Customer Loyalty Loop
Loyal customers, they don't just come back, they don't simply recommend you, they insist that their friends do business with you. - Chip Bell
What is Customer Loyalty Loop
The customer loyalty loop is a customer service concept that illustrates how consumers decide what they buy, and then continue to make purchases from a given company again in the future.
The model recognizes that, in real life, once people make a purchase they tell others what they think about the product, but constantly reevaluate if they should stick to that brand. It attempts to serve as a replacement and more realistic model for the funnel concept of marketing. If the future business professionals of Leo's class understand how the loop models consumer behavior, they can eliminate the consumer's consideration and evaluation of other brands, and keep the consumer as a customer as well as a promoter of the brand.
What is a loyalty loop trigger?
When we look at the loyalty loop model, its prime feature is the loyalty loop trigger. This is the stimulus for a customer to purchase a product or service. It’s the process of creating the need to buy through marketing, and loyalty loop marketing motivates the customer to skip evaluation and consideration and jump from loyalty loop trigger to purchase. It shortens the buying cycle while increasing true brand loyalty. Here’s the breakdown:
Trigger - The stimulus to buy a product and the process of creating a need in the customer’s mind through marketing communications or offers.
Initial Consideration Set - This is when a customer researches a product via online or offline.
Active Evaluation - When customers compare different products in terms of features, price, reviews, return policy, etc.
Moment of Purchase - The customer buys a product or service.
Post-Purchase - After a customer buys, they may share their experience via review or WOM.
Benefits of Loyalty Loop
It is super helpful for the management of the ongoing customer experience. Simply put, this loop allows you to garner data and picture an accurate stance of the customer’s position within the model at a given period of time. You can know whether the customer is considering, evaluating, or buying without any room for confusion.
It passes on a consistent chain of messages to the customer over the duration of your relationship. You can see this as a glimpse of how the customer views you. Further, this validates and verifies their decision by sticking around with your brand.
Over and above, this approach generates awareness, but it also created a powerfully visual and talk-worthy story shared online. When you have this in place, it won’t take much to transform buyers into long-term brand advocates – which is your purpose.
How Does the Loyalty Loop Model Work?
To understand the Loyalty Loop, first we have to take a look at how a Marketing Funnel works. It is a concept created to reflect the journey that customers take from wanting something to making a purchase.
A Marketing Funnel has six stages: awareness, interest, consideration, intent, evaluation, and purchase.
This path usually follows the process of choosing a brand, from discovering it to deciding it is the best option for them.
In the Loyalty Loop, however, the customers already know and have already chosen you.
Using the same framework would be redundant. That is why this concept cuts the first stages and focuses not on a straight path to conversion, but a loop that reinforces this relationship and encourages recurrent purchases.
Consider The first stage of the loyalty loop is the ‘consider’ stage. As the name suggests, the customer is now all set to consider a certain product or service. All she is doing now is considering the options that fit her requirements. For this, they may start with knowing the major competing brands for her fit.
Evaluate The second stage of the loyalty loop is the ‘Evaluate’ stage. As the name suggests, this is the phase where the customer tends to evaluate on what are the best products and services that fit their requirements. Once they have picked a few brands to buy from, they will then rely on the recommendations from their friends and family to decide which one to go with. Additionally, they might read online reviews and strike off the ones that have more cons than pros.
Buy The third stage of the loyalty loop is the ‘Buy’ stage. Now, this is almost self-explanatory. Once the customer has evaluated and decided to make a purchase. The next step here is to buy a particular product or service.
Enjoy Now, the fourth stage of the loyalty loop is the ‘Enjoy’ stage. This simply means, if the customer has had a positive experience with a brand, they will want to enjoy the process and if possible, repurchase from the same brand. This can happen in a number of situations. Say, the customer service was really proactive, or, the website was pretty seamless to navigate and user-friendly, or, the quality of the product was in line with the price paid for.
Advocate From the fourth stage where the customer enjoys your product and services, there is a fair chance that they might want to turn into a brand advocate. In simple words, there is a possibility that they would go about their relatives and friends and recommend your product. It can also happen that they would not take a backseat from posting a sweet testimony on the social channel as well. Most of these brand advocates are the repeating customers and they are also the ones who stick around with your brand for a longer time.
