The impact of COVID-19 on customer loyalty
2020 and COVID-19 redefined customer loyalty and companies are adjusting to fluctuations in brand trust from their most valuable assets—customers. At Innovatis Group, we spent 2020 honing in on listening to the voice of the customer. We quickly realized the renewed importance of thoroughly understanding and meeting the needs of community audiences in 2021 and beyond.
Loyalty is a two-way street in the B2C landscape. Customers remain loyal when a company invests in their interests. Companies who invest in their customers through a variety of channels have higher NPS scores. Edelman reports that brand trust was the second most important purchasing factor in 2020. Capturing the voice of the customer is not done through a single survey or looking at the bottom line. A loyal customer base isn’t found in the profit of a product line. Businesses must answer pivotal questions to get customers to return again and again: Why did the customer choose this product? What led them to decide on a specific company? Would they recommend it to a friend?
Becoming a member of an association or joining a user group allows customers across the world connect and engage with one another in new ways. Members of these types of communities have a shared interest through their purchases of products and services from a company the user community represents. Being part of a community promotes a sense of belonging and through online resources, knowledge sharing, networking, and industry and topical events, members can interact and develop or deepen their customer loyalty to a brand or company.
As we forge ahead into Q2 2021, the impact of COVID-19 on customer loyalty is most noticeable in the new and modified buying journeys for customers across almost every industry. Businesses that have adapted to new buying trends and made product enhancements after receiving customer feedback report higher NPS scores going into 2021.
Innovatis Group conducts multiple surveys throughout the year across the user communities we manage to capture insights from customer members with the goal of improving our clients’ outreach efforts. Market research is an essential service for our clients so that we constantly stay informed to bring the most value to both the customers and companies we work with.
We have found that in order to retain and improve customer loyalty, companies must recognize the value of peer-to-peer insights and customer stories. Recognizing these vital modalities and investing resources in user groups are tried and true methods to yielding more loyal customers with higher NPS scores.
The Impact of Peer Insights
Year over year, being a member of a user community has been noted as a valuable tool for individuals when making purchasing decisions. In fact, 99% of our survey participants find peer insights at least somewhat valuable when evaluating which tech products to purchase. Significantly more participants found peer insights very to extremely valuable in Q4 compared to Q1 2020, increasing from 68% to 78%.
The 10-point increase reflects a shift, as user community members are increasingly seen as sources of insight and expertise on company products. 41% of participants prefer going to a user group for advice on technology purchases over their own personal networks (26%), forums (19%), or analyst reports (11%). Leveraging forums, discussion boards, virtual meetings, and technical content are many ways our user community members acquire knowledge from peers and share their own expertise on products and technical topics.
Companies who invest in curating an active user group are more likely to have more loyal customers. 90% of user community members are more likely to do business with companies who support a user group than those who do not. This remained stable throughout 2020 as companies needed to find new ways to engage with customers.
Knowing that customers value peer insights proportionally more than those who make purchasing decisions on their own or consult other avenues, companies need to look to invest in user groups accordingly.
The Impact of User Communities on NPS scores
Companies looking to answer the question, “Why did a customer choose this product?” need to look no further than how people are being recommended a product or service. People are more likely to make a purchase when their decision is validated by another consumer. When we asked respondents, “How likely are you to recommend the products and solutions your user group supports to a friend or colleague?” 88% said they are fairly to extremely likely to recommend user community-supported products.
The higher the Net Promoter Score (NPS), the higher likelihood a company has for repeat customers. Our user community members are consistently more likely to recommend the products supported by their user group compared to the industry average. In Q4 2020, the average NPS score among our communities was 40, giving our clients a strong baseline to leverage in 2021 with improved customer feedback loops, new membership retention strategies, and knowing how and where to invest more in user community-involvement.
The companies supporting user groups have unlimited potential to tap into the member base to source solutions, drive innovation of new products, and leverage customer stories to enhance a company’s strategy. A customer feedback loop enhances a company’s understanding of the buying patterns and consumer purchasing journeys.
Improving Customer Loyalty
44% of survey respondents in our Q4 Survey indicated increased involvement in their user community over the course of 2020 comparatively to 2019. More engaged and active members creates avenues for companies to have direct access to their consumers, listen to their needs, and adjust strategies accordingly. The coronavirus pandemic placed a need for our clients to pivot to virtual events, improved online offerings, varied content and technical education. User communities are a viable channel for solutions selling, where leading companies can meet customers where they are in an omnichannel sales model, with an increased focus on digital interactions. Those embracing a new sales model and next-generation capabilities are growing revenue at twice the rate of GDP.
Customer experience matters. User communities offer the insight and engagement with customers to better drive sales performance. Capturing member insights while leveraging external industry market research can improve the customer journey for a company. Peer-to-peer insights continue to be a key driver for purchase decisions for customers, which has only increased due to the pandemic. Companies that invest in resources and pivot strategies to retain customer loyalty are positioned for success in 2021 and beyond.