This week we celebrate two landmark anniversaries. The blockbuster hit Back to the Future was released just 33 years ago on July 3, 1985. Amazon was founded almost exactly 9 years later, on July 5, 1994, as a small business selling books, starting out of Bezos's garage. Looking back on these humble beginnings that grew into cultural phenomenons got me thinking about what it means to build true loyalty. Were customers loyal to brands in the early days of the internet? Wait a minute Doc, how was customer loyalty created before that? Is it even possible to create true loyalty in today’s digitally-filtered world?
Let’s start with today. Amazon is a retail behemoth that seems to expand into a new market or line of business every time you turn around. Retailers dream of emulating its loyal base of more than 100 million Amazon Prime subscribers around the world.
Legacy retailers themselves, meanwhile, seem to be struggling as large malls go under and brick-and-mortar stores shutter. To many, it appears that these businesses need to look into the future and focus on stealing the dance moves of Amazon in order to survive. This is clear from the hundreds of articles out there on the lessons we can learn from Amazon.
In reality, however, the opposite is true. It’s not about finding a looking glass into the future, but rather about what we can learn from the past. How did loyalty work in the days before the digital disruption? What is the true meaning of loyalty?
Hop in the DeLorean to the heyday of brick-and-mortar retail. A customer would frequent their local corner store for the basics. Maybe they buy a pack of gum every Friday or a newspaper every Sunday. Either way, they visited regularly enough to get to know the proprietor by face, and eventually by name. They may start with idle chatter about the weather or weekend plans, but eventually that relationship turns into a clearer understanding of one another’s personalities, likes and dislikes. In time, the store owner can tell the customer about a new flavor of gum worth trying or a story they might like in the day’s paper. Maybe they even reach a point where the owner feels comfortable tossing in a candy bar as a gift, or giving the customer a second pack of gum for free since the newspaper never arrived last week.
“Old” retail knew more about customers than almost any business can claim to know today. They knew exactly what an individual customer did, liked and disliked. They were able to appreciate who individual customers were and what motivated them. Knowing all of your customer’s touchpoints and being able to recall nearly every interaction had its benefits.
Fast forward and it’s easy to see how this became impossible to scale as business went digital and global. There were simply too many customers to get to know them all, and too many touchpoints across disparate technology systems to keep track of interactions. Sentiment was nearly impossible to intuit unless it was very vocal - and, in the age of the internet, typically skewed negative. “Loyalty” was denigrated to a basic math equation - Money + Visits = Points + Rewards.
Today, that basic equation is giving way to beautifully complex algorithms. Big data, machine learning and a soup of other technology buzzwords are yielding the deepest understanding of individual consumers that we’ve had since the digital era began. The real reason Amazon is winning is that it’s perfected that old-style loyalty at scale using these new technologies.
Back to the future - what does this all mean for retailers working to create customer loyalty? First and foremost, don’t get caught up trying to create splashy discount days like Amazon Prime Day or subscription clubs like Prime Wardrobe. Those are wonderfully effective sales tactics, but they don’t solve the bigger loyalty picture. Building true loyalty only happens when you’re able to create moments underpinned by deep familiarity with your individual customers. And fortunately we’re reaching a technology tipping point where brands are once again able to accomplish that goal at scale.
If my calculations are correct, when this old school, tech-driven engagement gets up and running, you're gonna see a lot more happy - and loyal - customers.