Ethan Song, CEO of RareCircles, Previously CEO of Frank And Oak.
In the ever-evolving world of commerce, brands are always looking for ways to attract and retain customers. While brands have traditionally relied on advertising and promotions—mainly discounts—to drive sales and build loyalty, in a post-Covid world, some of these practices are becoming challenged.
What Customers Are Looking For In 2023
Today, I see customers looking for a lot more than just products and services; they are looking for a deeper connection with the brands they interact with. Customers want to feel like they are part of a community and to be valued beyond just the dollars they spend. Recent research shows that 89% of customers say they are more likely to be loyal to a brand that shares their values.
Almost all non-essential spending is expected to decline this year, so in response, I believe that brands must demonstrate empathy by focusing on building relationships. As someone who runs a community and engagement platform for brands, I’ve witnessed how customers are more conscious about their purchasing decisions these days and, as a result, are more likely to value community and experiences over discounts.
In addition to shared values, customers are also looking for a personalized experience. They want to feel like their products and services are tailored to their needs and preferences.
The Cost And Impact Of Discounting
In addition to cutting profit margins, discounts damage the perceived value of products and services. Deals and promotions may seem quick and easy to drive sales, but they can come at a high cost.
Higher discounts often correlate with low customer lifetime value, lower satisfaction scores and higher revenue churn. By providing discounts, customers will learn to wait for sales and businesses can ultimately attract less-than-ideal customers.
The perceived quality of the products and services brands offer may even erode when brands rely too heavily on discounts. Offering the lowest price can lead to a race to the bottom, decreasing overall revenue as companies compete to provide the best deal.
Ways Businesses Can Prioritize Engagement
Thankfully, brands can also build customer loyalty through a holistic approach rather than relying exclusively on discounts and promotions. I urge brands to look to create a sense of community with their customers and build lasting relationships by focusing on deepening their engagement. Here are some ways to do that:
Unique Content
One way to engage customers, especially Gen Z, is by creating unique and valuable content that speaks to their interests and needs. Whether it’s blog posts, social media content or videos, businesses can use content to share their values, educate their customers and build a community around their brand.
Rewards And Gamification
Brands can create incentives through points-based systems, experiences and exclusive discounts (versus blanket discounts) that encourage customers to engage with the brand more often. These rewards can be thought of as a way to incentivize and thank loyal customers. By offering rewards, businesses can create a sense of value and recognition for their customers.
Gamification, on the other hand, involves incorporating game-like elements into the customer experience and can include rewards, like digital collectibles, as a part of the game. I’ve found that rewards and gamification are two effective ways for businesses to build brand engagement, drive growth and build a strong foundation for success.
Community And Connection
Businesses can also foster customer loyalty by creating communities and connections by providing forums and other spaces where customers can interact with the brand. After years of fragmented communications, businesses that cultivate a sense of community build stronger relationships and more loyal customers. Customers feel heard and understood when a brand actively seeks out and responds to customer feedback. Businesses can strengthen customer relationships by identifying and responding to customer needs, increasing trust, loyalty and engagement.
Experiences
In addition to creating communities, businesses can offer access to exclusive customer experiences like products, services or events. Perhaps, you can consider the burgeoning phygital arena where technology and reality coexist. By providing access to something not available to the general public, businesses can create a sense of exclusivity and make customers feel unique and valued.
Build Customer Loyalty Through A Community Program
While discounts and promotions may have worked in the past, I believe that more is needed now to build long-term customer relationships. When you create a community or membership around your brand, you can engage and reward your customers more directly. Look to build loyalty by prioritizing authentic engagement beyond just a transactional relationship. This is what I believe will ultimately drive growth and help you establish a strong foundation for long-term success.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Read the full article here
