The academic and business press may have criticized customer rewards for being cheap promotional tools and short-term fads, but they have been around forever, and more brands are embracing rewards programs rather than shying away from them. Many organizations are investing millions of dollars in creating and executing innovative rewards programs, ranging from frequent flyer offers by airlines to reduced fees by telecommunications companies to increase and retain their customer base.

Customer loyalty programs remain a popular marketing strategy brands use to increase customer retention and promote customer loyalty. These programs typically offer rewards, discounts, or other incentives to customers who make repeat purchases or engage in other loyal behaviors. 

But do they really work? 

In today’s business landscape, it is becoming increasingly common for senior leaders to request that their marketing teams evaluate the potential impact of loyalty marketing initiatives. 

The fundamental question is whether such programs foster additional customer loyalty beyond what would typically result from the inherent value of the product or service offered. Additionally, brands must scrutinize their loyalty programs to determine whether they truly encourage customers to spend more or merely incentivize them to make repeat purchases. And in a highly competitive marketplace, are loyalty marketing programs a viable solution for every organization seeking to improve customer loyalty?

Engineering the economics of a loyalty program’s structure is key. 

It is a well-known fact in business and marketing that retaining customers is more valuable than acquiring new ones, which is why rewarding frequent buyers makes sense. 

So how can a brand go wrong with a simple loyalty program?

While you can get people to buy again from you by offering them rewards, how do you ensure you also profit when you get a repeat purchase? 

This is where many loyalty programs fall short. A lot goes into creating an effective rewards program. First, it has to be good enough to change the customer’s behavior in your favor, and yet, it should not be so generous that it shrinks margins. You must also understand your consumers, as the same reward often encourages varying purchase behaviors. 

Our research at Kadence has uncovered some patterns in successful and effective loyalty programs. These findings may be used as a toolkit to create a successful rewards program for any consumer-facing brand. 

Let’s explore with real-world examples how to ensure the effectiveness of a customer loyalty program, but first, let’s dive into the origins of loyalty programs and how they work. 

History and Origins of Loyalty Programs

The origins of loyalty programs can be traced back to the late 18th century when American retailers began offering customers copper tokens that could be redeemed for goods. However, it was in the 1980s that loyalty programs began to gain widespread popularity. American Airlines AAdvantage program is often credited as the first modern loyalty program, launched in 1981. Since then, loyalty programs have become an increasingly popular marketing tool brands use in various industries, from retail and hospitality to finance and healthcare.

What goals do loyalty programs strive to achieve?

While loyalty programs do not create an unwavering devotion or faithfulness to a brand in the true sense of the word, they can help accomplish many business goals. It is critical to start with a goal. What are we trying to achieve with the loyalty program? Is the goal to keep customers from moving to other brands, or is it to prompt customers to make additional purchases they would not have typically made, or is it to get a larger share of the wallet?

Once you know your goal, it’s easier to zero in on the most suitable loyalty program structure and engineer an economically viable rewards program. 

For brands with a higher lifetime value, like a mobile service or internet provider, it is crucial to keep the customers from falling off into the hands of the competitor. The goal for such companies is often to create a loyalty program that makes the exit difficult for customers because of the incentives or point system. 

How do loyalty programs work?

Customer loyalty programs are designed to encourage repeat business from customers by offering them incentives and rewards for their loyalty. The programs provide customers with points, discounts, freebies, or other rewards based on their level of engagement with a business or brand.

Customers typically sign up for the loyalty program by providing their contact information, such as name, email, and phone number. They then earn points or rewards by making purchases referring friends, or engaging with the brand in other ways.

As customers accumulate points or reach certain milestones, they can redeem them for rewards such as free products, discounts on future purchases, or exclusive perks.

Loyalty programs also provide businesses with valuable customer data, which can be used to personalize marketing messages, improve customer experiences, and tailor rewards to individual preferences.

Any customer loyalty program aims to foster long-term customer relationships, increasing retention and loyalty and ultimately driving revenue growth.

Many brands have recently flipped the script on tiered loyalty programs. 

When T-Mobile, a wireless voice, messaging, and data services provider, sought a fresh approach to express gratitude for its customers’ support and rapid growth, it went against the tide. Seeing that traditional loyalty programs were a decent way to generate additional sales but a lousy way to thank customers, T-Mobile wanted to prove the brand’s loyalty to customers instead of the other way around. 

