Making customer loyalty likely.

A how-to guide: Improving engagement and valuing a customer's investment in your company.

By Luke Francis26th July 2018

“The probability of selling to an existing customer is 60-70% compared to 5-20% of selling to a new prospect.” These statistics from Frederick Reichheld is often cited when explaining the value of loyalty.

A SABRE report “On Loyalty in Travel” showed that in 2015 American Airlines made 50% of revenue from 13% of passengers demonstrating the value of loyal customers. McKinsey Quarterly (Feb 17), on the other hand, reports only 13% of customers are “Loyalists”.

WordSteam, the Boston based online advertising agency, have written a post entitled “5 Ways to Earn & Build Customer Loyalty” which categories ways of improving customer loyalty.

  • Customer Loyalty Tip #1. Know Your Customer and Let Them Know You
  • Customer Loyalty Tip #2. Reward Loyalty with a Customer Loyalty Program
  • Customer Loyalty Tip #3. Make Customer Loyalty Easier
  • Customer Loyalty Tip #4. Be the Best at What You Do
  • Customer Loyalty Tip #5. Encourage Customer Feedback

In this post, we will go into more depth about how to achieve loyalty and which tools to use.

Knowing your customer.

Chris Ulph, senior marketing and e-commerce consultant at Sabre, emphasises that a holistic view is essential for an integrated loyalty program in his blog post:

"A richer, more connected traveler experience and end-to-end customer engagement is fast becoming the bedrock of how loyalty is earned in the travel industry. Customer data needs to be the force behind this evolution."

Our post “Using a CRM to power omnichannel” looks at how the foundation of any quality customer communication is a single customer view. Understanding how a customer, whether new or existing, interacts with a brand is essential to understanding how loyalty impacts a business.

All companies are different, but by having a breadth and depth of quality data, a company can understand:

  • Who buys from them and why. 
  • Who are returning buyers and who are new buyers.
  • Changing purchasing patterns. 

A Personalised Approach.

The Inspiretec "Powering Personalisation" guide explains in more detail why companies use personalisation, and the benefits associated (as well as how to implement a personalisation system).

We all want to be treated as individuals. A name and not a number. As organisations look to introduce “self-service” models, partially driven by the need to reduce costs and partially because millennials prefer to engage digitally, it inadvertently results in removing the all-important human touch from the experience.

However, the old adage that "people buy from people" cannot be ignored. When machines are involved in the selling and buying process, that unfortunately often happens.

Clearly, technology is here to stay, and I suspect that not many organisations will return to the days of entirely manual, human-driven experiences. We also suspect that very few organisations are not seriously looking at how technology can be taught to better personalise such contact, rather than simply adopting a faceless, anonymous, one-for-everyone broadcast approach.

Making the customer feel special should be at the centre of the CRM strategy. Eventually, this will pay off in increased loyalty. People who have the experience of being valued by their travel provider will more likely come back for more.

Reviews.

Supplemental to approaching customers, it's important that they have ways of talking to you in return. Reviews are an important way to fulfil two functions for a brand:

  • Gather customer feedback on product, service and experience
  • Give other potential customers confidence that they are buying from a trustworthy brand

When talking about loyalty, the first point is essential. Understanding a customer’s true experience and sentiment is a window on how a company is performing, and how likely a client is to purchase from you in the future.

In travel, we need to clearly split the review between product and service. For example - a brand may sell a great quality hotel but offer a poor service, or offer a great service but the hotel was not up to standard. Depending on a customer’s temperament either of these could result in a 1 star, 3 star or 5 star review, and not accurately reflect the customers experience.

Net Promoter Score.

NPS (Net Promotor Score) can almost be treated as an extension to reviews and helps put metrics against customer satisfaction. Though not a strict gauge of customer loyalty, it can be used to try to measure positive brand interaction by customers over time.

NPS is calculated based on responses to a question: How likely is it that you would recommend our company/product/service to a friend or colleague?

The scoring for this answer is most often based on a 0 to 10 scale:

  • 9 or 10 – Promoters – likely to buy more, remain customers for linger, make positive referral and general exhibit "loyal" behaviour
  • 7 or 8 – Passives – Between a Detractor and Promotor 
  • 0 to 6 – Detractors – Less likely to exhibit the behaviours of a Promoter

NPS is calculated by subtracting the percentage of customers who are Detractors from the percentage of customers who are Promoters.

Loyalty Programs.

We have two different loyalty based programmes, a loyalty accrual system and a loyalty redemption system.

Loyalty Accrual (Holistic).

In Holistic, we have a customer loyalty module. This module awards points to a client in Holistic when a booking is made. As for most clients that use Holistic, the bookings will come from reservation systems linked to Holistic where the points balance is calculated.

In this module, you can:

  • Decide how many points will be awarded per £1. 
  • Have the ability to add dates so different amount of points can be awarded at different times. 

Then on a client record, you can:

  • See how many points clients have accumulated.
  • See the history of bookings and how many points were earned per booking.
  • Have the ability deduct points defining how many points, authoriser, date, reason.  
  • See the history of points including bookings ref, how many points awarded, date and points deducted including how many, authoriser, date.

Loyalty Redemption (Harmony).

Harmony, our retail selling system, can be used to manage loyalty point redemption against travel bookings. Usually linked to a pre-existing loyalty programme, Harmony can use points balance (treated as £ $ € currency) and other forms of payment, to allow customers to purchase multiple travel types. Most of our clients in the loyalty space are in banking, redeeming points earned though credit cards.

The loyalty formula.

“It costs 5 times more to attract a new customer than to keep an existing one.”

Pivotal to the loyalty strategy is to keep current customers happy. Making it easy and compelling for them to come back to you will pay off over time and result in a higher profitability of outbound communications.

With the following rules in mind you're setting the base for good engagement between you and them:

  • Know your customer: Get a smart CRM offering the single-customer-view.
  • Personalise communication: Make travellers feel unique.
  • Enable reviews: Let them talk back to you (and listen).
  • Value loyalty: Allow customers to redeem points for future travel.
Discover other CRM insights on how to choose a CRM system and make an omnichannel approach happen on the Inspiretec blog.

Related insights