I always knew that customer loyalty was the result of a combination of good practices, but never have I heard the “zone of consistency” as one of them – until now.
This was the phrase used by Maxie Schmidt-Subramanian, a researcher at Forrester, to describe the practice of keeping prices reasonably in line with rival brands – not undercutting them. Do this, she advises, and enhancements to the customer experience become “more critical to create and sustain customer loyalty than trying to lower prices.”
Her theory is based on new research by Forrester, which reveals that price and value contribute only a smidge to improving consumer loyalty, while improvements to experience count for the lion’s share. For instance, the study finds that among retailers, the customer experience accounts for 47 percent of loyalty. Factor in price and value, and it rises just 47.2 percent, representing a marginal gain at best.
The experience factor, in addition to the “zone of consistency,” raises the question of how loyalty programs fit into the equation. Those marketers who think it begins and ends as an extension of their price proposition are missing the boat, and this study confirms it.
So how do we deliver an experience that really resonates with our best customers? The answer is through the data acquired from the loyalty program, but that is only the beginning.
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The data should be shared and analyzed with leaders in all departments across the organization, even finance, so it can be parlayed into insights that form one-of-a-kind experiences in each department’s respective realm. The data can help to organize message sequencing, to enhance products and to guide pricing in ways that are increasingly relevant to key consumers. There is a reason Amazon is the largest online retailer on the planet, and why people will shop at Nordstrom even when it rarely has sales. These are companies that deliver personalized experiences that build brand love.
Using loyalty program data to distinguish yourself from rivals, both from a standpoint of experience as well as to ensure you are strategically pricing against customers versus by category, are ways to fully use your loyalty asset.
To me, that is one zone to consistently aim for.