The result was T-Mobile Tuesdays, a customer appreciation program that offered simple, easy access to free stuff and great deals every Tuesday without forcing customers to spend more with T-Mobile. It was a fresh take on loyalty programs that proved to be highly successful, with customers enjoying well over $1 billion worth of freebies and exclusive discounts in the five years since the program began. In contrast to most companies’ traditional loyalty programs that ask too much of their customers and give little back in return, T-Mobile’s program is unique in that it values and rewards all customers equally.

Many brands utilize loyalty programs to sell other products and services. This helps them set their sights higher to capture sales that would otherwise not be made. Multi-tiered rewards work best in this scenario. An increasing number of airline and retail brands use this reward system. Sephora has been very successful with its VIB program, which provides rewards and incentives commensurate with the value of purchases made within a given year.

A point-based system works well for the goods and services we frequently purchase in smaller quantities. Many hotels, grocery stores, and retailers use this system to reward customers based on points for every dollar spent. Customers are more likely to consolidate purchases with a single brand when rewarded in cash. 

Well-thought-out rewards or loyalty programs also help brands access valuable customer data. So while many grocery store programs may not promote loyalty because they are just giving out a membership card for special pricing, they have a wealth of information about their customers, which allows them to customize offers for every customer. However, orchestrating the insights from data requires a substantial investment in data analysis tools and a dedicated team for the job. 

How consumer psychology plays a crucial role in the structure and type of rewards program. 

Numerous studies have indicated that members tend to utilize loyalty programs more frequently as they progress further in the program, while their participation initially is uncertain. 

At the beginning of their membership, they may feel distant from the rewards since they have yet to make any progress and need to understand how achievable the goals are. This is where the principle of the endowed progress effect comes into play. The endowed progress effect states that people with artificial advancement toward a goal exhibit greater persistence toward reaching it. This is used to create effective loyalty programs to prevent customers from losing interest in the loyalty program. This is why many brands throw in bonus points to get them started. 

While a growing number of brands offer a buy–ten-get-one-free promo to keep customers from going to competitive brands, it may be more valuable to create a program that provides customers a taste of something new and increases the range of products or services they buy from you. For instance, the US-based fast-casual chain Panera Bread offers a pastry or other such item to reward its regulars. Starbucks offers many different rewards, including free drinks, food items, and even merchandise, which must be redeemed within a period. This also helps promote the app as it helps keep track of the rewards. 

Many airlines use this strategy and upgrade their travelers to business class when they have empty seats, which gives their regular customers a taste of luxury and motivates them to purchase in the future.

fitness-tech-trends

The importance of measuring the effectiveness of customer loyalty programs.

While customer loyalty programs can effectively increase customer retention and loyalty, they often fall flat. It is critical to measure the effectiveness of these programs to ensure they achieve the desired results. This is where market research comes in. 

Market research is invaluable in devising the most effective loyalty programs and measuring their effectiveness. 

Here are some reasons why measuring loyalty programs is essential:

Know the ROI of your loyalty program.

Measuring the effectiveness of a loyalty program allows companies to determine the Return On Investment (ROI) of their loyalty program. This helps brands understand the costs and benefits of the program and whether it is worth continuing or making changes.

Customer Retention. 

If the program is not effectively retaining customers, brands may need to make changes to improve its effectiveness.

Customer Satisfaction. 

This information can be used to identify areas for improvement and make changes to better meet the needs and preferences of customers.

Competitive Advantage. 

A well-designed and effective loyalty program can provide a competitive advantage for companies. Measuring the program allows brands to understand how they perform compared to their competitors, make changes to improve their program, and stay ahead of the competition.

Customer Insights. 

By tracking customer spending, engagement, and satisfaction, brands can better understand customers and make data-driven decisions about loyalty programs and other marketing initiatives.

How to use market research to measure the effectiveness of customer loyalty programs.

Customer loyalty programs are an effective way to increase customer retention and loyalty. However, it is essential to measure their effectiveness to ensure they achieve the intended results. Market research allows brands to make data-driven decisions that drive customer loyalty and revenue growth.

Step 1: Define Your Objectives.

The first step in measuring the effectiveness of a customer loyalty program is to define your objectives. What are you hoping to achieve with your program? Is it improved customer retention, increased customer spending, or something else?

