Think Tank: Five Ways to Differentiate the Customer Experience and Drive Loyalty

Susan Grossman

Updated Tue, August 28, 2018 at 4:30 AM UTC

Today, even consumers who define themselves as brand loyalists can be lured away by a simple coupon. So how can a company drive loyalty when product availability and technology make it easier than ever to enter the marketplace — and differentiation is even harder to achieve?

These days, organizations that once dominated their market niche have found themselves needing to rethink their offerings to maintain market share. Global analyst firm Gartner finds that more than two-thirds of marketers with customer experience responsibilities say their businesses compete mostly on the basis of CX, illustrating the importance of building differentiation at both the brand and experience level.

We can look to five major levers that leading brands are using effectively to set themselves apart and grow in competitive markets. It’s worth reminding ourselves that each cutting-edge idea or new program is an investment. In order to get a return on that investment, organizations must properly test-and-learn, refining and optimizing processes through their successes and failures. When combining owned data and third-party information, organizations can glean a better understanding of different customer segments and the innovations that will drive business value.

1. Technology and Merchandising

Building meaningful interactions with technology and creating experiential merchandising are powerful ways to stand out from the competition. For example, fashion retailer Zara has embraced this approach by integrating new technology including augmented reality, hologram displays and in-store robotics.

Today, there are many innovations to explore, but organizations must balance the desire to educate and entertain with the ability to drive revenue. This balance is achievable through a rigorous, analytics-based approach to evaluate the impact of new ideas.

2. Customer Service

Today, customer service is a top priority across the board. The degree of success lies in how well the company infrastructure is set up to support customer service initiatives, and how well they are executed.

An important catalyst for growth here will be the generation of data-driven insights and putting those insights into action to shape programs to measure success. One innovative example comes from Delta Airlines. The company is using heart rate monitors to track volunteer customers’ heart rates at the most stressful points of the airport experience in order to proactively identify ways to improve the overall customer journey.

3. Automation and Convenience

In addition to investing in people and convenient in-store experiences, there is great potential for more “under-the-hood” technologies to simplify the shopping experience. These include chatbot-powered interactions across a variety of platforms, automated fulfillment, and platform linking and integration – all of which reduce friction on the customer journey.

The risk here is that if such initiatives are not calibrated correctly, customer loyalty may actually be compromised. Market research and testing are crucial to identify the customer segments that place a premium on a more automated experience, versus those who prefer a personal, human touch.

4. Localization

One trend among pan-national businesses is using local influencers and artists for their branding, experience or presentation in local markets.

For some businesses, the local angle is a core part of their strategy. We see retailers adjust space allocation by store or group of stores to cater to local market preferences. This can be seen at Trader Joe’s; the grocer truly commits to incorporating local themes and decor into the designs of different stores.

Working internationally, this degree of personalization can be challenging as organizations look to take advantage of economies of scale, but it can be done. For example, the hotel group Marriott offers regional wine and beer tastings to provide a local connection, one scalable tactic that still provides localized flavor for guests.

5. Personalization

Consumers and businesses have been successfully sold the promise of personalization through analytics and other technology. It’s now time for brands to deliver on the expectation of these tailored, bespoke services and interactions, or risk being left behind.

This may be as simple as a delivering a bouquet of flowers on arrival for a birthday stay at a hotel. It can also mean more complex service segments, such as new airfare classes like Basic Economy and Premium Economy, where passengers can choose what extra amenities they pay for. Balancing data privacy and personalization is key, and working to maintain overall brand trust will be crucial to success.

Driving Long-Term Loyalty

Successful efforts at differentiation through customer experience will be a balance between innovation and understanding customers’ true needs and preferences. It is the creation of flavors and features to fit a taste or occasion that will make a brand stand out.

A brand cannot be all things to all people — but by making data-driven decisions, being willing to learn and adapt, and working toward long-term loyalty over short-term superficial wins, organizations will find a route to winning programs.

Susan Grossman is executive vice president of retail and commerce at Mastercard.

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Think Tank: Five Ways to Differentiate the Customer Experience and Drive Loyalty

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