Sure, an outrageously excellent - or terrible - experience is likely to elicit an immediate tweet. But for every one of those there are many more "typical" experiences, experiences which day-in and day-out shape the ordinary conversations that power your brand's reputation. These same experiences - because they are associated with specific product and service interactions - also set the prevailing tone for the conversations that form around products and services. In other words, they drive sales.

So the first step is to measure and track your performance at these points of interaction - customer touchpoints - where talk-worthy experiences happen. Consider plotting the results so that you can see how various touchpoints are contributing to the overall perception of your product or service.

A simple way to do this - shown in the figure below - is to assess and rank performance at various touchpoints using a 0-10 scale. Then, for the same touchpoints assess and rank the talk-worthiness - how likely your customers are to talk about this particular touchpoint. For each touchpoint, plot talk-worthiness on the X-axis and assessed performance on the Y-axis. You'll end up with a map that should be "up and to the right." In other words, given the constraints that you operate against - no one can do everything - from a social optimization perspective the touchpoints with the highest likelihood to generate a conversation should be the touchpoints for which you recorded your best performances.
In reality it's seldom this simple: If your map looks more like blob than an up-and-to-right line, focus on the low-performing, highly talk-worthy points first; consider borrowing resources from the "low-talk/high-performance" efforts and apply them to the touchpoints you really need to improve on.

You can do more with touchpoints analysis, too: organize your touchpoint map chronologically and create a simple journey map. Furthest to the left - the earliest time - are the experiences associated with formation of opinion about a brand, product, or service during consideration. Furthest to the right are the experiences associated with renewal and the advanced stages of customer advocacy. The result is an understanding of the customer journey - the path your prospective customers follow when first entering into consideration of your product or service, through to the point where that same customer, after numerous interactions, has declared him or herself a brand advocate.

To see how touchpoint experiences impact loyalty, and indeed to see how loyalty itself is impacting advocacy, take your journey map and organize it into the post-acquisition stages of support, sales, and ideas corresponding to the customer emotions of satisfaction, loyalty, and advocacy, as shown in the figure below.
Activity in any layer can happen independently of any other. But it's much more powerful when satisfaction (because of happiness with what has been purchased and the way your customer has been supported) leads to loyalty and new sales (because the right products or services are being offered given what has already been purchased) and ultimately to advocacy (because taken together, these are the kinds of experiences given the product or service involved that anyone would wish for anyone else in the same situation).

Why does this matter? Simple: When you place the pinnacle - advocacy - against the management of personal social capital as the basis for talking about a brand, product, or service, it's clear that from the customer's perspective it's all about managing and building his or her personal reputation in a specific domain so that when a recommendation is offered, it is not only followed but contributes further to the accrual of person social capital. From your (business) perspective, this is jet fuel for your brand ascension program - the ascension in customer emotion from satisfaction to loyalty to advocacy. Put all of this together - the reality of contemporary brand-building is that it is built on a negotiated relationship between business and customer - and you are set for success.

Look back at the main points in this article: evaluating performance at specific touchpoints, and focusing your effort on the ones that get talked about, on the experiences that are likely to lead from basic satisfaction to the first of the higher states - loyalty. Next, organizing these touchpoints chronologically to highlight the critical stages in the customer journey where these emotional stages are crossed. Finally, stacking all of this into layers themselves - satisfaction, loyalty, and advocacy so that you can acquire, satisfy, and build brand advocates.

Loyalty begins with each experience: loyalty directly impacts ROI and leads to less-fiscal but nonetheless essential realization of advocacy. Follow the steps above, and at the same time score the power-up bonus by showing your customers how to build their social reputation in the domains which reflect their personal passions. Come back next month for more on how to do just that, and how to take reputation to the next level.

By Dave Evans
ABOUT THE AUTHOR
Dave is the VP of social strategy at Lithium. Based in Austin, Dave is also the author of best-selling "Social Media Marketing: An Hour a Day," as well as "Social Media Marketing.

