This is a cut and paste of an article I wrote on our sister blog site connectioneconomy It received fantastic comments and certainly stirred up the kind of debate I was hoping for. It forms part of a series that I will be writing on customer experience and customer loyalty so I have decided to also include the post here on the new world of work blog site.
There were 16 comments at the time of adding the post to this site: I’m deeply grateful to all who contributed their thoughts to this blog. Please read them and add new thoughts you may have
You can’t get customer loyalty so stop trying
This is a controversial statement; it’s meant to be. Loyalty is big business and an entire industry of consultants and loyalty scheme companies convince their clients to spend millions each year to building raving fans out of their customers. The quandary is that customer loyalty is no longer a realistic goal, it is a red herring and managers who seek to measure and achieve customer loyalty are creating a rod for their own back. I’d actually go as far as saying that the word customer loyalty should be erased from your company’s vocabulary.
That companies even expect customer loyalty is just a tad arrogant. The relationships customers offer to companies are privileged ones and should be treated as such. Business is about people – and of course profits – but the people part needs to come first. My problem with the term loyalty is that it focuses on the end goal and not the steps in between that are essential in building mutually beneficial relationships with customers.
No customer in their right mind sets out to build a loyal relationship with a company. But customers do want relationships. The explosion of social media clearly demonstrates that people have an insatiable appetite to build relationships with people and even companies. But let’s not confuse this behaviour with loyalty. Here are three reasons why measuring and trying to achieve customer loyalty should no longer be a goal for any customer-centric businesses.
Business lacks credibility and trustworthiness
The 14th September 2008 is an important day in corporate history. It’s the day that Lehman Brothers collapsed and we entered a confidence-draining global recession. It’s also the date that talented people gave business a bad name because over the ensuing months it has become blatantly clear that a number of very talented business leaders, politicians and even sports stars have been behaving very badly. Today, trust in business and business leaders is at an all time low. Today, customers recognise that most businesses are only in it for themselves. Bottom line – if you don’t have trust, there is no hope of ever getting loyalty.
Customers have changed
Citibank did a recent research survey and identified that seventy-five percent of their customers believed that their attitudes and behaviours had changed as a result of the financial crisis and great recession. It is true that the past two years have had a dramatic impact on shaping the behaviours of customers, but there is an even bigger reason for this shift than the recession.
From companies selling the hippest youth fashion-wear to those selling pension products, all are discovering that their customers’ behaviours and attitudes have changed. The reason for these changes is a massive social and demographic shift – new generations of customers are entering every major life-stage.
Our extensive research at TomorrowToday shows that the oldest of each generation is entering a major new life-stage. Baby Boomers are entering retirement; Generation X is entering midlife with established families and becoming influential leaders (for example, Barack Obama and his UK counterparts Nick Clegg and David Cameron are all Generation X cuspers). Lastly, Gen Y are entering the workplace en masse.
Each generation has its own unique worldview and set of values. These values were shaped and formed by the global events happening as they were growing up during their formative years. On the surface each generation entering a major new life-stage may not seem like a big thing but in reality it is massive. These kinds of social value shifts only happen on this scale every twenty years.
The fact that this shift has happened at the exact time when the world has entered one of its most serious economic crises merely heightens our awareness that customers’ values, attitudes and behaviours have indeed changed dramatically. Of course there has always been a multi-generational marketplace. The difference this time – and why generational values are so important today – is that the generational divide has never been greater. The rapid pace of change over the last fifty years means that each generation has effectively grown up in different worlds. Each generation has a very different view and take on life… and what they expect from companies.
The younger generations, Generation X and Gen Y are naturally less loyal, believing in instant gratification and knowing that they hold the power to choose the companies they want relationships with. These Generations have grown up cynical and jaded by the attempts from companies to woo them with glossy adverts and false promises of customer experiences that were rarely the reality. They are better educated than generations before and have no desire or need to be loyal to companies who do not provide them with a compelling WIFM (What’s In it For Me). These generations are concept loyal, not brand loyal. Not even the coolest brand like Apple can rely on customer loyalty from these generations. All it took was for Blackberry to come up with a hipper concept and droves of Gen Ys migrated across.
Boomers have also wised up. They have a natural distrust for institutions but believed things would be different once they came to power. They have learnt, sometimes the hard way as failed pension plans, medical schemes that don’t deliver and bank foreclosures have hit them hard, that even though Boomers now run the show it does not mean that they as customers are getting things the way they wanted them.
