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Loyalty Economics: More Than The Value Customers Bring To Brands


Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Anna Saffer, director of strategic customer intelligence at 84.51°.

Loyalty economics has traditionally been defined as evaluating how much a customer is worth to a brand over time. Whether a marketer looks at store visits, social media likes or proclaimed brand love, the center of the equation has been the retailer. What is this customer giving the brand and what is he or she worth?

In the age of customer choice, consumers are telling us what they want and when and how they want it. Brands need to flip the traditional loyalty economics paradigm on its head. Customers are in control, so they, not brands, should be the center of the value equation.

Instead of focusing on customers’ value to brands, brands need to focus on their value to customers. To build this understanding, brands must know their customers better than ever, understand what experiences are important to customers and quantify how much meeting those experiences and needs are worth.

Knowing Customers Better Than Ever

In a world of seemingly endless amounts of data, this feels like an easy box to check. Sure, a retailer may know how often its customers visit its stores and how much they buy. Overachievers may also understand who is happy with the overall experience being created. But this superficial knowledge of customers, again centered around the retailer, is what leads many of them astray.

To really know customers, retailers need to learn what excites them, motivates them and keeps them up at night. This full-life understanding leads to deeper, richer connections. Only when marketers understand customers at this level can they hope to engage them in a compelling manner.

Taking this rich whole-life lens, coupled with current engagement and purchasing behavior and feelings toward a brand, enables marketers to create a unique “DNA” for each customer. This DNA allows marketers to start to think of customers as people trying to make a meal or get their kids to soccer practice, not as a series of transactions or products.

A game-changing example of hitting on consumers’ needs and creating connections is the Coca-Cola freestyle dispenser, which allows customers to customize their drink. This delivery vehicle allowed Coca-Cola to engage with its customers and play into their love of personalization to create the soft drink experience they want. Along with the app and the ability for customers to create and share custom flavors, this innovation allowed Coca-Cola to create a community and a more direct connection with customers.

Prioritizing Experiences


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Once marketers know their customers, they can start to identify and prioritize the experiences that are most important to them. Across the thousands of decisions customers make each day, marketers need to identify the handful of pain points they can address. By looking across the scope of customer needs and identifying where a brand has the right to play or win, marketers can start to build a sustainable relationship.

The experience that Harley-Davidson, for example, delivers to its customers is much more than simply that of a motorcycle; it’s really about embracing a lifestyle and creating a culture.

With more 1,400 local Harley Owners Group (HOG) chapters, the brand has delivered an experience that creates ties across owners that are treated more like a family. Whether it is helping customers find a local chapter, connecting veterans, providing an online forum or teaching beginners how to ride, the experiences Harley-Davidson has invested in creating go well beyond motorcycles and apparel, toward embracing the HOG culture.

Quantifying The Impact

Lastly, it’s only after we know our customer better and understand what experiences are most important for them that we can start to quantify what we could be worth to our customers. If we solve that one nagging concern, how much would that drive a customer from indifference to like or love? Can we create a scenario where customers are not able to imagine their life being the same without a brand? This value to customers can then become the evaluation criteria for how brands invest and engage with our customers.

By putting customers at the center of the loyalty equation and focusing on what we could be worth to them, we can win in an era of increasingly stiff competition.

Follow 84.51° (@8451group) and AdExchanger @adexchanger) on Twitter.

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