 See Its Time to Look Within to learn more
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Tech Savvy Millenials Take Over Spending From Boomers

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(Posted on Apr 22, 2014 at 04:33AM by William Cosgrove)
For marketers, Millennials are the most important generation to come along in the last 100 years, according to a recent Adroit Digital study. This group of young adults is the largest generation by number in US history. Millennials number more than 80 million, a population larger than the Baby Boomers, and it outnumbers Gen X almost 3:1. Millennials came of age in the wake of massive advancements in technology, unparalleled communication access, and media exposure that allowed people to spread information faster to a wider, more diverse audience than in any generation before them.

As Baby Boomers move closer to retirement, they will take with them close to $400 billion in annual spending. Retailers are scrambling to secure the loyalty of the Millennial tech-savvy and fast-paced crowd, which spends $600 billion a year.

By 2030, Millennials will outnumber non-Millennials. In addition to growing up as digital natives, Millennials entered college in the face of the largest recession since the Great Depression. Many of those who completed their college education are accompanied by massive student loan debt, and they also entered college knowing a bleak job market faced them. They also see things differently because they are culturally different. Millennials are the most racially and ethnically diverse American generation ever, with over 20% of the population now identifying as Hispanic and 13% as African American.

When asked about how they think about brands compared to how their parents think about them, and how brands can gain their future loyalty, 64% of Millennials are more brand-loyal or as brand-loyal as their parents. 24% consider themselves to be more brand-loyal than their parents. Rest assured, says the report, this generation demonstrates strong brand loyalty.

To gain insight into how Millennials view brands and their thoughts on brand loyalty, 60% of Millennials said that social advertising has the most influence over them in how they perceive a brand and a brand’s value. Traditional media, outside of TV, fell flat. In the realm of influence, radio, billboards (OOH), and magazines finished last with mobile and online, both display and video, comfortably in the center.

Key findings in the report show that:


  • 39% of all respondents think that brands that don’t advertise through mobile channels, smartphones, and tablets are outdated and undesirable.
  • 32% of those surveyed said social advertising lends the most credibility to influencing their brand decisions, compared to 35% who indicated TV as the most influential advertising channel.
  • 26% of Millennial respondents said social is the most likely channel to introduce a new product that they will consider for trial.
  • 77% of the Millennials surveyed said they are evaluating brands on a different set of criteria than their parents. Millennials may be brand-loyal, and many use several of the same products their parents are loyal to, but they’ll be evaluating them against a new yardstick.
  • 55% of young shoppers said that a recommendation from a friend is one of the strongest influencers in getting them to try a new brand. 47% consider brand reputation to be almost as important. Product quality ranks fourth at 35%, while price has the most sway at 62%.
  • 36% of Millennials believe digital advertising is the most effective method of influencing their brand decisions, with traditional advertising as a standalone showing markedly less influence at 19%.
  • 52% of Millennials want brands that are willing to change based on consumer opinion and feedback to maintain future relevance. 44% want to have open dialogue with brands through social channels, and 38% want brands to be more about the consumer and less about the brand.
  • 38% of Millennials will switch brands if a company is found to have bad business practices. Outside of financial factors, a business found to have bad business practices is the number one reason that Millennials will switch brands.
43% of respondents indicated they use many of the same brands as their parents, but not all the same brands. There are a few who think Mother knows best. 20% of respondents said they use and are brand-loyal to the same brands as their parents. A larger percentage of men than women think Mother knows best: 27% of men compared to 12% of women fall into the above category of loyalty.

  • I'm brand loyal and use the same brands as my parents   20%
  • I use many of the same brands my parents use, but not all   43%
  • I use a few of the same brands as my parents   26%
  • I use different brands than my parents   11%
Younger Millennials, 18–25, are closer to Mother’s apron strings, with 72% indicating they use or are loyal to all or many of the brands their parents use, compared to 56% of older Millennials aged 26–33. 