Defining your objectives will help you determine the metrics you need to measure and the research methods you will use.

Step 2: Choose Your Metrics.

Once you have defined your objectives, you need to choose the metrics you will use to measure the effectiveness of your loyalty program. 

Some standard metrics used to measure loyalty program effectiveness include:

  • Customer retention rate: The percentage of customers who continue to do business with your company after joining your loyalty program.
  • Customer spending: The amount of money customers spend on your products or services after joining your loyalty program.
  • Customer satisfaction: Customers’ satisfaction with your loyalty program and your company overall.
  • Referral rate: The number of customers who refer new customers to your company.

Step 3: Conduct Market Research.

Once you have defined your objectives and chosen your metrics, it’s time to conduct market research to measure the effectiveness of your loyalty program. 

You can use several research methods, including surveys, focus groups, and interviews.

Surveys are one of the most common research methods used to measure the effectiveness of customer loyalty programs. Surveys can collect data on customer retention, spending, satisfaction, and referral rates. They can be conducted online, by phone, or in person and can be targeted to specific groups of customers.

Focus groups and interviews are also effective research methods for measuring loyalty program effectiveness. These methods allow you to gather more in-depth customer feedback and understand their experiences with your loyalty program.

Step 4: Analyze Your Data.

Once you have collected your data, it’s time to analyze it. Look for patterns and trends in your data and compare them to your objectives and metrics. This will help you understand your loyalty program’s effectiveness and identify improvement areas.

Step 5: Make Improvements.

Based on your analysis, make any necessary improvements to your loyalty program. This could involve changing your rewards program, improving your customer service, or making other changes to meet the needs and expectations of your customers.

Many brands are using market research to measure the effectiveness of their customer loyalty programs. 

beauty-trends

Examples of global brands doing rewards right. 

Starbucks is known for its highly successful customer loyalty program, Starbucks Rewards. Sephora’s Beauty Insider Program is another successful loyalty program that uses market research to measure effectiveness. The Insider tier is free to join, while VIB and Rouge tiers require customers to spend specific amounts yearly. 

Sephora’s tiered program is highly impactful due to the sense of exclusivity created by the upper tiers. Tiered programs are successful when the upper tiers have a limited number of members, typically around 10%. This way, the most loyal customers feel a sense of accomplishment, motivating other customers to strive for the same. Sephora’s Beauty Insider program segments customers into three groups: Beauty Insiders, VIB, and VIB Rouge, effectively establishing a hierarchy.

Tiers contribute to the gamification aspect of Sephora’s loyalty program and influence customer behavior, and motivating customers to strive for each new tier is the key to high engagement. Sephora has mastered this strategy, as evident from the feedback shared by its members on social media.

The program offers customers exclusive discounts, free samples, and other perks that align with its customer base. The brand also uses AI to make personalized recommendations. 

In the retail world, Amazon Prime, US-based Target Circle, India-based Flipkart Plus, Japan-based Rakuten Super Points, China-based Tmall Super Member, Singapore-based GrabRewards, and UK-based Tesco Club cards are excellent examples, as are many frequent flier programs like the Southwest rapid rewards card. 

Ensuring the effectiveness of a company’s loyalty program involves first defining its purpose. This entails meticulously considering the program’s design elements, including the rewards’ value and type and the methods of awarding and redemption. The key to a successful program is its efficient and consistent implementation. 

Loyalty programs have come a long way since their inception in the late 18th century. From American Airlines’ AAdvantage program to the modern loyalty programs of today, these have become essential marketing tools brands use to increase customer loyalty and drive revenue. While expecting absolute loyalty may be unrealistic, businesses can achieve long-term relationships with satisfied customers, serving as a valuable competitive advantage. With the help of technology, loyalty programs are becoming increasingly personalized, sophisticated, and effective and are likely to continue evolving in the years to come.

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Consumer behavior is shifting more rapidly and drastically than ever before. Brands are trying to keep up with massive changes in consumer behavior and preferences in virtually every sector, from groceries and fitness to banking and finance. Consumers continue to pivot their preferences and priorities with uncertainty, inflation, and an economic downturn. 

In the early days of the pandemic, an uncertain and dismal picture caused anxiety and depression, which led to panic buying globally. Those were short-term behaviors and did not last. However, many massive shifts due to the pandemic have stuck, including online shopping and the need for speed, efficiency, and convenience. 

