The Loyalty Iceberg Part 2: Understand Me

Originally written 01/06/2020. Revised 11/14/2023

Part 2: Understand Me

In our second installment of our thought leadership series, Loyalty Iceberg: Creating Human-Centered Experiences, Clutch turns to the second element of customer expectations: Understanding. It’s one thing to be recognized, but it’s quite another to be understood.  It’s this deeper understanding that becomes a foundational piece of customer retention. Until a company understands its customers, it can’t truly have an idea of what they want, what they need, or what makes them tick… and making a sale to a stranger with unknown motivations is nothing more than a lucky accident that is hard to duplicate. Luckily, today’s recent innovations in machine learning and AI allow for this understanding to occur at a deeper level, and in a more efficient manner. For those who seek to understand their customers, and reap the benefits of this understanding, we offer the following tips:

1. Start with a persona… The first step toward understanding your customers as individuals is to know them more broadly, crafting a profile of the common traits shared by the majority of them, and compiling it all into a list of attributes to create a customer persona. As a recent Forbes article noted, a handful of personas can help you solidify a wide range of customer types.  Once your customer persona, or personas, are created you have the basis for determining the individual members of the persona’s motivations, goals and needs.
   
   Sometimes these persona trends aren’t easy to spot. Even if two individuals have the same demographic behaviors, that doesn’t necessarily mean they have the same product affinities, or even the same purchasing behaviors. Look to Machine Learning to identify the missing puzzle piece in predicting future behaviors of individuals. The ability to analyze thousands of data points, and predict the sometimes unseen commonality between customers can’t go understated. Identifying those hidden data points then allow you to create personas that are thoughtful, consistent and accurate.
   
   
2. … and end with a person.  While a persona is a great first step to gaining insight into your customers, the journey towards customer knowledge should not end there. While an individual shopper may have many of the characteristics of the persona of say, “NASCAR dad” or “soccer mom,” this is a generalization, not an identity. According to Forbes they attempt to “put one face on something that actually represented a large group of unique individuals.” So, while the persona is useful in segmenting your customer base to get a handle on individuals, it needs to be followed up with further analysis of habits, behavior and preferences to give flesh and bones to the marketing equivalent of a stick figure. The advancement of large language models allow for AI to fill in these knowledge gaps of an individual and turn this cold categorization into effective human touchpoints. 
3. Integrate shopping data into your personas. We all reveal ourselves in our shopping habits. A recent research study found that it’s possible to predict people’s personalities from their spending, including insights into the “big 5” personality traits (openness to experience, conscientiousness, extraversion, agreeableness and neuroticism) simply by seeing what people purchased.  You already know what your customers are buying – why not use that information to gain a little insight into who is the person behind the purchase? This information feedback creates a loop (assuming the technical infrastructure is present to see it. ML can automatically analyze purchases, tie them to your marketing efforts, validate whether your messages, programs, or offers were effective in the purchase and then advise future decisions to improve future business metrics. These insights are invaluable and can be automated so future improvement is almost inevitable.
4. Offer free Wi-Fi. With nearly 60 percent of shoppers regularly looking up product information and prices on mobile phones while in stores, providing the comparison shoppers a free venue to do so provides valuable insight into your customers… and your competition. Even better, if you use a social media outlet such as Facebook for a login to your branded Wi-Fi service, your company is able to learn valuable customer data, including a verified identity, public profile information and email address – all the better to plug into a CRM for analysis. AI can take those social insights, combined with demographic data and purchasing behaviors, to position your marketing efforts to be more effective at bringing customers back into your store. 
5. Just ask. Sam Walton, the richest man in America, has been known to stand outside the parking lot of the local Walmart and ask customers what they thought of the store. And customers would let him know what they thought. While not many store managers (or billionaire CEOs) have the time or inclination to lurk around outside their stores to see how things are going, that doesn’t mean you can’t create a quick online survey or send out a text with a couple of questions to discover a little more about the people who pay to keep the lights on. Loyalty programs are a great way to create a closer connection with your customer base. Giving back to your customers can build deep relationships between customer and brand that will often cause your customers to be more open with you in their feedback, because they feel they are personally responsible for the future success or failure of your brand. 

Wrapping up, it’s important to note that anyone can make a sale, at least once. But if you want to make a second sale, and a third, and a fourth, you need to know the person you’re selling to: what makes them smile, what makes them angry, what makes them tick, to eventually lead them to the most important question: what can make them care. We know that’s easier said than done, which is why it’s time to rely on innovation to make these insights a reality. Utilizing Artificial Intelligence in customer loyalty software is the future of turning customer data points into practical insights that will optimize your customers’ behavior, and lead to more repeat revenue for your business.