Customers now have a sixth sense
The third reason is that technology has given customers a sixth sense – an ability to determine in real time which companies are offering them the best benefits. The combination of the Internet, social networks and mobile devices has dramatically shifted the balance of power in favour of customers. Companies are now more transparent than ever before. With just a few clicks, customers can compare your product offering with those of your competitors, check out comparisons and hear what other customers are saying about you. This trend is set to have a greater and greater impact as social media communities like, Foursquare, Facebook, Yelp and Gowalla become more influential in using social networks for location based marketing.
This customer sixth sense is going to get even more powerful. Just Google “Patti Maes’s sixth sense device” and have a look at the device that is sure to be on the next generation of smart phones.
Where to from here?
New generations of customers, the lack of trust in businesses and a growing ability to know immediately which are the best companies to buy from has made customer loyalty defunct. However, the demise of customer loyalty as a concept is actually a good thing because rather than focussing on the end goal of loyalty, using coupons, points schemes and glossy advertising, companies are now being forced to build genuine and mutually beneficial relationships with their customers. Companies that focus on the relationship and the customer experience will be the winners in this new world of work. The irony of the demise of customer loyalty is that it may actually result in the nurturing and building of mutually beneficial customer relationships, creating genuine two-way loyalty.
For those action minded individuals reading this article – if you shouldn’t be measuring customer loyalty what should you be measuring then? There are three things I suggest companies should measure. Firstly, will the customer buy a product from you again? Secondly, will they refer you to a friend? Thirdly, did the customer experience make them happy? My suggestion is get rid of the complex customer and brand loyalty matrixes that you are using to measure customer loyalty and focus on measuring and delivering on these three questions only. Focus on building customer experiences, for both internal and external customers, that result in a “yes” to all three questions and then strong relationships will follow.
Dean is a partner of TomorrowToday International, a dynamic organisation that is assisting both large and small companies to navigate the rich streams of the new economy. He is recognised as a creative and strategic thinker with an ability to influence individuals and teams to explore ‘outside the box’ options. TomorrowToday have several entertaining and enlightening multimedia presentations and workshops ideal for helping leaders explore themes relevant to customer experience, talent, diversity and leadership in tomorrow’s world.
Comments on the original post.
Dawna MacLean says:
September 9, 2010 at 3:59 am (Edit)
Huge kudos on presenting such an audacious and provocative perspective. I had a very divided response and enjoyed reflecting upon how my perspective differs and how it mirrors your insights. Broadly, I very respectfully disagree with advising that we should stop trying to acquire customer loyalty, but I do think you address profoundly important points.
Here’s where I struggle with your position:
“That companies even expect customer loyalty is just a tad arrogant.” …“My problem with the term loyalty is that it focuses on the end goal and not the steps in between that are essential in building mutually beneficial relationships with customers.”
Note that I left out the middle part, it is down below under my list of what resonated for me. My point here being that they are not mutually exclusive. I do not follow why you are assuming that having an end goal distracts or is in conflict with putting the people first? Goals are important and the only way to get there is to focus on the steps in between and done right it is built on mutually beneficial relationships with your customers.
“No customer in their right mind sets out to build a loyal relationship with a company..”… “But let’s not confuse this behaviour with loyalty. Here are three reasons why measuring and trying to achieve customer loyalty should no longer be a goal for any customer-centric businesses.”
Again, I agreed with the middle part but struggled with the rest, of course customers do not set out to build loyal relationships with a company but there is nothing better than discovering a company that you can count on, one that instills emotions of loyalty, I personally love that! I love knowing I can go to my favourite restaurant and count on my meal to be incredible and to be treated like I’m there number one customer, that keeps me coming back and makes me brag to everyone about them. I did not go there the first time hoping to be loyal to them, but I’m thrilled when that happens.
“The fact that this shift has happened at the exact time when the world has entered one of its most serious economic crises merely heightens our awareness that customers’ values, attitudes and behaviours have indeed changed dramatically. …They have learnt, sometimes the hard way as failed pension plans, medical schemes that don’t deliver and bank foreclosures have hit them hard, that even though Boomers now run the show it does not mean that they as customers are getting things the way they wanted them.”
I personally believe that the economic crisis is a symptom, not the problem and that the core problem is fearful leaders and a crisis in values. In the words of John Hope Bryant, “feel-good, me-based, immediate gratification disease” which he calls “short-termism”. I blogged about this just the other day http://dawnamaclean.com/2010/09/04/fear-leads-to-short-termism-and-making-smart-sexy-again/
I do not think we should accept the disparity in values you describe, we need to “make smart sexy” again.
