Generating Loyalty in the
Age of the Customer
By
Mark Cameron

We are in the age of the customer. As Forrester Vice President Moira Dorsey said in 2012, “the only source of sustainable competitive advantage is customer experience. Delivering experiences that meet or beat customer expectations is worth real money.” Dorsey went on to say, “For five years, we’ve been running a large-scale consumer study called the Customer Experience Index (CXi), which proves that customer experience leads to profits. Over a recent five-year period, a portfolio of customer experience leaders from our CXi grew by 22.5%, compared with a -1.3% decline for the S&P 500 market index and a -46.3% decline for the laggard portfolio.” With these kinds of results it’s obvious why companies are now getting serious about defining, investing in and managing their customers’ experiences.

So why has this new battleground for competitive advantage become so focused around the entire experience of the customer, and not the optimization of individual programs? One reason is that everything else is quickly being commoditized. Areas such as design and manufacturing strength, distribution power, and data utilization, which were once competitive barriers, are now quickly being made available to all. The second, and potentially more powerful reason is that customers now have more power than they have ever had. Access to, and the mainstream acceptance of online communication tools such as social networks, online review sites, and mobile apps has given current and potential customers the power to compare, research, discuss and review every interaction that they have with a brand’s product or service.

In this highly competitive market, fighting to acquire and retain these newly empowered customers is going to require innovative thinking. Many companies are going to need to rethink what customer loyalty means to their business. Simply rewarding transactions is no longer enough for many customers. Consumers have always had choice about where they spend their money; now they also have another choice. They can choose what they say about the experience of making that purchase. Put simply, it is just as important to measure and reward customer advocacy as it is to reward repeat purchases.

Forrester’s research into “the Age of the Customer” suggests the trend started in 2010. The Age of Manufacturing lasted from 1900 to 1960. The age of distribution where global transportation was the key factor for scale lasted from 1960 to 1990. More recently the Age of Information, where supply chains were dominated by those who controlled the flow of data, lasted from 1990 to 2010. Nobody knows just how long the Age of the Customer will actually last but if these past examples are anything to go by, it’s likely to be a trend that may last for 10 years or more.

The experience you design and manage for your customers is now your biggest challenge and your greatest opportunity. Customer advocacy can no longer be a guessing game. It needs to be systemized. It needs to be pulled into loyalty programs and rewarded. Integration of loyalty and advocacy will become the foundation of a winning customer experience.

Mark Cameron is CEO and lead strategist of social media conversion and commercialization agency Working Three. While his agency is based in Melbourne, Australia, he works for some of the world’s most innovative and forward-thinking brands. As a regular speaker and writer on social media and digital strategy, Mark stays focused on customers and outcomes, not the technology, leading to simple strategic conclusions.