Good news for marketers, says the report. 64% of Millennials surveyed feel the same level of brand loyalty or greater brand loyalty than their Baby Boom or Gen X parents. 24% fall into the category of feeling more brand-loyal than their parents.


  • Millennial men feel they are more brand-loyal than their parents compared to Millennial women, 30% and 17%, respectively.
  • As Millennials age, their feeling of brand loyalty compared to their parents drops considerably, with 23% of 18–25 year-olds and 37% of those aged 26–33 indicating they are less brand-loyal than their parents.
For brands’ continued success, securing the loyalty of the Millennial audience in the next ten years will create a tremendous upside in the future lifetime value of this customer set, opines the report.

39% of Millennials consider a brand to be undesirable and outdated if it lacks a mobile ad presence, a large enough that brands and agencies can’t ignore it, says the report. There is a significant difference in this sentiment between men and women, as well as between younger Millennials compared to their elder counterparts. More men than women feel mobile is modern: 50% of male respondents compared to 27% of female respondents. And, digital natives, those aged 18–25, see mobile as modern compared to older Millennials aged 26–33, who didn’t spend their formative years with mobile phones and the Internet at their fingertips: 50% compared to 32%, respectively

If agencies and brands want to hold sway over the millennial audience, says the report, TV is the champ, but social is quickly coming up on its heels. Those who spent their youth in front of the TV and not the Internet or game console say TV is their primary influencer in perceiving brand value. 73% of 26–33 year-olds, compared to 66% of 18–25 year-olds, consider TV to be their biggest influencer when it comes to brand value.

For brands prospecting new customers, TV and social will pave the way with Millennials: 29% and 26% indicated TV and social, respectively, as the media most likely to introduce them to a new product for trial. Both men and women indicated social and online display as their largest influencers beyond TV. Women are 1.5 times more likely than men to discover a new product for trial through social media exposure or advertising—31% compared to 21% of men.

When asked if Millennials chose brands on a different set of criteria from that used by their parents, the majority, 77%, indicated yes. When were asked which criteria they use to select a new brand for trial, quality was fourth on the list, with 35% of respondents. It was preceded by brand reputation at 47% and recommendation of a friend at 55%. The most important criterion to a Millennial is value and/or price, with 62%.

The big standout difference between men and women in their selection criteria is exposure to a brand through traditional advertising (TV, radio, magazines). Women are almost 2.5 times more likely than men to use traditional advertising in their brand selection criteria, 36% compared to 15%.

The criteria for selecting a new brand for trial, the list ranked by % of respondents is:


  • Value/price   62%
  • Recommended by friend   55
  • Brand reputation   47
  • Quality   35
  • Brand exposure through social media   29
  • Eco-friendly brands   28
  • Recommended by parent   25
  • Entertaining ad campaigns   23
  • Prestige/social perception   20
  • Established brands that instill trust   20
  • Brand exposure through traditional advertising   19
The key to brand loyalty is just that. What causes you and other people your age to switch brands, asks the study.

  • 56% of Millennials would change brands when they experience a change in finances, as  consumers have to evaluate their current brands and their associated costs and value
  • 41% of Millennials would change brands if their current brand increased in price
  • The other top three reasons that Millennials would change brands are a recommendation from a friend, at 38%; if their current brand is found to have bad business practices, at 32%; and if something newer and shinier comes along, at 37%
  • Women on average are more likely than men to change brands on several counts: something newer, 45% compared to 35%; a brand found to have bad business practices, 36% compared to 28%; and an eco-friendly competitor, 35% compared to 25%.
Outside of the constraints of financially driven motives, concludes the report, brands courting Millennials should adhere to a few ideas: keep people talking about your brand, make sure you’re a good corporate citizen, and keep your products and brand fresh and exciting so consumers aren’t tempted away by the latest new product.

Center for Media Research

For more information, please visit AdroitDigital here to access the  complete PDF file.