We spoke to the Head of Decision Sciences for Currys to find out his take on the future of loyalty and the critical role of data in the company's...
Earning brand loyalty with the Kano Model
The future of brand loyalty is about emotional connections. The Kano model helps blue chips assess the emotional response of their digital products.
“People will forget what you said, people will forget what you did, but people will never forget how you made them feel.' Maya Angelou
If you’re calling it out as loyalty, it better mean something.
Loyalty schemes used to be about repeat custom. Now they are a focal point for organisations to learn more about their customers to deliver exceptional and memorable experiences.
Loyalty activity should be where you reward your most desired customer behaviour, where your brand competes genuinely, meaningfully, as only your brand can.
Everything else you should just be doing anyway.
It’s a profound shift away from points and discounting—a baseline expectation—towards making an emotional connection with your customers.
The Kano Model can help blue chips recalibrate loyalty efforts around generating an emotional response, forming the sort of bond that earns brand devotion.
The Kano Model
Micro-theory on the Kano Model. Stick with me, I have charts.
The Kano model is a method of analysis which factors in emotional response when assessing capabilities in your product or service. For those unfamiliar, familiarise yourself - this is a great article.
It was developed originally for investigating how brands maintain and improve customer loyalty levels. Simplified, it uses five categories to assess product features.
The basic premise is that a functional product or service can 'get the job done' and have all the requisite parts but still miss the mark if you don't account for emotion or joy.
I'm going to use these three feature types from the Kano model to frame how you should think about loyalty in your product:
- Must-be features
What it says on the tin. These are non-negotiable things you simply have to have. Like the presence of a bed in a hotel room.
- Performance features
These are desired features. How well you tick the box, things your customer will put on a list when comparing you. Like how big or squishy the bed is.
- Attractive features
These are the exciting ones. The feeling ones. Things that set you apart and evoke emotion. Things your customer will tell their friends about and create connection.
This is where loyalty thrives. Like the fact that the shower has a built-in mini-fridge for shower beer… (see the BrewDog hotel).
(There are also indifferent and reverse features - but for simplicity, we won't go into those).
1. Get the basics right [Your 'Must-Be' Features]
Have a customer strategy, not a digital or channel strategy.
Customers don't think in channels - they expect to experience your brand wherever they are.
In our recent Badger Session, our expert panel debated the future of loyalty.
Digitisation of schemes came up in various forms, as a critical thing to get right. This is true - but digitisation is just a symptom of recognising this is where your customers are.
We should still adopt the mindset that it's a customer strategy, not a digital strategy.
Frame it in a customer-first way. Speak to customers. Validate their specific needs. Recognise that you have multiple customer groups with different needs. And that all of those needs need to be specific to your brand.
A great quote from Giafranco Cuzziol, Group Head of CRM and Personalisation, Natura & Co., highlighted this thinking:
“It's about understanding your customer, understanding the behaviours you want to change or recognise within your customer base, then you can start thinking, okay, what is the technology I need to deliver that experience?”
Serve your Loyalty offering where your customers are, consistently
Gen Z is demanding a higher bar of service, which the rest of us would appreciate, just don't yet have the audacity to demand.
Digital native businesses position a joined-up customer experience as a baseline expectation.
The reality in global blue chips is that it is often a case of linking up a dispersed customer ecosystem, physically, digitally, and socially - just to get to the point where you can have your loyalty offering everywhere.
This makes connecting up systems, although hard, essential housekeeping - POS, CRM, supply chain, e-commerce. They all have to talk.
Critical to the 'Must-be' feature set is the fact that their existence is a basic expectation.
The lack of these capabilities will seriously frustrate your customer (a hotel room without a bed?!) but their presence doesn't really get you closer to truly valuable customer loyalty - they just make sure you're in the conversation.
2. Be personalised and relevant. [Your 'Performance' features]
“A huge evolution and changes in the mindset of the customer, they're now becoming savvier to what their data is worth.” Candice Lott, Owner and founder, We Are The Digital Type
Make it personal. Recognise that customers know the value of their data - and give them a meaningful reason to trust you with it.
