In a typical customer journey, so much of the marketing effort centres on customer retention and loyalty – after all, it’s cheaper and easier to keep a customer than to win a new one, right?
New research from McKinsey suggests the fight for future market may no longer be as much about keeping customers happy as it is about getting them in the door in the first place.
In today’s digital world, the concept of loyalty is becoming more and more elusive as customers are enticed into relationships with new brands via clever online marketing, the influence of friends and family, a desire to get ‘the best deal’ and the sheer volume of choice.
The extent to which your business is impacted by this shift away from customer loyalty depends somewhat on the industry in which you operate.
According to McKinsey’s latest quarterly update, purchases in mobile, auto insurance and investments are much more likely to be loyalty-driven than shopping-driven – but if you’re working in financial services, you’re in for some trouble.
Financial services happens to be one of the industries most prone to shopping around, with loyalty driving only 10% of purchases.
Reshaping the customer journey
Financial technology firms are making waves in banking, advice and superannuation with their innovation and agility – in particular their ability to move down the cost curve through automation.
In a typical customer journey, the first two stages are awareness (do your prospects know who you are?) and consideration (are they considering become a customer of your brand?).
In order to buy from you they have to be aware of you, but a consumer can be aware of you and not buy your product, which is why building awareness is just one part of the puzzle. Getting in your customers’ consideration set is the thing that ultimately allows you to move to the acquisition and customer service stages – and if you’re lucky, right through to satisfaction and loyalty.
Many fintechs have managed to circumvent the typical path to purchase – in some cases very quickly – jumping from awareness to acquisition by building customer-centric businesses that are not hamstrung by bureaucratic process.
And they’re using digital intimacy – the very thing that got the customers in the door in the first place – to cost-effectively keep their customers on the hook and remain in their consideration set.
Three things you can do right now
Now don’t get me wrong; no one is advocating that we cease focusing on customer satisfaction. Keeping customers happy will forever be a critical foundation of any successful business.
But as we search for growth – in customers, revenue or profit – this shift in focus from loyalty to shopping demands a reconsideration of the importance of loyalty programs in the fight for future market.
Businesses that are able to grow their brand in a highly competitive digital world will flex their marketing program to place greater energy on customer consideration by:
- Incorporating behavioural segmentation to make sure they’re targeting the right people, through the right channels, at the right time
- Using business intelligence to analyse their own data and shift their focus away from lower-productivity spending
- Leveraging social media and other verticals to drive search engine optimisation to not only raise awareness but also give their prospects a reason to engage
With consumers bombarded by choice everywhere they look, the key to growth is hooking your target market earlier – and using digital engagement tools to stay in their consideration set.