Here’s where your advise really resonated for me:
“The relationships customers offer to companies are privileged ones and should be treated as such. Business is about people – and of course profits – but the people part needs to come first”
I could not agree with you more on this, it is critical to recognize that your customer relationships are a privilege and your biggest asset. If you don’t put the people part first the profits will not sustain.
“But customers do want relationships. The explosion of social media clearly demonstrates that people have an insatiable appetite to build relationships with people and even companies.”
Bang on, I think we have universal agreement on this one.
“Business lacks credibility and trustworthiness”
Again, I could not agree more. However, I think this challenge has been a blessing in disguise, now customers are eager to know a company’s values and demand transparency and authenticity, this is a huge leap forward.
“Customers have changed”
They sure have, this two is a blessing and a huge opportunity for customer-centric companies to forge ahead.
“Customers now have a sixth sense”
Again, totally agree. I look forward to this level of awareness to continue to sharpen.
I want to stress how much I enjoyed reading your post. The fact that I spent this much time articulating my response is a reflection of my respect for your opinion. Thanks Dean!
Michael Cowen says:
September 9, 2010 at 11:52 am (Edit)
Are you just trying to be controversial for the sake of controversial here Dean. You suggest:
“There are three things I suggest companies should measure. Firstly, will the customer buy a product from you again? Secondly, will they refer you to a friend? Thirdly, did the customer experience make them happy? ”
This is exactly what the Net Promoter measure and it translates into a loyalty score. Are you not just arguing for the very thing you are arguing against; or is a question of how you measure loyalty pr how you define loyalty?
Michael
Kristina Evey – The Customer Experience Queen says:
September 9, 2010 at 6:04 pm (Edit)
The title certainly caught my eye and I was ready to completely disagree with you. After reading the rest, I think you’ve hit the nail on the head. I believe you are dissecting the word “Loyalty” to nuances we generally gloss over.
My thought is that companies hope for loyalty, but ultimately to break it down – they are hoping for repeat business from their existing customers time and time again. Your point about customers never looking to find a business they can be loyal to is correct. I think that customers are looking for a “go to resource” for that particular need. The way to do that is to create a truly unique experience. You build unique experiences by tapping into the feelings of the customers and thus, building relationships that continue over time.
The key here is to constantly be talking and engaging with the customers. As you so eloquently pointed out, they are not falling for empty promises or glossy ad campaigns. Studies show that 80% of companies think they are delivering good service and making good on their promises, but only 8% of their customers agree. To that point, as you said “companies are now being forced to build genuine and mutually beneficial relationships with their customers” – that is the crux of successful sustainability.
Based on human nature, people remain loyal to those they have positive relationships with, be it family or best friends. As consumers, we absolutely want to have one resource that is based on a positive relationship – one where the customer is appreciated for the dollars it brings to the business, and the customer values the efforts being made by the business by trying to solve their problems and create an environment and experience that draws the customers back.
With my clients, the first thing I tell them is that it is not their product or service that their customers are buying. It is the relationship that is being bought. The relationship based on the promises that the company makes and their willingness and ability to fulfill those promises, wrapped up in a package catered to the preferences of that customer.
So, that being said – I think you are dissecting the word loyalty to one that many have not done before. Loyalty on the part of consumers cannot be expected. The repeat business is what the company is wanting and they must do everything in their power to make their customers want to go out of their way to do business with them.
Very thought provoking post! Keep them coming!
Kristina
Dean van Leeuwen says:
September 10, 2010 at 6:05 pm (Edit)
Hi Kristina
Thank you for your comments. I love what you said about creating positive relationships, that to me is the crux. To be honest I believe that companies can achieve loyalty (of sorts). I think Zappos is a company that achieves this, but they work very hard in putting the customer relationship first every time. That is the key to loyalty, very few companies do this
I have a few more ideas and concepts up my sleeve following a similar thought pattern and will let them out soon
Take care and thanks again for taking the time to comment
Dx
Dean van Leeuwen says:
September 10, 2010 at 6:11 pm (Edit)
Hi Michael
it’s excellent to hear that Net Promoter are using a matrix similar to the one I recommend my clients use. I’m not being controversial for the sake of it, but I do want to try and shake the customer experience industry up a bit. Too many companies pay lip service to the concept and I want to challenge where companies and the consulting industry is today and open up a debate which I hope leads to greater insights and results in an area of business that I;m hugely passionate about.
thanks for your comments I look forward to hearing from you again
Dean
Dean van Leeuwen says:
September 10, 2010 at 6:21 pm (Edit)
Hi Dawna
Firstly let me thank you for making such a full and comprehensive comment, my admiration for the work and approach you take is growing daily.