Bond This calls for the sixth as well as the last stage in the loyalty loop. As the name suggests, this is where the customer wishes to bond with you, finally. If everything goes on to be well and good, the customer is more likely to bond and trust the brand with no room for second thoughts. A well-defined bond is something that will stay with you for the rest of your life.
Building your Own Loyalty Loop
If you already have a Marketing Funnel up and running, it is easier to adapt it to create a Loyalty Loop that will go along with it.
The principles are the same but there as some aspects of it that you should be aware of when making this transition.
Look at the steps you have to take to make it work:
Find out more about your customer’s expectations There is no way to build loyalty if you don’t know what your customer wants from that relationship. It is, after all, a two-way street. So take time to do some research.
What you will be looking for is what your buyer persona expects from purchase, not only the product/service in itself but also what it means to them.
Knowing the key motivators for purchase will tell you what you need to make the next one.
Design the loop After you better understand what drives your customer’s purchasing decision, you can go ahead and design the loop. A good tip here is to use Content Marketing to create some interactions specifically tailored to this group.
We mean content that acknowledges that the persona is already a buyer and builds up on that.
You can give more information about the use of that product, suggest ways of using it, or other practices and items that go well with it, etc.
It is a way of keeping your brand in the front of their minds and also leading them again towards a new conversion.
Invest in post-purchase experience The most critical moment for brand loyalty is what is called the honeymoon phase the period directly after the purchase, when all is new and exciting.
Giving your buyers an unforgettable post-purchase experience is the quickest way to put them back into the loop.
It starts with the anticipation of getting it delivered or having digital access to what they bought.
Then there is the unboxing, be it physical or virtual. At last, the experience of using your solution for the first time.
Ask customers to speak up A lot of times buyers like the product, love the brand, but never share it. It’s not only a wasted opportunity for a new advocate but this lack of interaction can make the loyalty fade with time.
So don’t forget about your customers after they were converted. Participate in their lives via social media and automated email marketing.
Ask them to give opinions, to share their experiences. Every little prod is a chance to pull them back into your loop.
Create incentives for loyalty You don’t have to rely just on talks to build a relationship with your customers. In that case, some gifts now and then can do a lot of good for you.
You can build loyalty programs and special discounts, tied to automatic triggers when that converted lead takes some specific actions and moves forward in the loop.
Make them feel special like they are in an exclusive group getting extra attention that the rest of the leads aren’t.
Measure customer’s satisfaction Indicators like NPS are vital for adjusting and improving your Loyalty Loop with time. To find out how satisfied customers are and how they feel about your product/service is to understand what points to address to bring them even closer to a second, or third purchase.
Other KPIs are also important to that growth strategy. Mainly the three we mentioned before: CAC, Average Ticket, and LTV.
These numbers will show evolution, if your plan is really working and if loyalty is becoming more prevalent among your customers.
And that is the goal you will want to achieve.
Using the Loyalty Loop is taking shortcuts to new purchases while building stronger bonds, creating new brand advocates, and making the whole acquisition process cheaper.
Starbuck: customer journey examples
We’ll use the Starbucks example to illustrate how offers can guide the customer journey to reinforce the loyalty loop.
Let’s say our customer is a fan of black coffee. The ML system will analyze his motivations and interactions with the brand to date, and deliver the following series of offers:
Increase frequency: The customer is given a repeat action offer that we call a product dash, e.g. buy a black coffee 5 times to earn 500 points.
The product, number of visits and incentive are all personalized to the customer, helping to motivate them to visit more often.
Over time, the product dash reinforces the behavior more effectively than a one-size-fits-all offer like a punch card.
Introduce new product (cross-sell): Once the customer is visiting more frequently, their offer may shift to introducing a higher margin item such as a breakfast sandwich.
The new product may be introduced as part of a quest, a series of different actions that earn an incentive at the end.
Quest actions for this customer might include purchasing two black coffees one week followed by a black coffee + sandwich the next week.
In the above scenario, 1:1 relevancy delivers a clear message that recognizes the customer’s habits and preferences, while gamification incentivizes the steps they need to take and tracks their progress to create natural recursion. This combination of motivators works for any industry that can utilize a loyalty program, from grocery and retail to hospitality and financial services.
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