Is it loyalty or just habit?

A well-functioning sales support or loyalty program is a considerable challenge, even for the most thriving companies in the market. We discuss how to meet this challenge and where to start with Przemek Kończak, a Loyalty Program Expert at Interactive Systems, who has been actively involved in the sales support programs industry for 18 years.

People often lump B2B sales support programs and B2C loyalty programs under one umbrella called “loyalty programs.” Do they differ, and if so, how?

They have different target audiences, different mechanics, and different premises, although the main goal is the same – increasing sales. B2C programs are targeted at consumers, that is, people who buy a product or service. Most of us are familiar with them because we participate in them, e.g., at Orlen or Żabka.

On the other hand, B2B sales support programs are intended for sales forces – stores, wholesalers, sales representatives. They happen in the background, outside the awareness of the average Joe, although they indirectly affect him. Because they influence whether or not Joe will see a product in a store.

Do both types of programs (B2B and B2C) build loyalty?

B2B is pure business. Someone works in a wholesale shop, store, or sales department and does it to make money. They don’t sell specific products just because they love a particular brand; they want to earn money to live. Therefore, B2B programs are more motivational programs with little loyalty. They motivate more effective selling – they include educational elements and various other mechanisms that make sales better.

In the case of B2C programs, however, we can talk about true loyalty. And that’s what we really care about.

Why?

Because a truly loyal customer buys products or services because they like the brand, believe in it, think it’s cool, and will recommend it. They will forgive a slip-up if it happens…

How can you make the consumer loyal and spend money on our products, even if they are slightly more expensive than the competition?

Many factors influence building brand loyalty, such as how you handle things. Suppose I’m a coffee machine manufacturer that makes excellent coffee. The customer has my machine and is super happy, so they buy all the accessories, coffee, and other gadgets from me. After years, they decide to buy a new one and choose the same brand because they like it and know it makes good coffee. Unfortunately, they get a machine that has a defect.

A disaster?

Not necessarily, because the customer knows and likes the brand, so they’ll think, “It could happen to anyone.” They have a warranty, and I replace the defective part or the entire machine. And the customer feels like it’s a reputable company because it did what was needed. That’s why they like the brand, because it reacts well in different situations. And that’s why they’ll be loyal.

Is there a specific time frame for the company to react in order to build loyalty with the customer?

Loyalty is built through many small actions, continuously, not just by one good reaction. If there is a slip-up, you need to react immediately. If the company introduces a new coffee to the offer, it can send a sample or information about the novelty. If it is at a trade show, it writes in a newsletter to the customer – “We are in your city, come by for great coffee and see our new products.” If the customer calls, you have a nice conversation, and if they ask something on social media, you respond quickly. If there’s mail-order sales, the store is easy to navigate, and the customer always knows the status of their order. All these things contribute to the feeling that the brand cares about them, which, in turn, builds brand loyalty. Regular communication with the customer is essential – it can be done, for example, through SMS. SMS is commonly used by all age groups.

All these exemplary actions take place in the background, beyond the mere points collection mechanism like “the 10th coffee is free.” Of course, the program’s mechanics are essential, but with the other actions mentioned above, we enter a completely different sphere.

Into the sphere of emotions. How long should you consider when thinking about building loyalty?

There’s no way to expect brand loyalty after a month of cooperation. We consider it at least in the perspective of one to two years.

The fact that I shop somewhere regularly does not mean I feel loyalty to the brand. Take the greengrocer as an example. I’ve been shopping there for 15 years, even though the guy who works there sometimes irritates me. But I buy at this greengrocer because I know where the parsley is and where the carrots are, because it has a wide selection and fresh produce, because I often find novelties that aren’t available elsewhere, because it’s close to my home. I don’t feel loyalty to this greengrocer, I’m just used to it. And now the question is: where is the line, and is there even one, between loyalty and habit?

You go to this greengrocer because it’s convenient for you. It’s close, the price is good. And if a greengrocer opened nearby that had better vegetables, the same prices, and the service was nicer – would you stay with your guy or not?

