LOYALTY MYTHS

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Myth 1. Average spend is a good indicator of loyalty

A 2014 McKinsey study found that half of spending by a company’s best customers goes to other retailers. Relying on spend to measure loyalty isn’t enough because your best customers are highly likely to be shopping elsewhere. Clients need a more sophisticated measure.

Myth 2. Demographics data is enough to clarify your target audience

Trouble is many demographic cohorts are exhibiting new and surprising behaviours. Did you know that Twitter’s fastest growing group between 2012 and 2013 was the 55 - 64 age bracket? This is a demographic not traditionally seen as social media-savvy. Traditional approaches to data sources aren’t enough in this new era of marketing. Clients should not make assumptions on consumers based on age.

Myth 3. Historical data gives you the full picture

CRM databases are excellent systems to capture historical data around how valuable particular cohorts of customers are based on what they bought, when they bought, and where they bought. But to anticipate what they’ll do in the future it’s essential to move beyond historical data to capture the ‘why’ behind purchasing. Loyalty frameworks need to factor in attitudinal factors which then shape emotional decision making. Literally how different thoughts a customer has about a brand changes how they feel about it.

Myth 4. When it comes to loyalty it’s all about hard quant metrics

We know from our own studies at Motif that understanding attitudes and emotions are key to decoding loyalty. It’s our understanding that drivers of emotion are far stronger than drivers of convenience, flexibility and ease. And emotional topics are areas best assessed with qual, not quant. If loyalty was a straight equation then quant would probably be enough. Trouble is loyalty is more emotional than that.

Myth 5: Customers are annoyed by SMS promotions

One of the great benefits of a loyalty program is having a direct dialogue to your customers, which includes sending text messages. Fivestar research shows that 94% of loyalty members want to hear from the brands they’ve signed up with. And that 70% of customers say they like receiving texts from brands. 50% say they’d like to hear from businesses via text 1-5 times a week. Texting has become so mainstream that many customers embrace it as less invasive than a cold call and having less environmental impact than direct mail. Add to that, Fivestar’s research shows that the unsubscribe rate for text messages remains less than 1%.