Using digital media to increase customer loyalty and value

 Using digital media to increase customer loyalty and value

The ultimate commercial aim of relationship marketing approaches such as e-CRM and 

social CRM is to increase engagement with customers leading to increased customer 

loyalty and so direct sales from these customers and indirect sales through advocacy. 

Understanding the different levers that contribute to increased engagement and loyalty 

amongst different customer groups should be the starting point in developing a customer 

retention and growth strategy.

In Chapter 2 we introduced the Loyalty Loop described by Court et al. (2009) in the 

classic McKinsey Quarterly white paper The Consumer Decision Journey. The paper 

discusses ‘Loyalty loop’, which shows opportunities for brands to reinforce the loyalty of 

their own customers or encourage switching after purchase during what it calls the ‘Enjoy, 

Advocate, Bond’ stage. They found that more than 60 per cent of consumers of facial skin 

care products conduct online research about the products after purchase – a touchpoint 

not normally considered in the classic marketing funnel. When consumers are pleased 

with a purchase, they’ll advocate for it by word-of-mouth including social media, but if 

a consumer is disappointed by the brand, they may criticise it through social media. Part 

of social CRM activities are to encourage online advocacy and limited negative word-of-

mouth. Presi et al. (2014) explored how customers who share their negative service expe-

rience by creating UGC in social media can be segmented according to their motivation. 

They found that altruistic, vengeance and economic motivations are strong drivers for 

user-generated content (UGC) creation after a negative service experience.

In their book, Groundswell (Li and Bernoff, 2011), advising on social CRM, Forrester 

analysts Charlene Li and Josh Bernoff advise using these five activities to manage CRM:

1 Listening – developing an analytics capability enabling you to monitor social 

conversations.

2 Talking – improving customer engagement capabilities (in both social and other chan-

nels) that enable you to respond to what you’ve heard.

3 Energising – harnessing the power of your ‘best’ customer to be active advocates for 

your brand.

4 Support – using social channels to help customers help themselves and others via 

collaborative and cooperative behaviours across social media.

5 Embrace – involve customers in the development and tailoring of your products.

Determining what customers value

Consider the different forms of online interaction a consumer can have with a brand that 

can determine their perceptions of satisfaction and influence loyalty. Figure 6.11 shows 

how, when using digital media for online retention marketing, our ultimate goal on the 

right of the diagram is customer loyalty. The factors on the left help to deliver two main 

drivers of loyalty. First, emotional loyalty, where loyalty to a brand is demonstrated by 

favourable perceptions, opinions and recommendations including social Tips and tricks for improving your social media platform sharing. The success factors at the top of the diagram are all related to the customer experience of 

online services (as we will explore further at the start.

 These tend to influ-

ence emotional loyalty the most, and these are important in determining customer satis-

faction. Of course, a favourable customer experience is very important to achieving repeat 

purchases – how many online sites have you continued to use after a poor level of service 

was delivered?

The second type of loyalty is behavioural loyalty, where loyalty relates to repeat sales, 

repeated site visits, social interactions and response to marketing campaigns. To achieve 

these repeat sales, companies work hard to deliver relevant marketing communications 

either through email and social media communications, web-based personalisation or 

through traditional media.

Measuring the voice of the customer in digital media

Online voice of customer (VoC) measures are useful for reviewing customer sentiment 

online. The satisfaction ratings we have reviewed are one example of VoC measures. 

Another approach, which we will explore is intent-satisfaction 

surveys where the reasons for why a customer is visiting a site are compared against their 

success in completing tasks and their satisfaction ratings. This is a key technique for 

improving online customer journeys.

Net Promoter Score (NPS) is a key VoC measure of advocacy originally popularised by 

Reichheld (2006) in his book: ‘the Ultimate Question’ is essentially ‘would you recommend 

us?’ The aim is to work out techniques to maximise this NPS. Reichheld explains the main 

process for NPS as follows:

1 Systematically categorise customers into promoters, passives or detractors. If you 

prefer, you can call them loyal advocates, fair-weather friends and adversaries.

2 Creating closed-loop processes so that the right employees will directly investigate the 

root causes that drive customers into these categories.

3 Making the creation of more promoters and fewer detractors a top priority so 

employees up and down the organisation take actions based on their findings from 

these root-cause investigations.

In practice, consumers are asked ‘Would you recommend [Brand/Company X] to a friend 

or colleague?’, answered on a scale between 0 (not at all likely) and 10 (extremely likely). 

The actual score is calculated by subtracting the percentage of detractors (those giving 0–6 

answers) from promoters (9–10s). The middle section, between 7 and 8, are the so-called 

passives.

The concept of NPS is based on economic analysis of the customer base of a company. 

For Dell, Reichheld estimates that the average consumer is worth $210 (five-year, Net 

Present Value), whereas a detractor costs the company $57 and a promoter generates $328. 

Online, Dell uses software from Opinion Labs (www.opinionlabs.com) to both gather feed-

back and follow up on negative experiences and so reduce the number of detractors with 

major negative sentiment.

So, the idea is that after surveying as many customers as possible (to make it representa-

tive) and show you are listening, you then work backwards to determine which aspects 

of the experience of interacting with a brand creates ‘promoters’ or ‘detractors’. Some 

specific approaches that can be used to help manage NPS in the online environment are:

1 Facilitating online advocacy:

● Page template contains ‘Forward/recommend to a friend’ options.

● Email templates contain ‘Forward to a friend option’.

● Facilitate customer feedback through a structured programme of emailing custom-

ers for their opinions and NPS evaluations and by making it easy for site owners to 

comment.

● Showcase positive experiences – for example, e-retail sites often contain options for 

rating and commenting on products.

● Involve customers more in shaping your web services and core product offerings, 

such as the approach used by Dell in their IdeaStorm site (www.ideastorm.com).

2 Managing online detractors:

● Use online reputation management tools for notification of negative (and positive) 

comments.

● Develop a process and identify resources for rapidly responding to negative com-

ments using a natural and open approach.