Transitioning from Loyalty to Ownership – How Customer Relationships are Evolving with Changing Customer Expectations
When we think of outstanding customer experience, we instantly think of Amazon. The poster child for customer-centricity, Amazon has always been a great example for all companies trying to learn a lesson or two on revamping their customer experience strategy and management. Think AI based product recommendations as you build your shopping cart, Alexa- your voice-based personal assistant, or Amazon Prime- a subscription-based service that has completely redefined the way brands build loyalty- Amazon has been at the forefront of all customer-centric innovation.
Amazon Prime takes loyalty a step further- it makes customers not just loyal users, but proud “product owners”. Amazon Prime, or any other Over The Top (OTT) subscription service for that matter, is built on what is now called the ‘platform model’. This model seeks to provide 360-degree personalized customer experiences to every user by combining the platform’s knowledge on customer behavior with brilliant content and massive inventory. The result- a seamless consumption process powered by an excellent understanding of the users’ needs and interests. Users feel a sense of “connect” with their account on Amazon Prime Video- through content that has been tailored only for them, and this builds a sense of belonging. According to a recent publication by HBR, more effective personalization can lead to 5-8x the ROI on marketing and improve sales by 10% or more.
It is not just the OTTs that are employing and benefiting from the platform model. Other verticals are applying subscription-based consumption strategies to grow their sales too. According to a recent report, 15% online shoppers have opted for some subscription service or the other, mostly via monthly deliveries, and the subscription market has grown by over 100% in the last five years.
Standard Hotels is building its user base by launching a subscription-based platform that will offer members special privileges like access to events, retail partnerships, dining experiences etc. They expect that users will engage better with their digital content, convert more, and visit more often- building loyalty like never before.
For brands to strengthen their subscription models, it is important to understand why customers opt for these subscriptions. Subscriptions can fulfil three needs:
Replenishments: These are daily use objects that customers need periodically. These subscriptions offer convenience
Curation: These are “handpicked” or tailored products or experiences that seek to delight customers
Access: These are aimed at providing special privileges in the form of exclusive offers, deals or other benefits to customers
Customers demand a great experience and are willing to subscribe to a product only if such automated purchases provide them with one or more of the benefits mentioned above. Amazon Prime Video, for example, offers customers curation (by means of a great and personalized movie and TV show selection and recommendations) and access (to faster and secure delivery). To keep the subscriptions going, Amazon will have to make sure that the experience delivered via the platform becomes more personalized over time. Amazon Prime as a model depends completely on repeat purchase to sustain the business. Churn could reduce the economies of scale Amazon operates with currently, leading to questions raised on the business model itself.
How do businesses looking to build and sustain subscription models avoid that? There are two key components to the success of this model-
Data integration and analysis
Large organizations capture customer data at various touch-points, over multiple transactions. This could be purchase history, call center tickets, social media reviews, feedback forms etc. What use is this data if it is stored in silos, and does not provide a 360-degree understanding of your customers’ needs and expectations?
Historical data is great but does not do a very great job of predicting what your customers will want in the coming days, or weeks, or months, leaving organizations unprepared. Behavioral analytics is forward-looking and gets to the root of understanding “how” and “why” customers make decisions. By predicting with accuracy how customers’ needs will evolve, organizations can plan and cater to their demands well in time.
How can OSG help?
OSG Dynamo™ integrates data from all your customer touch-points like social media, CRM, POS, surveys etc. By using insights from behavioral analytics ,OSG Dynamo™ provides you real time guidance on what it is that will keep every customer hooked. Our insights can help you strengthen the personalization for your customer, improving their experience every time they use your product.
We hope this information has been interesting and valuable to you. Please, feel free to share it with colleagues and other people in your network. We welcome discussing this topic further with you and understanding your specific challenges.
OSG Steps to Success
OSG is a “catalyst” that helps our clients be the best at decoding their customers’ decisions. Our clients have seen a minimum 20% improvement in customer engagement by implementing smart insights delivered using our behavioral analytics products.