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What is the new era of loyalty marketing?

Updated: Sep 19, 2022

In a digital and fast paced world, maintaining an authentic 1-to-1 relationship with your customers is crucial, more than ever before. Loyalty marketing is not something new, but greater possibilities in terms of data and marketing tools has led us into what we call; The New Era of Loyalty Marketing. We marketeers can now truly get ahead of the curve and create good customer experience. In this article, we will explain why customer loyalty should be a part of the “Full-Funnel Marketing” concept where the new acquisition and loyalty team are working together to achieve true customer loyalty and give tips on how to build a future-proof Loyalty Marketing strategy.

A new era of Customer Loyalty

Let's start by defining what Customer Loyalty is before we get into the new era of Customer Loyalty. We define Customer Loyalty as “the result of a positive emotional relationship with your brand over time” and also “the perceived value of every interaction between you and your customers”. In order to accomplish this perceived value, we need to evaluate and prioritize every interaction. In other words - mastering the Customer Experience for your customers. But what advantages does customer loyalty actually have and what can we learn from our data? Let’s dive into it.

Customer loyalty - a direct source of revenue

Loyalty is not only from an emotional business perspective , it also has a direct correlation to increasing both your revenue and bottom-line. Usually we say that an existing customer will cost 5 times less than recruiting a new customer, which means that you need to take care of your existing customers and not only focus on prospecting new ones.

Focusing on loyalty can help you in:

  • Strengthening your brand

  • Increasing revenue

  • Decreasing cost

  • Reducing churn

  • Driving customer lifetime value

  • Improving the overall customer experience.

Some of you have probably heard of these business benefits before, and are working actively to achieve them. We often see that it is the loyalty teams that are left alone to achieve these overall business objectives through Customer Loyalty by themselves. How come the marketing teams are not working actively together to achieve them. Maybe it is because we build our marketing organizations and target our customers the same way as we did 10 years ago. The question we could ask ourselves is if it has to be like this in the coming 10 years as well? Hopefully not, we are shifting to a new era, where we see our customers and clients working and becoming more digitally than ever before - and this gives us huge possibilities in terms of personalized marketing

Orchestrating Customer Experience in detail

Today we can create, test and measure loyalty like we’ve never really been able to do before. This also enables us to be more exclusive with who we market to, and how much time and money we want to spend on them. Marketers don’t always need to use discounts or flash sales to convince customers to return. They can improve marketing initiatives to go beyond only focusing on product and offering.

We now have the ability to orchestrate the customer experience in detail, and in that way get a better understanding of the entire customer journey. In order to measure and drive customer loyalty further you can use powerful AI tools.

So what are the biggest changes in your loyalty Marketing toolkit?

  • Access to more data and insights

  • Ability to interact with customers in real-time

  • New digital tools that bridge gaps over different channels

Identifying key Customer interactions

The customer journey starts as soon as we interact with a new potential customer and make them aware of your brand and value proposition. All customer interactions count; however not every customer journey is equally important. In order to drive loyalty, you need to understand where in the journey you can make a difference, and prioritize accordingly. By identifying key customer interactions and touchpoints where you can make a difference, you can expect a higher amount of quality customers and simplify future up-, and cross-selling journeys.

We have now described how marketers work with customer journeys from an inside out point of view, however this isn't enough to create great customer experiences. We also need to look at it from the customer's perspective.

Customers as your source of truth

The customer's perspective is slightly different from the marketers. They don’t have our marketing models and terminology on the top of their minds. And we cannot assume that they want a relationship with us as companies, but they could definitely be open to exploring our business and products. As mentioned before you need to nurture this with creative relevance in every interaction from brand awareness to lead generation. You will know that you’ve succeeded when the customer is moving forward in the customer journey and exploring our brand on their own initiative, and shows buying intent in their interactions. But how do you actually know if they have a buying intent? You can collect data that reveals trails such as browsing specific products on a site. They might have added a product to cart, the interaction with specific content and all our first party sales & customer data reveals what they like and are interested in.

Avoid working in silos

The question is if you are organized in a way to use these findings? Well to start with, we tend to organize ourselves around the tools that we have. E.g you might divide it to paid channels in one team and email and SMS in another. On the road to the right, we illustrate a typical brand & performance team working with paid & social advertising. Their focus is on brand and new acquisition where quantity trumps quality in terms of acquiring new customers and the end result being many new customers. However these new customers tend to cost a lot and rarely re-purchase anything from you. On the road to the left we have a loyalty team working with email, SMS and telemarketing. Their focus is on increasing customer lifetime value by making existing customers buy more or stay longer, but the end result often leads to a so called tired customer base that experience a feeling of being overloaded with communication from you. And this siloed way of working also creates a fragmented perception of our brand and makes it hard to achieve the overall shared loyalty objectives.

Adapting to full funnel strategy

This could be solved if we adopt a more holistic customer strategy. This is also known as the Full funnel strategy and means mastering customer interactions across the entire funnel. The magic in the funnel when it comes to gaining more loyal customers occurs by leveraging Marketing Automation tools to segment your customers. We can actually then send our most valued segments through advertising platforms so that they will find similar “customer twins” to start interacting with them. Therefore your acquisition team can find new customers of really high quality, which makes it easier for your loyalty team to reach higher customer lifetime values and lower churn rates. You can see that it’s an ongoing back and forth loop, where the teams are supporting both themselves and each other - like 2 teams finally becoming 1.

Is it enough to find lots of loyal customers?

As mentioned we need to find our Loyal Customers, and a common assumption is that they are the same as our Satisfied customers. Therefore we need to understand the difference between customer satisfaction and customer loyalty. You can think of customer satisfaction as a hygiene factor, so if your product doesn't meet the expectations or the needs of the customer, great marketing can never completely bridge that fundamental issue.

True and earned customer loyalty requires creating genuine relations from interactions that align with our brand. Make sure to promote activities that convert Satisfied Customers into Loyal Customers. In the new era of Loyalty Marketing we are not only talking about classical reward schemas or loyalty points any more. A good example is “customers help customer forums', where customers can support each other and feel that they are part of the brand. It is therefore important to be aware that all interactions should be relevant to your clients.

The key to being relevant is Data

With relevant data about your customer base you can divide individuals into segments and figure out what a good customer experience might be for them. The customer who buys from you regularly, but doesn’t really connect with your brand will eventually over time churn.

A relevant activity could be to position our brand better toward the specific individuals. What topics can we have a dialogue about? Here you need to look closely into what the actual data does say. Maybe they are convinced by emotional benefits. Are they aware of our Social Responsibility work? Maybe we could highlight this next time we interact with them. Your marketing mechanisms also need to be adapted to what we know about the customer. Targeted campaigns based on customer insights and one-2-one marketing will make a lot of difference. An aim should be to create a stable customer base that we - with the help of new customer insights - can continuously up-sell to, and further on become a loyal customer base.

Sum up the meaning of loyalty marketing era

  • Customer satisfaction alone is not enough – you need to strive towards customer loyalty.

  • The customer dialogues must be targeted and personalized.

  • Targeted dialogues must be based on your ability to understand and react – with powerful AI-tools.

  • Full-Funnel perspective throughout the entire Customer Life Cycle where paid and loyalty teams are working as one.


Sofia Vinsa

Head of Partnerships & Strategy

Connect with me: Linked In


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