In part two of the discussion, Al Lalani, Co-Founder of Annex Cloud talks with Ali Cudby, Author of "Keep Your Customers" dive deep into emotional loyalty and building a customer centric culture within your organization.
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Welcome back to another episode of Annex Cloud Market Movers, where we bring in industry luminaries, experts to help us with the current times. This is part two of our conversation with Ali Cudby. Ali wrote the amazing book, "Keep Your Customers", which is an Amazon book bestseller. We spent the last time, Ali, speaking a lot about how important customer loyalty, even more, important customer loyalty and retention is in the current times. We spoke a little bit about your thoughts on lucrative loyals and how to keep them happy and how to create an emotional connection with those loyal customers. We want to take the conversation to the next level, loyalty, and building loyalty is a business process change. That's one of the big things we talk about internally. It's not a one and done, it's not a one-person job. There's a lot of team members that have to buy into it to execute it internally and as well as externally. Can you talk a little bit about, in your book, how you explain that change and then how you bring that about within your organization?
Sure. So it is a whole organization process, customer retention, is ultimately about building a relationship, which is about building trust. And so when your messaging is different from department to department, then it's harder to build trust. So if the sales team and the product team aren't on the same page, if the product team and the marketing team aren't on the same page and the customer is getting mixed messages, then, of course, it's going to be harder for them to feel like they can be in a trusting relationship. And then that's a barrier to loyalty. So that's one of the key reasons why you need to make sure that everybody in the organization is really aiming for the same bullseye when it comes to that key message of the customer message and how you're talking about what the relationship looks like.
Wonderful. I think in specific terms, you also mentioned in your book a little bit about loyalty is a strategy. And now we, a lot of us, think about loyalty as loyalty programs. And we're used to our favorite programs, whether it's airline miles or grocery stores or whatever that might be, but in your terms, loyalty's the strategy, the rewards programs are just a tactic. Could you explain sort of the differentiation of what people think about loyalty programs and what cultivating loyalty is all about inherently and how these two things work together?
Sure. So you can think about it kind of like loyalty programs with a lowercase L and actual loyalty with an uppercase L right? Capital L. So a loyalty program is a tactic. It's a way of incentivizing a customer to take an action, but they know that it's transactional. I don't know anybody who feels like personally motivated by buy 10, get the 11th free. And so it's hard to feel like you're really being seen, heard and valued as a customer because you get a loyalty program. It's a transactional opportunity and everybody gets something out of it. And you know, that’s the deal.
Loyalty, capital L, that is much more of an emotional connection. That is when you truly feel connected to a company and that motivates you to want to engage with them. So instead of it being a transactional referral, like, okay, you're going to give me 5% off my next purchase because I give you my friend's name and email address. You are pulling your friend down the street to say, Oh my God, you got to check this out. It's the difference between me giving you a coupon code to say, Hey, show my book. And you saying, I read this book and it was great. Those come across completely differently. And because they are completely different. So yeah, it's absolutely the difference between strategy and tactics. And it's the difference between, the transactional and the relationship.
That's wonderful. And I'll give you a couple of things from a tactical perspective on how we actually do this on a day to day basis implementing these loyalty programs because this is so very important for people to internalize and implement. Loyalty programs initially were created for taking people away from discounting, because it was a race to the bottom. I give 10% off. My competitor gives 15 percent off.
There we go. So we implemented loyalty programs to people more loyal, but then they became just another way to give another discount. And it really doesn't make a difference if you don't do it differently. That's when the second part is even now, and we're having some real conversations with people, loyalty programs wouldn't give down the discount way. And this is very tactical that they add to the liability of the company and for larger companies that may amount to millions of dollars in liability that you're carrying on your books, which is bad during these times, especially. And so what we talk about is experiential loyalty and personalized loyalty. So experiential loyalty is, don't give me a discount, give me an experience, give me something I would really care for that I can stick with and I know you talk a little bit about that in the book.
You know, don't give me this free product. Don't give me this free discount. What can make it a better experience that I can touch with, that I remember. And I really remember your, I think you bought a bookshelf or something in your kitchen, I think. Cabinets, I think. But you have to give them something that they value that is contextually relevant to what they bought. And that's the experiential loyalty we talk about versus discount oriented things that are just maybe very transactionally focused. So very, very appropriately said there.
Well, that's a great example from the book, from "Keep Your Customers" because so yes, with my husband and I, we put a new kitchen cabinet and when we bought them, we got this really fancy gift basket from the kitchen cabinet company. And so on the one hand, you're thinking, wow, they didn't offer the discount. They gave this nice upgrade. That's lovely. And yet I couldn't begin to tell you what the brand of my kitchen cabinets are. I don't ever sit there and think, Oh, I'm going to refer my kitchen cabinet brand to my friend who's building a house. And it's actually funny because yesterday, a friend of mine said, "Hey, I'm building a new house", any thoughts? Because they knew that I had just recently done it and it never even crossed my mind to say, "Oh yeah, think about this kitchen cabinet brand".
