Two thirds of businesses miss the loyalty mark; lessons for the ECEC sector
The views expressed by contributors are their own and not the view of The Sector.
A global study commissioned by Collinson has revealed that many businesses are failing to measure the right information to understand the loyalty of the people using their product or service.
In findings which are of interest to early childhood education and care (ECEC) service providers wishing to grow and expand their offerings, or to retain existing customers, the study outlines key ways to collect and use data in order to optimise loyalty from customers.
Decision makers in organisations (job title of manager or above) with revenue exceeding USD$300 million in the UK, North America, Hong Kong, mainland China, India, UAE, Singapore, Brazil, Australia, France, Japan, Korea, Indonesia, Saudi Arabia, Mexico, and South Africa were surveyed, with respondents grading their programs based on a series of measures, and sharing their key goals and challenges.
Conducted by Forrester Consulting on behalf of Collinson, the survey showed that the majority of organisations jeopardise customer relationships and profitability through a lack of understanding about the drivers of customer loyalty, with two thirds of those surveyed not understanding why their customers are loyal to their organisations.
Almost 7 out of 10 businesses surveyed (67 per cent) reported that they did not have a proper framework in place to measure loyalty in the context of overall business performance.
The study revealed that to appeal to modern, choice-rich consumers, it is important to engage them at an individual level which means collecting all appropriate data across the customer journey.
The research found that:
- 60 per cent of respondents did not have centralised business rules to incorporate all sources of customer data into a single customer view;
- Less than a half (48 per cent) collected a wide enough range of customer data to run deep analyses;
- 26 per cent of respondents automated advanced data analytics to optimise their customer strategy; and,
- 35 per cent used predictive modelling to identify the right existing dynamic content based on customer behaviour.
In an ECEC context, services and approved providers, based on the research, may be missing a valuable opportunity to collect data from families using the service, which could provide valuable insights into their loyalty behaviour. Services collect data which enables them to provide care for a child or children, but often neglect to collect data which provides care for their business, and supports loyalty from families.
Examples of times when such data analysis could be useful in an ECEC service include:
- Whether parents are more responsive to text messages, emails, phone calls or face-to-face communication, and if this responsiveness is dependent on the subject
- Parents’ level of engagement on social media – following the service or brand, and on which platforms, and at what time of day
- Likelihood of parent to use social media to promote or detract from the reputation of the service, which would support a targeted approach for media promotion – both social media and more traditional
- Groups which families are involved in, in the local area. Knowing which sports teams, playgroups, shops and services families use to connect with other families can open up avenues of cross promotion
- Working habits of parents and families – knowing the amount of families who work full and part time, and how flexible their roles are, which allow a service to target not only their marketing, but also events, to ensure the greatest possible chance of attendance.
Parental satisfaction with a service was once thought to be a key component of loyalty, however research shows this is only the case in the first year of a child’s life. Retaining enrolments becomes less reliant on parental feelings satisfaction towards individual childcare settings as children age.
Research also shows that trust makes a statistically significant contribution to loyalty, whereas satisfaction is not significantly related to loyalty in ECEC services. In other words, if parents join a centre with a young child, and develop trust, loyalty will result, even if they are dissatisfied with some elements of their customer experience along the way. Trust is essential in influencing loyalty in the ECEC context.
Mary English, Executive Vice President for the Asia Pacific region of Collinson, says, “A clearly defined loyalty strategy provides the foundation to design a proposition for continuous engagement with your customers in a relevant and meaningful way. Data is the fuel for ongoing loyalty to a brand with heavy weighting on a well-structured single customer view to capture, measure, gain insights, and personalise the dialogue with their customers”
A number of ECEC services have KPIs for their staff built around occupancy, and centre occupancy rates are a key metric in determining the viability of an operation. Estimates say that 70 per cent occupancy within service is a breakeven point, with occupancy rates of 80 per cent and above a target for profitability. ECEC services having an understanding of loyalty is integral to maintaining occupancy levels and viability.
Ms English encouraged businesses of all types to put loyalty back on track by becoming better aligned in terms of their objectives, what they measure, and how to differentiate their programmes, saying “There is really no ‘one size fits all’ approach and each organisation must identify their brand’s unique, valuable assets in formulating a strategy that is regularly reviewed and updated to the changing behaviours of their customers.”
Using the study results to solidify her perspective, Ms English said that creating formalised processes and employing dedicated resources can be a valuable investment and can demonstrate a businesses commitment to loyalty and to their clientele.