Taken together, today’s customer is less value-taking, accepting whatever is offered them as a passive recipient of company offers and marketing messages and more value-extracting, that is, defining value on their own terms according to their personal needs and then taking more control of how this value is created, delivered and ultimately used. This value-extracting behaviour of customers means that traditional relationship marketing approaches are becoming less effective.
Companies can no longer rely on crafting marketing messages and better targeting in the hope that they will persuade a sufficient number and type of customers to buy their products and services. Nor can they rely on merely satisfying their customers.
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Exceptional value is created when your customer perceives your product or service to be worth more to them than the price they pay. There are two components in any strategy for creating exceptional value with the customer. The first is how well you are communicating the unique value of your products and services as compared to alternative solutions in the marketplace. This is important and can result in a high level of rational satisfaction.
However, it takes emotional satisfaction to develop a loyal customer by building deeper, trust-based relationships — that is the key to emotionally satisfied customers.
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Customers are looking for relationships that deliver unique value. Yes, they want your products to solve their problems, but they also seek a level of satisfaction that goes beyond the intrinsic value of what they paid for.
To gain customer loyalty, one needs to look at the elements of the relationship they have with you
1) Reward. It’s the tangible thank-you that you give people for changing their behavior and allowing you to gain insights into what they value as consumers—what is known as a "hard benefit."
2) Recognition. In addition to issuing a hard loyalty currency, you recognize your valued customers with gestures that say, "We appreciate you for giving us your business". Today’s "best customers" have a higher expectation of recognition, and they have come to expect to be acknowledged for their continued loyalty. How many of us know this as Gold and Platinum members of loyalty programs across airlines, hotels, retailers?
3) But the differentiating factor is Relevance. As traditional channels of communication are increasingly splintered and sidelined by emerging mediums like social media and mobile, connecting with the consumer has become an equally fragmented task. Consumers are inundated with information and competing messages. In this environment where people feel overwhelmed with information, you create engagement by connecting in ways that show people you understand who they are and what they care about. By being, in a word, relevant.
If you think the price of your products or services is the reason you are attracting or not attracting and maintaining customers, think again. Today’s customers are savvy and want much more from their relationship with your company than just a low price.
Developing emotionally satisfied customers who enjoy extrinsic value (beyond functional benefits) might seem like tall ideal, but there are many real-world examples. Think about a Rolex watch and what you feel when you see one being worn. Any watch can give you the time. But most of them aren’t a Rolex.
What captivates us about a Rolex isn’t its function; it’s the prestige. A Rolex suggests more than your need to tell the time. It says that you appreciate the finer things. It shows that you have earned enough success to purchase one. It means you are knowledgeable about the value of the craftsmanship and the precision it represents.
That is the connection you should seek to develop with your customers. You want to deliver more value than the functional benefits inherent in your product or service. You want your customers to experience the extrinsic value you bring to the relationship by being emotionally engaged throughout the buying process.
The bottom line on measuring loyalty: (1) How many of your customers intend to purchase again, and (2) how many of your customers would endorse your company to others
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While retailers are all reeling under importance of focusing on the customer experience, a gap remains between what retailers are delivering and what shoppers expect. Retailers can close this gap by systematically integrating knowledge of what their best customers want and expect from their brand into every core operational decision. This is where the bar will be set for retailers – to turn shoppers into advocates and create a sustainable, differentiated advantage.
Unprecedented diversity, fragmentation of consumer values and information transparency have polarised the retail marketplace and created an imperative for all retailers to differentiate. In addition, the challenges of an increasingly price-driven world have raised the bar for retailers to create a shopping experience that builds loyalty to brands, channels and services and is not based solely on price.
In making your customers your biggest advocate, trust is the key to customer loyalty. Earning it, achieving it and keeping it will take on a new significance in an era of the connected customer and the social web.
Word of mouth is the most effective form of marketing in the world. Now, through the social web, customers are increasingly connected – and vocal – about the brands in their lives. How can you ensure that your brand is part of these conversations…in a positive way?
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