So you have, that's why it is strategic. That's why you need to know who your lucrative loyals are because you need to be able to speak in the language that's going to be meaningful for them. And so this cabinet company spent a lot of money putting together this gift pack of like food and a cookbook and an apron and a this and a that. And you know, it didn't move the needle. Maybe it just isn't that we're lucrative loyals. Like maybe I just don't fit the profile for that brand. And hey, that's fair. But you know, it didn't seem like they were really thinking it through. That kind of upgrade, that kind of experiential loyalty, it has to be thoughtful and you have to keep the people that you want to inspire in mind and the actions that you want them to take in mind. So yeah, I mean, we ate the chocolate, but it just missed the mark.
Now, if you do want to check out and find out a couple of case studies where it did work for Ali, you have to read the book. So there's a couple of good ones where it did work and she explains it really well. And so please check that book out because it has some amazing examples beyond the ones that Ali just mentioned where it didn't really work and how to create that experiential and emotional connection from a rewards perspective.
You mentioned in your book a lot about referrals and sort of advocacy of next level loyalty. It's the circle of them discovering your product, then buying your product, then rebuying your product and becoming loyal, and then being so excited that they're going to tell other people about it in this previous example, as well. Referrals play a way to just amplify the revenue and sort of grow that revenue even further for your lucrative loyal customers, as you mentioned there. And we agree as well. How does a brand identify those advocates? How can they amplify those advocates or lucrative loyals, some thoughts around how to sort of achieving a good referral program going.
So it really begins, as we started to talk about in part one, with knowing who those lucrative loyals are. And so we talked about that a little bit already, and it's not just as easy as looking at the revenue. The lucrative loyalty is those customers that have the lifetime value. And so that has to do with the referrals, with engagement, and revenue. But you can even have a lucrative loyal who might spend a lot less, but bring in a lot more in terms of referrals. And so, how you build that relationship matters. And that's going to change from company to company, industry to industry, and customer relationship to customer relationship. But there's a great story that one of my clients actually did. This is a retail client. And they wanted companies... They want customers to feel connected, even after the purchase.
And they wanted to remind their customers to come back in. So again, brick and mortar experience. And in this case, they sold lingerie. And so the company started creating these little nice smelling packet things, sachets. Yeah. And they instructed their customers to put the sachets into their underwear drawer when they got home. And so every day, the customers would open up their underwear drawer and a nice waft of nice smelling stuff, whatever, vapor, would come out of their underwear drawer. And so they would be reminded in both seeing the sachet, but also smelling the scent. And they had a whole thing that they did to create the scent with a local artisan. And so there was a whole story behind it and that engaged more loyalty because people felt bought into it and the employees felt bought into it because they got to participate in putting the whole thing together.
And anyway, long story short is that people started, customers started putting the sachets on their Instagram and they started telling their friends about it. So that level of referral had very much to do with this company, this small company, understanding who their customers were, and being able to speak in a language that those customers really wanted. And so they felt appreciated because they were given something and they were shown why it was meaningful. And so those are really, again, we talked about this in the last section. But there are those two components to generating loyalty. It's the heart, which is that emotional connectedness and the smart, which is the clarity and consistency behind it. And when you have those together and you know who you're aiming for, that generates referral because you're speaking those people's language.
Wonderful. And back to the point, like generating referrals by just giving a discount, that's just very transactional. It doesn't continue on an ongoing basis. You can really amplify. And if you do this right, it can become a meaningful revenue source from a company's perspective. So cultivating those advocates as you cultivate your loyalists and grow them from lazy loyals, to lucrative loyals, to advocates, and then so on and so forth. So that's wonderful. Ali, if brands and companies want to reach out to you for help, for strategy, how do they contact you? How do they reach you?
Sure. So if people want to go to youriconicbrand.com/annex, then I'll know that they're coming from you. So the company is called Your Iconic Brand and your special URL is youriconicbrand.com/annex. And they can check out the book at keepyourcustomersbook.com.
Okay. Thank you, Ali. It was a great discussion. We really appreciate you joining us. For everyone else, go to annexcloud.com/marketmovers, where we continue to bring in amazing speakers like Ali, Ali, thank you again. Bye for now.
Co-Founder, Annex Cloud
Author, Keep your Customers
Since 2010, Annex Cloud has provided industry leading loyalty solutions to more than 250 leading brands and retailers, including Jenni Kayne, Hewlett-Packard, Bed Bath & Beyond, e.l.f. Cosmetics, Olympus, Sugarfina, Mizuno, MacKenzie-Childs, VF Corp., with the ability to engage tens of millions of their customers one-to-one at scale.
The Annex Cloud platform provides fully integrated Customer Loyalty, Referral Marketing, and User Generated Content (UGC) solutions that seamlessly work together to optimize the customer journey and deliver a unified customer experience that is designed to accelerate revenue growth, retain valuable customers, increase average order values (AOV) and drive repeat order frequency.
Keep Your Customers shares a fresh perspective on the old problem of customer retention. The #1 Bestselling book by Ali Cudby provides real-world consumer behavior stories, business best practices and CEO-led case studies.
Keep Your Customers features interviews with renown venture capitalists Mark Suster and Kara Nortman of Upfront Ventures, CEOs from industries ranging from technology (ClusterTruck, PERQ) and consumer packaged goods (Soapbox) to retail (Esprit de la Femme, Urban Stems) and more.
Keep Your Customers is ideal for business leaders who want to grow without being stuck in the endless grind of new customer acquisition.
To learn more about Your Iconic Brand, visit youriconicbrand.com/annex