Does your digital brand really stand out from the competition?
Have you really considered the extent to which your online brand proposition provides something compelling to your audience on an ongoing basis? With the rapid acceleration in new technologies and channels to interact with generic and niche audiences, brands are having to adapt quickly in order to stay relevant and to their audience as well as to out-manoeuvre the competition.
For brands it is ensuring you’re playing to your strengths – are you trusted source or supplier which audiences continue to engage with over time? Are you retaining your authority within your sector and are you listening to your customers and aware of your competition? Developing a digital brand differentiation strategy is essential to retain brand identity and relevancy.
This post will focus on the concept and importance of creating ongoing engagement or 'lock-in' – explaining what it is, how it can be used, and examples from other brands such as Carphone Warehouse, Apple and Zappos who have successfully implemented Lock-in.
What is the purpose of creating Lock-In?
‘Lock in’ aims to create a barrier for customers to switch from your brand or offering and instead move to a competitor offering. It can do this through a combination of increasing switching costs or the effort to transfer (soft lock-in) and positive reasons to stay such as superior brand experience or incentives.
In an article entitled 'Coordination and Lock-In' by Farrell and Kemperer, the authors explain the role of lock-in in hindering customers from changing suppliers in response to changes in efficiency and therefore is an effective strategy to extend your customer lifetime value, and to assist in building a direct one to one relationship with your audience.
Lock-in also provides a canvas to consider where possible new, uncontested market places reside within your sector that you could be exploring and moving into.
Where ‘Lock-in’ fits within your digital marketing strategy
The key objective of a successful lock-in strategy should help to link your brand with your customer, establishing a true partnership and the catalyst to build a direct relationship with your customer base whilst at the same time, it should assist to make it more difficult for the competition to move into your market space.
Digital provides the perfect platform for lock-in due to the number of digital channels, low barriers to entry and possibilities to now forge communities with your end customers and users.
From completing a situational analysis this will help identify opportunities for lock-in, such as helping to identify opportunities to differentiate from the competition or create a new uncontested market place as discussed in a previous blog post introducing Blue Ocean strategy, Lock in should fit around or as part of defining your unique selling point (USP).
How to identify opportunities for brand Lock-in
Go back to the objectives you are looking to deliver through your digital strategy as this should assist you in steering your drivers and opportunities to create a lock-in. Your organisation sits on a wealth of intelligence for you to discover and extract to look to create possible lock-in strategies.
I recommend these sources of insights to consider to inform opportunities for engagement.
Analytics – The first place to start, to really dig down and put together a picture of how customers interact with your digital channels. There are multiple insights and reports that can be run through your analytics so it’s important to start with your objectives to help steer that analytics reports you’re running and focusing your time on.
Customer churn – simple analysis of your customer database will provide you with insights into how customers interact with your brand and completing calls to action, in this case for an ecommerce operator by segmenting your users into this 3 model approach:
- 1. Recency – how recently did customers place an order will provide you with an idea of customer loyalty.
- 2. Frequency – An effective way to segment your best customers that buy regularly. At the same time, it segments those customers that are infrequent buyers.
- 3. Monetary – Customers that place a high average order value.
By analysing your customer history, this will help uncover whether there is an opportunity for a Lock in to be created in order to migrate customers who fall into irregular to regular purchases by introducing an incentive (e.g. money off, exclusive promotion, and discount?)
Customer Service – Your customer service team can provide you with a wealth of customer insights and the feedback provided via phone, email and social media. By spending time quantifying this data into common trends this can help to unearth patterns of opportunities in creating a change in your customer focus.
Surveys– Pick up the phone and go and visit your customers to get some good first hand insights on the objectives you’re trying to achieve. By putting together a list open-ended questions, this will help frame what you’re trying to achieve and opportunities.
Senior management – Ask for senior management support in their views, thoughts and motivations on areas of focus. Sharing some of the quantitative research you’ve uncovered will help frame their thoughts an opinions. Be sure to articulate what you’re trying to achieve and how it will meet the objective you’re looking to deliver.
Digital tactics to help create ‘lock-in’ for your brand
There are a number of tactics that could be considered an opportunity to create lock-in and below are a few tactics to consider based on the motivations and understanding of your audience. Brands that have developed their proposition in creating successful lock-in strategies within their industry sectors focused on playing to the strengths of their organisations and turning this into a key point of differentiation.
Some examples of lock-in Strategies
Below are selected examples of brands that have developed different types of lock-in strategies in competitive sectors.
1. Trade-in – A tactic used by online retailers to encourage customers to exchange their past purchase and use it as part-payment for a new order. Classic examples of this strategy are within the mobile phone sector e.g. Carphone Warehouse. This provided the retailer the ability to differentiate themselves by carving out a niche within their sector by introducing money back incentives in trading your old handset in and upgrading to the next model – this provided customer loyalty and extended their customer lifetime value.
2. Technology – Apple who are famous in creating and implementing Lock In marketing tactics such as Apple putting at the heart of its strategy the iTunes music store which is the only music player that an iPod or iPhone could access and upload music files.
Here is a 5 classic Apple marketing tactics that have been used to lock customers into the brand. From recent research, American media company CNET estimated that 90% of iPhone buyers intend to repurchase when it’s time to buy a new phone due to the reliance of their iPhone 'locked-in' to the need for iTunes and the potential hassle to seek an alternative phone and media provider.
3. Customer Service – US based online retailer, Zappos has re-defined their customer service experience which could be described as their 'lock-in' strategy by delivering an exceptional service that users would remain loyal to the brand in their customer lifetime value.
Zappos pioneered initiatives such as 100% satisfaction guaranteed return policy, upgrading customers who remain loyal to the brand to next day delivery and treating customers like individuals, something that other retailers have tried to replicate but with as much success.
This article by Econsultancy summarised different techniques on how Zappos has empowered not only their customers to retain their loyalty to the brand but also empowering their own staff in driving staff loyalty and retention to the organisation.
Differentiating your product or service online provides the potential for a company to create a niche within their sector and an opportunity to gain attention from prospective consumers for their product or service. This is where considering a lock-in for your strategy should be considered for brands operating in competitive sectors that also have little brand loyalty.
Author Mitch Joel, in his book Ctrl, Alt Delete, emphasised the importance of brands needing to embrace the term utilitarianism marketing – to create something your customers would want to use daily and a reason to return daily but more importantly a value that stands out in a media saturated world by building an emotional connection with the customer.
Building a relationship with your audience is essential for brands to remain relevant and interesting and by adopting a lock-in, this helps to cement such a strategy.