The pandemic has changed certain habits for the long haul, with many consumers going to stores less frequently than before. Buyers are now more comfortable shopping online, and most consumers prefer a hybrid shopping experience combining the physical and digital worlds as convenience becomes paramount.

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With the growth of online shopping and technological advancements making online shopping as personalized as a store visit, consumers are exploring options beyond traditional brick-and-mortar stores and looking for a complete experience, be it physical, online, or hybrid. Businesses must adapt quickly to these changes and shifts in consumer preferences to remain competitive in a dynamic and ever-changing market. These changes have been taking place for some time, but the pandemic accelerated the rate of change unexpectedly. 

Some of the consumer behaviors that have drastically shifted post-pandemic are food and grocery delivery services. In the U.S., consumers did not regularly use grocery delivery services. According to some reports, about 15 percent of U.S. consumers tried grocery delivery services for the first time due to the pandemic, about 80 percent of those first-timers liked the service, and 40 percent said they would continue using it post-pandemic. 

While convenience and safety were the two reasons delivery services skyrocketed during the pandemic, the price will likely supersede convenience as we enter a time of out-of-control inflation. Consumers will try to make their money stretch further because savvy consumers know the premium they pay for using delivery services like Instacart. 

In this new economy, will they still be comfortable paying a premium and missing out on discounts for fuel when they don’t shop in person? 

Food delivery services also became more popular worldwide, and the takeout and delivery trend was rising. However, as people returned to in-person dining, food delivery apps took a hit. These apps will also follow the same path as grocery delivery services because when consumers buy from DoorDash, the prices are higher, and they cannot use vouchers. 

Many big retailers like Walmart are following shifts in consumer behavior by offering pick-up and delivery with no markup on prices. Other delivery apps are double-dipping on price, and the consumer pays more than they would in the store. 

Brands need to understand that just as convenience and safety were top priorities during the pandemic, consumers prioritize value and price over everything else, given the current economic environment. 

The fitness market is also seeing massive shifts, and consumers now want an omnichannel approach to fitness, where they use at-home gym equipment and online classes and apps in combination with in-person classes. 

Many e-commerce brands capitalized on creating connections with their consumers by using hand-written-style notes to add to the unboxing experience.

Beauty and fashion brands made it easier for consumers to shop online by using machine learning and artificial intelligence to offer personalized suggestions, experiences, and Virtual try-on sessions using Virtual Reality to mirror an in-store experience. 

Brands need access to high-quality consumer data, insights, and business Intelligence to stay in the game, meet customers’ demands, and outpace the competition.  

In any business environment, enterprises need to clearly understand the psychology behind why consumers behave the way they do. Consumer behavior is the study of consumers and analyzes how consumers decide what to buy, when, and how to buy. It seeks to understand the psychology behind consumers’ needs, wants, and desires and how they purchase, use and dispose of products and services. 

This study is critical because it helps brands understand the motivations and influences behind their purchases. It allows brands and marketers to develop the right products for the right audiences and market the product with the right messaging to convert prospects into buyers and retain them over time. 

Several factors come into play during the purchase decision stage, and these may include personal (age, culture, values, beliefs), psychological (brand perception), or social (friends, family, influencers, social media).

There are four types of consumer behavior:

  1. Complex buying behavior

This type of buying behavior is associated with big-ticket purchases, like buying a home or a car, where consumers invest a lot of time and energy. 

2. Dissonance-reducing buying behavior

This type of consumer behavior is often seen when a consumer is highly involved in the buying process but takes longer than usual because they do not want to regret the decision. This happens when multiple brands are very similar, and choosing one is tricky.

3. Variety-seeking behavior

This behavior is exhibited by consumers who opt for a different brand, even if they were happy with their previous purchases because they value variety.

4. Habitual buying behavior

Consumers that purchase the same brand because of habit rather than brand loyalty are in this category. 

A grasp of the type of consumers your brand attracts will allow you to segment your market based on consumer characteristics.  

Marketers also need to understand buying roles and who is the decision maker regarding their specific product. In a family, for instance, the parents make major buying decisions; however, in some cases, young children are highly influential in the decision. In fact, unlike in the past, the younger cohorts, Generation Alpha (those born after 2010) and Gen Zs (those born between 1995-2010), make many important buying decisions regarding what they wear, eat, or travel. 