Customers are in the driving seat when it comes to what they can command in exchange for their first-party data.
Most brands are now collecting data - but there is a big difference between having data and having insight.
Empowered with data and various technologies, the opportunities to individualise your customer experience are huge.
But most businesses have not yet evolved their digital experiences to provide that equitable value exchange to make the experience bespoke and compel customers to willingly identify themselves to your brand.
If you want to move unknown users to loyal customers, reward those who trust you with their data to create an experience customised to them.
Make it relevant, like now.
There is a Gorillaz depot about 1 mile from my house. They hold the record for filling my fridge in 11 minutes. 11 minutes. I checked my order history.
Gen Z wants it NOW. Information, deliveries, event access, bookings – all at their fingertips.
Your performance features are about how well you do your thing. While it’s likely others do this thing too, customer satisfaction is directly correlated with improving performance features.
So if you’re at this point, and you have basic and performance features well covered, I salute you as you are in a great place as these things are hard to do well.
3. Compete emotively, with content rich things [Your 'Attractive' features]
Accept that customers will never be loyal to you for must-haves or performance features alone.
If you want to be exceptional, if you want unwavering support from the “NOW Generation”, you have to build a loyalty offering which lives in this space.
Industry-leading loyalty is not the mere existence of a digital programme and sending me an email on my birthday.
It’s having the data to know that I’m not just buying a toaster and kettle, I’m creating a new home. That I’m carving out a new lifestyle.
If you can start a dialogue with me that focuses on helping me realise that dream, with pointers, tips and ideas, then we’re on track to begin a more two-way symbiotic relationship.
One I’m likely to cherish and look to continue over the long term.
And do it meaningfully - think about how your specific activities are genuine and purposeful to your brand.
'Attractive' features' are defined by the 'feeling you get when experiencing something beyond what you know and expect from similar products'.
Make this the bar for the loyalty programme.
Accept that it is never done, and that what is 'Attractive' today, is basic expectation tomorrow
Freezing your Monzo card for the first time, or instantly changing your pin in the app didn’t just raise the bar, it was almost a new type of banking product. By 2019, you could do it in all major high street banking apps.
Embrace the digital product mantra that things are never done.
Take heart that what you delight with today will simply become the performance tomorrow (and soon, basic expectation).
Embrace this by building accountable product teams and repeatable discovery practices which enable your product to continuously evolve.
Start making emotive connections
Be genuine - think about how your specific activities are meaningful and purposeful to your brand.
Shift your loyalty mindset to the top of the Kano model - and build brand loyalty by harnessing the power of emotion and truly exceptional experiences. After all it is a relationship.
Accept that baseline expectations of customers are high, and only getting higher. But be smart in how you think about what you need to build customer loyalty.
It's not about having all the things, it's about knowing your unique customers, and having just the right things for them.
Is the future of loyalty point-less?
You can catch the panel debate I mentioned earlier–featuring loyalty, data, CRM, e-commerce and product experts from Boots, Currys, Natura & Co., We Are The Digital Type and Whitbreads–in our special digital loyalty insights hub.
Turn your loyalty programme into a digital product
Download our in-depth guide and start your journey to building a loyalty product that your customers will love and that will keep you ahead of your competition:
Download your copy and start reading now to find out:
- How to elevate your loyalty scheme to strategic customer engagement and align your stakeholders around a shared vision
- Unlock and realise the full potential of your loyalty scheme by developing a solid blueprint for execution and evolution
- Create a detailed roadmap and plan complete with quick wins, investment opportunities and Return on investment (ROI) metrics everyone buys into
- Build a modular platform primed for rapid innovation to not only accelerate delivery but own your own data and infrastructure
- Deliver a first-class digital product your customers love focused on what is important to them
- Establish a long-term capability to help you respond more quickly to market pressures and sustain a competitive advantage