Your comments are spot on and you have captured the underlying message that I want to convey. There are companies that achieve loyalty, but they are so few and are between. In my presentation Herding Cats I talk about how why it’s impossible to get customer loyalty using conventional approaches, however, they can get loyalty of a sort if they focus on delivering the benefits of friendships. I’ll explain more about my thoughts around this concept in a later post.
I’m feeling very privileged that you took the time to write these comments thank you, I’m looking forward to future engagements where we can share insights and ideas
Dx
martin Hill-Wilson says:
September 10, 2010 at 8:53 pm (Edit)
Dean,
I’m going to reply to your post first and then read it.
Reason is this is a topic of conversation I recently rehearsed, never published and guess what? The early bird gets the worm. So here is my take while the spotlight is on the topic.
Loyalty is a type of word best begun with a dictionary to appreciate its true meaning rather than the watered down version the customer management industry has reduced it too. Actually go do that now and see for yourself.
Had you never been part of this debate, you would say that loyalty is all about the degree of relationship between someone and lets say their country, their family, their tribe. If it’s anything, it’s intense. It runs deep. It’s lifelong. Its worth going to the wall for. Brothers/Sisters in arms.
Is that really what’s going on between customers and brands? Can’t say I’m aware of who the last consumer was to martyr themselves to defend the honour of their brand. Let me know if it made YouTube.
The essence of loyalty is to the last breath. ‘From Apple to Android they will go once the grass is greener’ is not about loyalty, its just about the opposite of being captivated – i.e bored, which triggers let’s look for something new.
Those that believe their customers are loyal as opposed to being in a short/medium/long term state of captivation, risk feeling confused, rejected and upset when the satisfied bid goodbye and move on. You thought they were loyal and therefore had obligations to you. Not a bit of it. The habit of having them close made you complacent.
To my mind the game is this. In a world of plenty where most have no notion at all of what poverty of choice means, the only reason I stay with you is because today you shine the brightest. I stay not because I have any sense of ‘ought’, ‘must’ or deep feelings of kinship with you. I’m the moth, you are the light. That’s the chemistry.
So remember this. While you continue to re-invent that fascination for me, I stay. If you fade I go once another shiny thing catches my attention or my social network flocks elsewhere.
Marketeers have known this for ever. They know their audience and have not romanced the relationship. Consumerism is two parts product and three parts show business. You need to earn my attention if you want to continue sharing my wallet.
So bury the word loyalty. Sit in silence and listen to what your own intuition tells you. Think afresh. If you look at describing how customers actually relate to brands I bet loyalty is not the word you end up choosing as the one that best throws insight onto that type of relationship.
OK ’nuff said. Suppose I should read what Dean actually said now.
Kate Nasser, The People-Skills Coach says:
September 10, 2010 at 9:54 pm (Edit)
Very very interesting post especially with the point about all generations entering major life changes. I think that coupled with the terrible betrayal of trust from the selfish greed of Wall Street has definitely changed the game.
I am not sure I agree that customers don’t want a loyal relationship. I would like to give that more thought and come back to comment again.
Nonetheless, this post offers much and I will RT on Twitter.
Thanks!
Kate
Sim says:
September 13, 2010 at 2:27 pm (Edit)
Dean, this post was interesting reading – as were the comments that followed. I can’t help adding my R5’s worth here (I figured with inflation surely no one is adding 2c anymore?)
I’m not a customer-experience professional … so my comments to this topic are purely based on my own consumer experiences. (But, if I may say … I am a very enthusiastic shopper … some say it’s a talent I have … others (my husband in particular) say it’s a hazard. Either way … shopping is part of my DNA.)
Basically –in a nutshell, if I understand you correctly – you’re saying that companies should stop wasting their time and money with “loyalty” schemes (and the measuring there of) – because customer loyalty is not achievable. Instead companies should focus on the relationship with the customer. (And then if you get that right … just maybe your customers will continue to spend their money with you.)