There are six major buying roles brands need to take into consideration:

  1. Influencer(s): Several people may be involved in the purchase decision in many cases, but they may not all be consumers. Influencers are those who can exert influence in the final decision. These could be bloggers in today’s world or friends and family whose advice commands weightage in the purchase decision. 
  2. Gatekeepers are usually family members who control the information flow regarding a product within a household. 
  3. Initiator: This is the person who first initiates the purchase idea. 
  4. Decider: This person has the final say in the purchase decision and decides whether or not to buy the product. He also may determine how and where to buy it. 
  5. Buyer: This is the person who ends up buying the product.
  6. User: This is the person who consumes or uses the product purchased. 

Consumer behavior helps with market segmentation, as it goes beyond the essential demographic elements like age, gender, and location to explore the behavior patterns customers exhibit when interacting with a particular product, brand, or website. This concept is instrumental in e-commerce and online shopping environments. 

Here’s how e-commerce brands use consumer behavior to segment customers and users based on their level of engagement with the website, app, or product page. 

They segment or group their customers by their attitude toward their brand, level of brand recognition, usage, frequency and timing of purchase, and purchasing patterns or tendencies, like special occasion buying behavior. 

This allows them to tailor their marketing messages and create compelling campaigns to achieve their goals. 

By utilizing behavioral segmentation, brands can get a complete picture of their customers and filter them by the highest levels of engagement. For instance, brands can track those who regularly open their emails or visit their product pages. Marketers can also target ads with the most appealing messaging to customers based on their needs. For instance, an online shoe store can show those interested in athletic wear more running shoes and sneaker ads, and at the same time, serve ads with formal shoes for those interested in evening shoes. 

Another significant shift in consumer behavior is related to a demand for personalized and customized products, especially amongst the younger cohort of Gen Zs. Using behavioral segmentation, brands can provide more refined personalized experiences to win business. Brands can gain deep insights into their consumers’ needs, wants, desires, challenges, preferences, and concerns to gain a competitive advantage. Upselling and showing complementary products and replenishment reminders based on customer history and interests can reduce cart abandonment and boost brand loyalty. 

The use of behavior segmentation beyond the purchase also helps provide a high level of customer service to cement the relationship with the customer, leading to higher retention rates, more repeat business, referrals, and brand loyalty. 

Using behavioral segmentation, brands can unearth invaluable data and insights that may otherwise never have been discovered.

Understanding consumer behavior comprehensively helps brands improve performance across channels to diversify their marketing efforts. Brands can use these insights to adjust brand messaging, packaging, design, features, pricing, and more to stay ahead of the competition and boost brand equity. 

Kadence International helps leading brands make game-changing decisions. If you are looking for a research partner to help better understand your customers, we would love to help. Simply fill out our Request for a Proposal here.

If you are anything like me, amidst the coronavirus and the global lockdown (even as some markets like Vietnam and Vienna are slowly returning to ‘normal’), you would be doing one of 3 things:

  1. Staying at home and minimizing social contact
  2. Trying to make home-based working happen while balancing all kinds of other personal life commitments
  3. Try to keep things light-hearted by looking at memes

While we all know that going back in time is not (yet) possible, brands can certainly try to move things forward by thinking about what they CAN do with the rest of the year. Dealing with uncertainty requires strategy and guidance, as detailed by our MD Phil Steggals in his recent article. That said, where do brands find guidance?

We at Kadence are big advocates of brands creating their own futures, rather than try to predict it. Earlier in the year, before the whole pandemic went global, we brought together trend watching experts from across our global boutique to identify four key trends that we believe will define the next 12 months, inspiring innovation across Asia, the US and Europe, that we outlined in this report.

While it may be still early in the year to review our own work (spoiler alert: we’re on the money!), we certainly think our identified trends are definitely relevant to the current times, and can guide brands to think about the rest of the year (and even beyond!)

First things first, a quick recap of the 4 trends:

  • The shift towards 360-degree wellness
  • The move from brand purpose to purposeful design
  • Consumers left craving connection
  • Personalization reaching a new frontier as it moves offline

The shift towards 360-degree wellness: Trend vs. Manifestations

One of our key trends to watch for 2020 was the shift in how consumers are thinking about their wellbeing. We’re seeing consumers moving away from focusing purely on physical health and appearance, to now recognizing the importance of their mental health too.

