“We want to step into social media without losing control. Social is difficult because the consumer has as much control as the brand.” - Gavin Hawthorne, Pets at Home
It’s either the best insight into the overlapping worlds of loyalty, social media and marketing. Or it’s an indicator that the end of the world is nigh. Either way, “10 dogs you’ve disappointed with your marketing strategy” brings together into one cute/evil slideshow everything within that three-way Venn diagram. Pictures of dogs are one of the most viral pieces of content online, while guilt about marketing performance in the social space is a new anxiety for practitioners.
Dogs, of course, are the standard by which loyalty is judged. So if your marketing strategy is letting the dog down, it may stop being loyal - and possibly mention that fact in a tweet or blog. That might be fanciful (although there are plenty of dogs with Twitter and Facebook accounts), but it is now a fact of life that customers expect more and comment more than ever. As a result, the nature of loyalty as a psychological trait is shifting and the marketing strategies intended to influence it must follow suit.
Take these findings from a survey carried out last Summer by Ipsos Mori on behalf of The Logic Group: 24 per cent of UK online adults said they expect to check product reviews and details via their mobile while shopping in-store and 42 per cent want to receive offers while they are shopping, not afterwards. Companies they are loyal to can expect to get visits to their Facebook pages from 27 per cent and be followed on Twitter by 16 per cent.
One objective of the new social loyalty marketing should be to translate this following into fandom. Matt Hutchison, general manager, data analytics at loyalty specialists ICLP, says: “Advocacy is arguably the highest state of loyalty - liking a brand enough to positively endorse or refer them. This also supports revenue growth through word of mouth.”
He says that positive peer affirmation of a brand can be measured using tools like Net Promoter Score and that revenue growth clearly results. However, Hutchison adds that: “Simply measuring your NPS does not lead to success, but rather the actions which are taken based on the results and analysis. American Express has been able to track NPS all the way to shareholder value - for a promoter who is positive on American Express, they see a 10 to 15 per cent increase in spending and four to five times increased retention, both of which drive shareholder value.”
As a psychological trait, advocacy requires something to trigger that action of giving a positive mention or score. Most of the time, customers sit in a zone of tolerance and indifference, only reacting when something happens to push them outside of it, either good or bad. That might be exceeding their expectations, as Southwest Airlines has achieved, or deliberately lowering those expectations, which used to be Ryanair’s strategy. “Social media facilitates this conversation, but it is still about the customer experience exceeding expectations that fuels customer referral,” says Hutchison.
What marketers will want to see is a return on investment from changing their approach or even evidence for a change in the business model. Ryanair historically offered its customers an unbundled approach in which profit was derived from ancillary revenues, such as extra payments for using a credit card when booking or for excess baggage. That left the core service of the flight without any experiential wrapper - complaining about poor quality was like saying it rains in Wales.
However, relying on this bald approach has been shown to be dangerous, as Hutchison notes. “To say this is more important ahead of core retained, proactively-grown and cross-or upsold revenue would be a mistake. Loyalty for premium brands like Harrods - and in fact most brands - still means good customers coming back more often and spending more money on core products. Achieving a greater share of individual customers’ wallets is a huge reward,” he says.
Even so, loyalty marketing can not stand still. The programmes which used to act as reward mechanisms for a desired behaviour, such as frequent flyer schemes, have become commoditised. Instead, the data they generate is becoming a potential new source of ancillary revenue. (According to Thomas Power, speaking at the DataIQ Future Summit, US start-up FlightCar looks to make all of its profit from selling customer data, rather than on its core service, for example - see page 18.)
Equally, achieving advocacy is easier when you offer products and services that trigger an emotional response. The inherent excitement and anxiety which comes with flying means airlines have an advantage when it comes to getting customer endorsement (and disadvantage in being more prone to complaints). Other, more commoditised sectors will struggle to drive much interaction in the social space.
Pets at Home sits firmly in the emotive space. Head of CRM Gavin Hawthorne says the business plans to move into social media soon: “We’re in a category where people care passionately about their pets and we have a lot of expertise to offer to help them get the best out of those animals.”
The chain of pet stores already runs a loyalty scheme, called Very Important Pets, which has five million members. An 84-page magazine, MyVIP, is part of the regular communications programme which is in the process of being reviewed for its potential to go digital. “We will feed it out into those channels in some way based on what we know about our customers,” says Hawthorne.
Conversations are already taking place between pet owners on social media, with questions being asked about pet care that others offer advice on. “We want to step into that without losing control. Social is difficult because the consumer has as much control as the brand,” he says, while pointing out that most animal charities are already active in social media. The VIP loyalty card already allows members to make a donation to their preferred cause and pet owners can follow what happens to their money via social posts.
Hawthorne says the goal now is to build an eco-system which links this all together. “You can read a lot of clever social strategies, but the best idea is to have a useful relationship with your customers. People are choosing to spend their time there - if you don’t add value it disappoints them,” he says.
