Building brand loyalty and how data can guide you

Why are customers loyal to certain brands? The reasons are changing. How can you keep up with these changes and adapt to encourage loyalty from your customers? Let your customers tell you. Analyze your customer data to learn more.

Retail shop owner working on Microsoft 365 Business Premium a mobile phone and a Surface.

Enabling intelligent brands

Deliver the future using innovative technology tailored for the consumer goods industry.

Get started today

Personalized customer experiences

The most successful loyalty programs are agile. The ability to quickly respond to change is key to success not only in business overall but also in loyalty programs specifically. Having customer data that provides insights into why your customers are loyal to your brand will give you a solid foundation for your loyalty program.

Customers have so many contact points with a brand. Maintaining consistency and relatability, across online, offline, in-store, and more is massively complex. The ability to capture and analyze the multitude of customer signals across these channels provides the customer knowledge you need. Over the past few years, the explosion of e-commerce and direct-to-consumer strategies has provided many new ways to reach customers. This evolution has impacted every aspect of retail and consumer goods, from transforming supply chains to merchandising, customer service, and advertising. Adapting your loyalty strategy from being reactive to predictive requires a system that can analyze all that data. Often AI solutions are required to make it predictive. Data is a great enabler for every brand, especially retailers and consumer goods companies.

Have you noticed the brands you shop with are expanding into interesting new services? Brands are experimenting, trying new and diverse ways to both attract and retain customers. Some brands are doubling down on their resale business, providing customers with opportunities to sell products back. Resale channels are increasingly popular for fashion brands. For example, one popular clothing retailer partners with secondhand e-tailer. Another clothing brand resells its gently used products via its own site. Brands are also offering unique payment options. A popular smart-bassinet brand promotes rental services to new parents. Subscription models are growing as a categoryfrom meal prep to clothing and accessories to diapersa subscription set-it-and-forget-it strategy ensures brands stay top of mind. Managing economic uncertainty over the last few years, more brands are offering new payment solutions like buy now, pay later (BNPL). In fact, in the age group of 18 to 24 years, 61 percent of consumers made a BNPL purchase.¹ These programs are designed to meet customers where they are economically and keep conversations ongoing. They also feed an incremental stream of data related to customer needs that can point to new and necessary loyalty solutions and offerings.

As critical as it is to leverage data to power a strategy to increase loyalty, it’s equally important to capture data from customer events and power it to uplevel the overall customer experience. Brands can drive deeper customer engagement by using customer data to improve their overall experience. Campari launched a campaign “Aperol Together Again” focused entirely on bringing people back together as COVID-19 restrictions were lifting. The campaign was entirely orchestrated on the Microsoft platform. Data from in-person events across the globe fed into behavioral and transactional customer data to inform the next best actions online, like intelligent product recommendations and predictions.

Demonstrating and communicating core values is another key ingredient to earning customer loyalty. Shoppers want to know what brands stand for and how they give back. Classic differentiators like price, selection, services, and convenience are not the only factors influencing loyalty. Brands are building connections with customers on an emotional level by entwining mission and purpose with products. According to Capgemini, “86 percent of consumers with high emotional engagement say they always think of the brands they are loyal to when they need something, and 82 percent always buy the brand when they need something.”² One clothing brand sends customers receipts for purchases that cite the exact impact a purchase made towards saving the planet (12 pounds of carbon dioxide and 8,196 gallons of water). One clothing retailer famously donates a pair of socks for every sock pair purchased to homeless shelters. Shoppers want more than standard perks for their devotion and data.

Examples of how brands are adapting

To earn access to data, retailers and consumer goods companies must first gain the trust of their customers. Be explicit and clear about the information you are collecting and how your organization will use it.

Trust is a long game to win, and a short one to lose. It takes years to build long-term loyalty, but one small slip-up can reset things to zero, so it’s critical for retailers and consumer goods companies to get it right. If brands want to use customers’ data to drive their loyalty programs, they must prove they can be trusted to use it wisely and transparently and provide perks such as personalized services, relevant product recommendations, exclusive promotions, or better delivery options in exchange.

Brand loyalty program staples such as mailing lists, coupons, and advertising are being reevaluated. AI, including generative AI, can improve personalized messages to customers. Finding ways to include gamification can attract customers or build unique engagement opportunities in a commerce-enabled environment in the metaverse. Unlocking insights hidden within data gives brands what they need to build connected, personalized experiences for customers, employees, and partners.

Finding ways to combine online and in-store experiences creates consistency for customers. Brands are exploring how to use mobile applications to send personalized promotional offers to customers in real-time while they’re in stores.

The future of loyalty programs

The evolution of loyalty programs continues. Recent headlines have shown brands shifting and changing their programs. The realityand the challengeis that customers expect consistency across every brand channel. They expect better and better experiences with each engagement. Staying current with technology, both customer-facing and behind-the-scenes, is critical. Having a platform to collect, store, and analyze customer data is the first step. However, customer touch points like point-of-sale systems will also need to evolve. Having the ability to engage with customers on their smartphones will continue to be important.

We’ll continue to explore new technologies to create solutions such as headless loyalty services. Headless commerce is the separation of a website’s front-end from its back-end e-commerce functionality. This separation gives more flexibility and increases the number of buyer experiences you can create. There is an appeal to loyalty engines that are always present and consistent, regardless of which channels customers engage with. In addition, brands are exploring how to use the metaverse and Web 3.0.

Capitalize on Microsoft technologies and solutions

Now is the ideal time for your brand to drive lifetime customer loyalty. Both the market and customer expectations are changing. There are new technologies that can help you capitalize on opportunities and enhance customer relationships. However, we would caution against haste. Retail and consumer goods companies should view the race to win customer loyalty as a marathon, not a sprintevery experience matters. A customer’s last best experience sets the standard for the type of experience they expect everywhere, particularly in the digital world where experiences transcend industry boundaries. Take time to understand your customers, plan loyalty strategies carefully, and harness the power of technologies and solutions from Microsoft and key partners to help you develop and deliver unforgettable experiences that lead to lifetime loyalty.