The future of customer loyalty is digital

Certainly, at a time when competitors are multiplying and offers are increasingly diversified, companies must work harder and harder to turn casual buyers into regular customers.

After all, with just a few taps of their smartphone or laptop keyboard, customers can buy a tablet of a different brand or change their energy and gas suppliers.

In this scenario, how digital transformation can boost customer loyalty?

To answer this question, it is necessary to explain well what Customer Loyalty really stand for.

Customer loyalty can be defined as a measure of customer’s likeliness to do repeat business with a firm or brand. It is the result of customer satisfaction, positive customer experienceand the overall valueof the products or services a customer receives from a company.

Customer loyalty is indeed a very important boost for economic performance of a company, guaranteeing regular customers who will provide repeated purchases and who will recommend a company’s product to their family and friends. All of these consequences are obviously connected to an increase of profits.

Customer loyalty is the result of a bigger framework of brand’s actions and interventions called customer retention, which refers to all activities and actions that companies and organizations take to retain their customers and to establish a lasting relationship between the company and its customers.

For example, think about every new Apple product: Apple is a brand with one of the highest levels of customer loyalty and this has launched them to the dominant position they enjoy today.

This happened for various reasons such as their continuous innovation in consumer tech, the guaranteed high quality of the entire product range and how they satisfy their consumers ambitions.

It should be noted that in some departments the main objective is to increase the company revenue, which commonly implies acquiring new clients, without considering the importance of existing customers. But, according to Marketing Metrics, the success rate of selling to a new client is very low – about 5-20% – much lower than the success rate of 60-70% when it comes to selling to regular customers. It is well known that regular customers provide as much revenue as new client acquisitions and therefore it is important to maintain excellent customer relationships. 

Nowadays, customers are “always-connected” and in order to keep up with the new generation of tech clients, companies must embrace technology to create an unforgettable customer experience.

Digital transformation is indeed imposing organizations to change their business models and adapt to the new digital market. That’s why digital transformationcan be defined as the process of using digital technologies to implement new – or change existing – business processes, culture and customer experiences to meet changing business and market needs.

Digital transformation it’s about transforming the way a business interfaces with its clients and how they provide their clients with an immersive experience whenever and wherever they need it.

Companies that are integrating digital transformation are creating high involved customers, which are more inclined to test a new product or service from their favorite brand and more inclined to recommend their preferred brand to their family, friends and colleagues.

It is really curious to explore how two giant well-established companies are applying the digital transformation tools to their strategies to increase customer loyalty: Disney and KFC China.

  • Disney

Disney’s technology strategy was based on four objectives: changing the customer experience, driving operational efficiency, personalization using connected products, and enhanced interactivity across channels.

Using analytics to personalize customer experience: Disney uses data mining to comprehend past behavior and preferences of individual visitors. Forecasting models are used to understand the type of holiday packages preferred by visitors and to help the company provide targeted hotel offers to its clients. Using this method, Disney’s call center workers were able to offer families low-priced hotels available on its list, which has led to improved repeat business. Disney implements relevant real-time analytics in its daily operations in order to improve customer experience at its theme parks. Through analytics it is possible for example to predict waiting times at popular rides.  

Using a Data-Driven Attitude to Operational Efficiency:Disney has a very large cast and therefore it becomes difficult to program thousands of shifts. The solution was the implementation of a rule-based, on-demand technology that allowed Disney to improve labor resources by 20%. Disney uses also analytics to simplify back-house operations, for example to handle its garment inventory and laundry.

Customizing through Connected Products:their strategy includes MyMagic+ initiative which is a mixture of a website, a mobile application and a wristband that permit guests to customize their experience at a Disney park. The project has required the training of many employees on new technology as well as the introduction of radio frequency readers and the installation of scanners at its parks, hotels and stores. With MyMagic+ Disney was able to attract 3000 additional daily guests during the Christmas holiday season.

Adopting Digital Transformation to Create New Interactive Consumer Experiences: the intention of ensuring a memorable customer experience concerns not only theme parks, the digital transformation also involved different parts of the Disney family as demonstrated by the high-tech makeover of the traditional bricks-and-mortar stores. The store renewals have contributed boost profit margins by 20%.

  • KFC China

KFC China, the major restaurant chain in the biggest country in the world, is a company that has entirely reinvented itself in recent years. Such extraordinary transformation was driven by the need to connect with China’s growing millennial audience and to meet their needs.
Below are a few examples of KFC China projects that show their digital transformation. 

Loyalty App Benefits: with the KFC China app the company not only allows to make online orders and payments, but they also send exclusive offers, coupons, rewards and packages to loyal customers.

Gamification: in collaboration with the country’s award-winning gaming giant Onmyoji, KFC China has produced a personalized game that, through augmented reality and location-based services, invites users to meet in store to play together.

eGifts: to expand their digital distribution channels, the company has also opened a digital store on a Chinese eCommerce marketplace, an innovative way to sell gift cards and coupons and to drive store visits.

Store Innovations: technological innovation has also involved their stores, now equipped with charging stations, a facial recognition payment system and DUMI, the first AI service robot in the world, capable of recognizing local dialects, profiles and even moods.

The above-mentioned examples are just a couple of the many ways that show how digital transformation is able to fortify company’s Brand Loyalty and Customer Loyalty, as well as to improve Customer Acquisition. 
It is a necessary condition in order to stay competitive on the market.