As an article discussing mental health issues in a recently re-opened Wuhan shows, this trend is definitely a strong one: Along with the countless new online fitness platforms that have sprung up over the past 6 weeks, the conversation is increasingly steering towards how people staying at home needs to pay attention to their mental health too. Already there are reports about how anxiety over job losses is impacting the American population, while closer to home, Singapore has decided to keep allied health services, such as psychology and social work, open because they are defined as ‘essential services’. Dealing with a global situation requires both physical and psychological strength, which is what this trend is all about.

What can my brand do with this in the #newnormal?

Regardless the industry you are in or the product/service that you offer, highlighting a mental benefit or creating one (within credible limits) will definitely benefit your brand’s standing with consumers, even after the situation improves – this trend is here to stay.

From brand purpose to purposeful design: Trend vs. Manifestations

Brand purpose is undoubtably one of the big trends of the past few years. We’ve seen ads against toxic masculinity, deforestation and discrimination, as brands have tried to convince consumers that they share their values and have a higher purpose than simply selling products. And with research from Havas Media showing that meaningful brands outperform the stock market by 134%, it’s easy to see why so many brands were quick to adopt this strategy.

But we’re starting to see a shift. As consumers begin calling these campaigns out for being all-talk and no action, companies are realizing the need to move beyond surface-level brand purpose and to start embracing what we refer to as purposeful design, creating products and services which allow consumers to make the world a better place.

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There are numerous examples in this space that demonstrate how many big global brands actually ‘get’ it, and have quickly sprung into action in this global crisis: from Louis Vuitton (along with many other high-end luxury brands) producing pertinent medical supplies to Singapore gaming brand Razer pivoting from its core business to produce face masks, these show brands taking action on their beliefs, which can in turn inspire consumers to come forward and do their part as well.

What can my brand do with this in the #newnormal?

We want to believe that it should not take an international calamity for brands to be #woke and realize that ‘purposeful design’ should be at the heart of their operations from here on out. To be more specific, innovation in this space can fall into two categories – products and services which enables people to make a positive impact to the causes they care about and those which enable people to reduce their impact on the world around them. Regardless the product/service, is there a way that your brand can remain relevant in the #newnormal, and satisfy consumers increasing need for being better versions of themselves?

Consumers are left craving connection: Trend vs. Manifestations

This trend we identified focuses on consumers craving connection and a sense of belonging, in an increasingly divided and lonely world. People are now single for longer, meaning that more people are living alone, particularly in urban centers. A Washington Post wrote about how, in Japan, it’s predicted that 40% of households will be single person households by 2040. This trend is echoed in the West – in the US, half of young people aged 18 – 35 say they don’t have a steady romantic partner.

With global lockdowns in place, the way we work and socialize has been forcibly brought into the online world. Zoom meetings are becoming so frequent for work that ‘zoom fatigue’ is a real phenomenon, while social interactions online are a poor compromise because they literally lack the physicality that’s so much of a fundamental human need. These examples show how technological developments, hailed for their power to bring people together, have not always brought positive change, and are essentially stop-gap solutions for quality connections.

That said, though, connections made during this period inevitably become more ‘intimate’ as well (whether intended or not): bedrooms are shown to colleagues as background in work calls, while ‘bring your kid to work’ takes the reverse route because the child is very likely going to pop into the video camera during a conference session anytime. Even ‘live’ shows and music performances take on a ‘closer’ tonality as viewers are now given the chance to peep into a celebrity’s home! All these point to the possibility that consumers will demand not just more, but also better, connections in the post-COVID future.

What can my brand do with this in the #newnormal?

While there are experts who still feel that brands can still meaningfully enhance their customer experience digitally during the crisis, we would propose looking ahead and think about ‘connection’ in the broadest sense of the term, and see how both your brand can put that front and center. This is not about ‘omnichannel’ or ‘O2O’; this is interrogating what kinds of meaningful connection your offering can provide your customers, as this pandemic leaves us with the realization that effective, rather than efficient, interactions are what they really crave.

Personalization reaches a new frontier as it moves offline: Trend vs. Manifestations

We predicted that 2020 would see personalization reach a new frontier as it increasingly starts to occupy offline, as well as online spaces, thanks to the proliferation of new technology.