Ultimately, Pets at Home aims to be able to track how its content is viewed, used and shared in the social space. At the moment, its loyalty programme is card-based, tracking spend and associating it with individuals. The goal will be to match that data with the web traffic and social likes and shares, if possible.
“Pets are a very emotive subject - most people with a pet are passionate about them and they love to share photos and stories. We can get involved in that as long as we are helpful. One advantage we do have is that 92 per cent of our employees have pets,” says Hawthorne. Anybody who has read deeply about customer satisfaction will know that employee satisfaction can be a major driver - if staff get involved in those conversations and sharing their own experiences as owners, it will be a virtuous circle. And the brand has a fresh new, highly-emotive story to tell with the introduction of dog rehoming centres into all of its stores, which is sure to generate lots of happy dog photos.
Advocacy is usually viewed by loyalty marketers as something they seek to win from customers in the online world. It undoubtedly is the top rung on the loyalty ladder. But there are also opportunities to drive loyalty through corporate advocacy towards customers, especially if it helps to overcome negative perceptions.
McDonald’s Canada realised that it had a specific problem around food quality and flat scores on the question, “food I feel good about eating.” Having identified three groups of customers - lovers, fence-sitters and haters - it set itself the goal of increasing food quality scores by 14 points by 2014, as chief marketing officer Joel Yashinsky told the Loyalty World Canada conference earlier this year.
To do this the brand needed to adopt a bold approach which moved away from the traditional approach of simply stating how good its food is and involved listening to customers. As Yashinsky told his audience: “Consumers have questions about our food quality. We have answers. Good ones. People will start listening to us only if we start listening to them.”
This meant engaging those fence-sitters and haters in a genuine conversation about positive food quality stories. As he pointed out, “the task was not to say something new, rather to say what we had been saying for years, but boldly!”
Poster sites repeated common questions about McDonald’s, while a socially-powered platform supported an open and honest conversation around questions on ingredient sourcing, product contents and even why burgers look different in restaurants to how they look in ads (answer: restaurants prepare it in 60 seconds, photographers take four hours). Extracts from the dialogue between the brand and its customers were then used in further advertising.
As a result, over 19,000 questions were asked and 1.6 million website visits generated with an average dwell time of four minutes 30 seconds, while video posts achieved 13 million views. The results were a breakthrough shift in key perceptions, with “food I feel good about eating” rising by 10 points, “good quality ingredients” rising 16 points and “good quality food” by nine points. There were significant rises across all of the core measures used by McDonald’s compared to pre-execution figures.
Yashinsky said this proves the importance of listening to customers. “Own the truth - be fully transparent with your customers,” he told the conference. “Transparency is all or nothing - you have to be prepared to answer the hard questions to gain trust.”
Certainly it is becoming harder to avoid using social media in some form and if the brand is talking to its customers, why not build-in loyalty-driving content? A proportion of customers will undoubtedly identify themselves online and want to engage this way - the deeper challenge is how to get the majority involved. Equally, there is a gap between holding a conversation in the social space and measuring or proving that it is creating value for the business.
At the same time, customer behaviour is no longer what it was a decade ago. The conventional model that the lifecycle is determined by the brand and dumbly followed by customers happy to gain a few points or rewards simply does not work any more. From price comparison to reviews to direct tweets at the CEO, customers are making their voice heard and want to see that companies are listening.
That does not mean throwing the loyalty baby (or dog) out with the bathwater. “Does social change loyalty? For me, it makes loyalty marketing even more important,” says Andy Wood, managing director of GI Insight. “Individual customers are far more likely to give their personal details if they are part of a structured loyalty programme, but if it is just a request when entering a competition, they have less appetite. The potential of a loyalty programme is what it has always been - to allow you to match customer data to transactions.”
The extent to which a brand will want to adopt social within its loyalty programme will partly depend on the industry sector. Emotive products have a head start over more rational ones, although even these can find entry points. “A lot of social is being used to see if the customer is actually saying anything, even if that is not part of a programme per se,” says Wood. “The real problem is how to link somebody’s Facebook or Twitter identity to their offline one.”
Getting the critical piece of social data could prove to be the hardest task for social CRM as many consumer see it as private and have no desire to be sold in those channels. As Wood points out: “One of the reasons for the new Data Protection Regulations was as a reaction to the marketing industry taking online targeting too far too quickly. When consumers see ads on Facebook, many don’t want that and wonder how advertisers know who they are.”
If any sense of creepiness enters into the relationship between a brand and its customers, then it can only work against building a positive feeling of loyalty. What consumers want is to be respected, rewarded and treated fairly, otherwise they will make their discontentment heard. For loyalty marketers, one of the hardest things to accept is that negative views will appear online anyway, whether they are in the brand’s estate or on third-party media. Engaging in a genuine conversation can be productive, otherwise marketing becomes like a hapless owner shouting after a dog that is running away.