The link between personalization and customer loyalty

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Personalization is a big theme now in CX, and a lot of brands are investing heavily in tech capabilities to predict what customers want based on their past behavior and tailor their experience. You might have even heard leaders in this space say that personalization is key to customer loyalty - but how that link works is not very clear.  

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Amplify wanted to unpack insights from our recent work with retailers on the connection between personalization and loyalty, and break down how you can make sure your personalization program gets this right.

Loyalty building block: reciprocity

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One of the major building blocks of loyalty is the customer’s relationship with the brand - how well do I know the brand, and how well does it know me - as in, does my experience with the brand meet my unique needs? This is really important because the stronger the relationship, the more lasting that emotional loyalty will be, even if the transactional relationship changes. 

So to do this, to build a real relationship through customer experience, it's about reciprocity. So it's getting across that idea that the more the customer puts in to the interaction - the more data I share or the more preferences I share, or the more I interact with the system - I get more out of this experience and I can see the experience change every time that I do that. 

Personalization features can be a way to show reciprocity. Personalization features can both gather customer input and deliver a unique response to it. BUT - it has to be a two-way conversation.  Often, personalization can be a one-way conversation in which the brand gives you what they predict you want, but there's not a clear exchange of value.

Ask yourself, is your personalization program a two way conversation, or a one way conversation?

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How to build reciprocity through CX:

Here’s three ways to build reciprocity into your personalization experience: 

1. Ask them what they want. Don’t assume you know it.
2. When you make a recommendation, ask for feedback
3. Show where their information goes and how the experience changes with their feedback

In our research, when we show that the brand was really trying to understand what customers wanted and their motivations, and then deliver on that and clearly show where that information went, it was very powerful. All customers went up into the right on that emotional loyalty spectrum. And it creates a virtuous cycle - customers want to put more information into the system when they see that value.

What was really interesting in our work is that when customers understood what was happening, what they described was a growing relationship with the brand. They talked about the relationship in very personal and intimate terms, such as feeling taken care of, feeling like the brand has my best interests at heart, feeling like a part of the family. 

That's the kind of brand love that most retailers would kill for - that is emotional loyalty. And it's important to note that the emotional effect of this cycle was much more powerful and drove more loyalty than any kind of transactional reward, like points or money. 

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