You’ve got a nose! A new greengrocer opened nearby, but I still went to the old greengrocer more often. Unfortunately, the owner hired a new person who miscounted the change a few times. Only then did I stop going to the old greengrocer.

Habit and loyalty go hand in hand. But this story also shows how easy it is to lose a loyal customer and how difficult a process it is not only to build loyalty but also to maintain it.

For me, habit and loyalty are two different things. I shop somewhere out of habit because it’s easy and convenient. I buy dishwasher capsules in a specific store online without even checking if they are cheaper or better elsewhere. Not because I like the store, but because it’s easy to log in, I know how to click the cart to do it quickly. It has nothing to do with brand love. I buy there out of convenience, habit, and laziness – because I don’t want to look for anything else.

Convenience is also an action. It may be by chance or the result of deliberate action. If the brand has consciously organized it so that its customers find it convenient and invested in a convenient purchasing process, it builds a portfolio of loyal customers. Convenience means you don’t look for something else, so in effect, you are loyal to the brand. It may not be such super true loyalty when you say “This is a great brand. They have great prices, very good products, and even if something happens, they exchange” but you will give a recommendation “It’s convenient to shop there.” And that also has value.

You’ve convinced me. Loyalty can have many shades and doesn’t have to mean love for the brand. It can be “unconscious” – resulting from convenience and habit. Loyalty can be built on different levels.

Exactly.

So is there a gradation of loyalty levels? Do we first build it at the level of convenience in the online store service, then add the next element…

I don’t know of such a classification. You could probably create one, but would it make sense? When creating a loyalty or sales support program, an individual case of a particular company is always considered, and based on a very detailed analysis of financial results, marketing, sales, and communication activities, decisions are made about what program to implement, what its goals should be, and the next stages.

We talk about stages, yet many companies have a tendency to use a B2B/B2C program to address all topics at once.

There’s no point in setting 5 goals in a program simultaneously, like: increasing sales, increasing basket value, improving service quality, quick distribution building, introducing new products, and so on. It’s worth focusing on one metric first, checking if we achieve it and how. And then on the next one and the next until we achieve the set goals.

Why?

Because if we set 5 goals at once, it’s unclear what was achieved, what wasn’t, and what caused what. Defining the order in which we achieve subsequent goals increases the program’s effectiveness – you know what happened when and under what influence it worked according to assumptions above or below expectations.

How do we know which goal should be secured first and which later?

We buy vegetables every 2 days, dishwasher capsules every month, and a coffee machine once every few years. The order of goals depends heavily on the type of product, so many different elements influence how we will build loyalty. In one case, customer service level will be more important, in another, the way the brand communicates with the customer, and in the case of, let’s say, coffee machines, the fact that the coffee brewer in the machine has been the same for 10 years, which means that such a machine can be easily repaired. And for many customers, this reparability and ease of buying a spare part is a feature on which loyalty can be built, provided, of course, that it is an important part of the brand’s policy/image.

On what basis is it decided that a feature is particularly important in the context of building loyalty?

We get to the point where we need to get to know the consumer and how they buy. See who our customer is, which means making the so-called persona. We determine who our consumer is, how they behave, what their requirements are, and so on. And based on this, we decide what we will build loyalty on. Of course, it must be consistent with the brand’s assumptions and business goals.

Is there one feature worth focusing on when building loyalty? Something that is always important, regardless of whether we are selling vegetables, financial advice, or coffee machines?

The only common denominator that always affects loyalty is the quality of customer service. So, how you talk to the customer, how quickly you respond to questions or complaints, whether you keep your promises on time, how you react to problems… this is always important. And it has a tremendous impact on brand loyalty.

What should we define first – the goal of the program or who the consumer is and the features on which we will build loyalty?

