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Loyalty and the Power of Habit

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Loyalty and the Power of Habit
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Customer loyalty is fleeting, maybe unattainable as some define it.  Though we float the “big idea” in our our strategy-focused PowerPoint slides, the best in the business will admit to the real goal. It’s an achievable one that translates to creating sustainable behavior change across a specified customer group for our clients. Done well, it’s also highly profitable which should put any fears to rest over the first statement in this post. You can define loyalty any way you want, but I’d rather compare income statements at the end of the day as a measure of just how clever we are as marketers.

To apply what we have learned in loyalty marketing over the past decade or so and to stretch that knowledge to impact the digital consumer that increasingly is THE focus of marketers, we’ve got to get way out of our comfort zone. My thesis is that loyalty marketers have been so focused on the transaction that they have failed to notice what motivates consumers on a human level. After all, our customers are human beings, not just members of “decile 9″ or “cell group 142″.

I’ve been reading “The Power of Habit: Why We Do What We Do in Life and Business” (not an affiliate link) written by Charles Duhigg and like what I am learning. The book is centered on understanding how habits are formed, both good and bad ones, and what it takes to change habits. Using examples as diverse as Procter and Gamble’s marketing of Febreze, Tony Dungy’s leadership of the Tampa Bay Bucs and Indianapolis Colts and the reasons behind the magic of Alcoholics Anonymous, the book makes some very important points in clear language. It also provides rationale for those who are skeptical of the effectiveness of game mechanics to change behavior. Read this book and you’ll start to get an idea why “gamification” of loyalty programs is not a fad, but here to stay.

In short, new habits are created by putting together a cycle of a cue, a routine, and a reward. At the center of the cycle is a craving that the user seeks to fulfill through participation in these behaviors. Researchers found that marketing the benefits of Febreze (making smells disappear) did little to capture the attention of consumers. When they discovered the craving of those responsible for household cleaning, that there should be a reward for the hard work, they positioned the product at one that delivers a great smelling house. Suddenly consumers saw Febreze as a magical solution and within on year from launch, the product had generated more than $230 Millioin in sales.

Cravings are what drive habits and Mr. Duhigg shares a “Golden Rule of habit change” – use the same cues to get the same reward, but shift the routine. He goes further to say that “almost any behavior can be transformed if the cue and reward stay the same…and to change an old habit, you must address an old craving.

In loyalty marketing terms, we can possibly instigate a craving with a well assembled value proposition, or we can satisfy an established craving and shift share between brands by leaving the cue and reward the same, but changing the routine. Maybe this takes place through improved customer experience, unique offers, or exclusive content and rewards. That has to be decided on a case by case basis.

I know that I have an established craving, to understand the drivers of consumer purchase behavior. The reward is a satisfied client who is willing to hire us again and recommend us to others. The critical path to success in an age of Social Loyalty is to create a new routine and understanding human behavior is at the core of the solution.

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