We already see brands tapping into location and health data from smartphones and wearables to provide personalized products, services and marketing campaigns to consumers on the go. But the rise of facial recognition, and its integration into smart home technology, will take this to another level, making personalization part of our homes, our shops, our day-to-day offline experiences.

While there aren’t any specific examples of how this trend manifests itself during the COVID situation, we are at least seeing some examples of brands and corporations speeding up the interfacing between offline and online, which may be a good start to push forth this trend. From major Hollywood blockbusters being released for online viewing faster than normal, to tech giants like Google and Facebook quickly updating/launching video chat functionalities to gain competitive edge, it shows brands can make necessary changes, if they want to.

What can my brand do with this in the #newnormal?

This advanced nature of this trend suggests that now’s as good a time as any to think about how your brand is really making sense of all that data to personalize not just messaging and comms, but also offline outreach/products and services that are relevant and pertinent to consumer needs (i.e. see above: Connections, Purposeful Design and 360-degrees Wellness), who may start to have expectations about brands embracing new technologies quicker, once the pandemic ends

We at Kadence are big advocates of brands creating their own futures, rather than try to predict it. Earlier in the year, before the whole pandemic went global, we brought together trend watching experts from across our global boutique to identify four key trends that we believe will define the next 12 months, inspiring innovation across Asia, the US and Europe, that we outlined in this report.

We’ve all been there. That moment of frustration when you visit a store or restaurant or hotel and are so entirely and completely underwhelmed by the experience. Perhaps it was the inattentive or poorly trained staff. Or the unclear and confusing information. Or the restricting opening hours. But what makes the whole thing worse is that this is not what you were promised – the ads; marketing and branding all suggest a very different experience. As an extreme example, the hot water that United got into for forcibly removing a passenger is a complete mismatch of its brand promise of: “connecting people. Uniting the world.”

On the flip side, there are golden moments when the unexpectedly wonderful happens. The barista remembers your name and favourite order; you’re given a hotel room upgrade; the restaurant goes out of their way to accommodate your food allergy.

The reason for both of these reactions is because of the unexpected. The experience you were primed for by the brand promise is different. Causing an emotional reaction as we deal with that.

Experiences have become perhaps the most important aspect of shaping the brand. Not only can experiences be documented and shared more easily than ever with camera phones and social media; but an experience is more visceral and powerful than any marketing and will live on much longer in the memory.

However, a recent survey by the Chartered Institute of Marketing suggests that only 53% of marketers claim successful alignment between brand promise and experience; just 37% believe their employees understand how to deliver this brand promise; and a measly 17% feel they enable their employees to suggest way to improve brand experience.

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Part of the reason for this is that it’s hard to measure the brand experience. Brand health studies measure the brand promise not experience; Satisfaction studies test the brand’s SOPs rather than the consumers’ experience; and mystery shopping relies on a small sampling of outsiders’ opinions. Relying on these studies alone is not enough for the CXO to draw any kind of conclusions about how their customers are experiencing the brand. Also, is it even relevant?

After all, while ‘satisfaction scores’ and ‘likelihood to promote’ a brand can be assumed to imply that the customer ‘likes’ the brand, that inference does not necessarily show the CXO what is the nature of the experience, and what specifically about it created the ‘emotional hook’ strong enough for the customer to want to ‘promote’ the brand to other users or have been satisfied. In short, it will likely leave more questions than answers, rather than illuminating actionable next steps for improving the process.

Rather, you need a measurement tool that tells you what customers of your brand (as well as your competitor, and even category) value when it comes to experience. Something that complements current studies you already have; but offers deeper insights that can help you create a strategic plan of action. A piece of research that sheds light on not just the ‘what’, but the ‘why’ of your customers’ emotional connection (or disconnection) with your brand based on their experience.

In short, Kadence’s Emotional Connection Matrix (ECM) is what you need. We have completed a study amongst Singapore consumers across categories on how individual brands scored in terms of emotionally-connecting with them, how these brands compare to others, which product category has the highest tendency to provoke positive emotional connections based solely on brand experiences, and what kinds of actions actually lead to said positive emotional connections. Drop by the CX Conference 2019 at Four Seasons Hotel on 26th July to satisfy your curiosity, as we talk more about the Emotional Connection Matrix.