The goal must be defined before we even think that it should be a loyalty program. Let’s go back to coffee machines – for some reason, our sales are declining, and we want to stop this trend, or: we want to expand because things are going well, or: we want to enter new markets or introduce novelties. The goals are varied, there can be many, but it is important to define which one is the priority. Once we know what we want to achieve, we know the goal, we select the tools. The tool can be a loyalty program, and then we define what we will build loyalty on. But it could also be a lottery with great prizes or a sales support program for distributors.

Who should define the goal – our agency or the company ordering the program?

The goal comes from the company’s needs. There is management, directors, people deciding how the company is to develop, and at this level, goals are born. This is the company’s responsibility. However, when the company knows what it wants to achieve, it should turn to specialists who know how to achieve these goals and talk to them about HOW to achieve them. Not the other way around.

Between the lines, you mentioned a very important thing that is rarely highlighted. Often a loyalty program or sales support program is treated as a goal. Meanwhile – and this should be emphasized – the program is a tool and should be used consciously, like any other tool. Fit the tool to the goal, not the goal to the program.

For us, this is obvious. For example, a company sees that the competition has more sales, even though the product is similar in quality and price. The management’s goal may be that they want to reduce this difference by 5%. Then, at the agency, we analyze the situation and it turns out that the company has weaker distribution compared to the competition. Based on this, we propose an appropriate solution – we create assumptions and mechanics for the program aimed at improving distribution at many levels – from introducing products to a larger number of more important stores to motivating sales forces to sell more effectively.

I come to you as a client. I say: my sales are falling, I want to increase my sales or at least maintain them at the current level. So, I have defined the goal. However, I don’t know whether to focus on a loyalty program for target customers or a sales support program to motivate salespeople.

Do you know why sales are falling, or don’t you? If you don’t know, we check what’s going on. Is the entire market falling, and you are falling with it, and this is a general trend, or has the competition taken actions that have made it more preferred? By analyzing sales data, we look for the reason for the decline.

In what time perspective do you look at the data?

It depends. It’s different when the program is already running – then you continuously monitor the indicators showing the effectiveness of the adopted strategy and modify them depending on the situation. And it’s different when we are only planning to implement the program. In the latter case, we analyze sales over a longer period of time – a year, two years, because such a long period allows us to see trends.

Sales data is strategic data for the company. As a client, I would have concerns about sharing such sensitive information with the agency.

When working with us, the client is guaranteed confidentiality, as we sign a non-disclosure agreement. There are other solutions too – we can ask the client to have their company’s analysis department check a specific thing. Of course, this is a bit more difficult and prolongs the whole process because often new questions arise from one piece of data and conclusions. If you have access to data, you do it yourself and notice certain correlations.

The decision is always up to the client – what to share. However, making decisions based on partial sales results means that something in the program may work differently than we assumed.

We already know what we want to achieve and what our challenges are. So, the next step is to design the mechanisms and benefits for participants.

To do this, we need the so-called persona, which I mentioned earlier. In the case of B2B, we usually know who our recipient is – either a sales representative, a wholesaler owner, or a store owner.

In the case of B2C, this is a bigger challenge.

When we know who the recipient is and we know what we want to achieve – we select the tools, that is, the mechanism and the way of rewarding participation.

When you say mechanism, do you mean a platform like a lottery, a loyalty program, or specific processes on this platform?

Based on what action we want to trigger and what we want to give in return to the user, we create a mechanism supporting sales. For example: we have 20 key distributors we want to reach. We offer a very simple mechanism – if you meet condition X, we will take you on a trip.

Or: we want the buyer to order not just one product from our portfolio, as is currently the case, but three products. We set up a mechanism that will support this goal. Once we have the mechanism developed, we then dress it in specific tools – an app, a lottery program, an Excel template, or anything else. This is simply a tool to implement our mechanics.

When following the principles of program creation that we discussed, is there anything else that is crucial for such a program to succeed?

Yes, implementation. A very important moment, in a sense, a summary of months of work. The way the program is “handed over” to the users largely depends on whether they will engage with it, and thus the success of the entire operation. How to properly implement a loyalty program or sales support program – that’s a topic for another conversation.