Here are my comments to this:
I like “loyalty” schemes. I’m not saying they ensure my “loyalty” (whatever that is??) but are they completely ineffective? I think not. Take for instance the “Littleworld” programme that Woolies runs (see … I even call Woolworths by an affectionate pet name!) … I think it has potential. They send me emails with (sometimes) interesting articles on parenting which I enjoy reading. Every now and again they send vouchers – which naturally encourage me to shop there and make me feel like I’m getting a bargain. (I was especially happy when they sent me a voucher for free pack of new caramel cupcakes! What’s not to love about that?)
Exclusive Books, Dischem … I can rattle off a few “loyalty” cards that I have.
And here is the thing Dean … people love “free” stuff. We like the idea of a “reward”. I might buy a magazine from CNA rather than Exclusives because it happens to be more convenient on one day … and I might buy my toothpaste at Dischem if I’m there to pick up nappies because they’re on special.
So you are right in that customer “loyalty” is illusive and it shouldn’t be the end goal. But … does having a “loyalty” card encourage me to shop somewhere … yes, I think it does. (And not to mention the benefits the company gets by being able to track consumer shopping habits and personal data …!)
By the way Dean … just curious … do you have voyager miles on your Credit Card??
Joolz Lewis says:
September 13, 2010 at 3:09 pm (Edit)
Fab post Dean – very good reading, and thanks for being up front about being deliberately provocative.
I agree that ‘customer loyalty’ is a purely business goal (rather than customer-led) – but that doesn’t make it a bad thing. Customers wouldn’t use the word ‘loyalty’, but they do want to feel special and valued for their custom. They also like to feel part of a ‘tribe’ that represents their values.
More interesting than WHAT ‘customer loyalty’ is, is the process of defining HOW the company goes about engaging with its customers – by continually delivering an experience which resonates with customer values and emotions, within their financial means. I truly believe that there is more ‘art’ than ‘science’ in creating a formula which allows a business to focus enough creative energy and attention on continually staying ahead of the curve in developing experiences which not only meet, but anticipate demand.
Which is why I’d love to find out more about your generation-based research to see how good a predictor it is of how values, demands, needs and tastes are likely to change over [X] number of years.
Finally, your article seems to be much more ‘consumer’ than ‘customer’ focused (i.e. B2C rather than B2B), look forward to reflecting and maybe discussing the crossover between the two…
Dr. Osman Khan says:
September 13, 2010 at 10:21 pm (Edit)
Hi Dean. An interesting topic. While I agree with you that loyalty as most companies take it is not very relevant. I think this model needs some amendments. Your definition of loyalty as you describe here is what we call Behavioral Loyalty. It is arguably the worst of a relationship that a company can create with its customers. What you suggest is that companies should try to do more. That more, as Michael commented is actually loyalty, just a different type. So you’re right in the sense that companies should stop trying to go for the lower level of loyalty, however loyalty itself is not dead. In fact, that is the thing that gives companies a competitive advantage. My 5 years of research has shown numerous examples of companies that do well over long periods of time as a result of having high levels of loyalty. This article is in line with one of my blogs on ‘why loyalty programs don’t actually build loyalty.’
Scott Zimmerman says:
September 16, 2010 at 9:28 pm (Edit)
I agree that the companies that focus on the relationship and the customer experience, rather than solely on customer loyalty, will be the winners in this new world of work. That very concept is what I call Engagement Communications.
Engagement Communications comprises the blending of advances in communications such as voice messaging, SMS, email and web portals with a human touch. Together they create points of engagement with a customer that not only makes a connection, but inspires them to take action.
Engagement Communications involves tailored and personalized campaign-based outreach which encourages two-way dialogue. While outgoing messages can be scaled to the hundreds and even thousands, each is delivered and experienced in a tailored and personalized manner. These ongoing two-way dialogues not only build better customer relationships, but also create a constant feedback loop that gives companies deeper insights into their customers’ motivations and needs.
For example, hotels and resorts are integrating their reservation systems with automated customer engagement communications. By providing customers, at point of check-in, the opportunity to receive SMS, voice or email messages to be notified about anything from happy hour discount notifications, show tickets or restaurant reservations, casinos are able to tailor the information and medium used to engage their customers.
TeleVox recently implemented an Engagement Communications pilot program for a Las Vegas casino/hotel where 5,000 patrons were notified of a special offer to receive a free room and concert ticket. Patrons could choose to be transferred to a call center to take advantage of the offer. The calls were significantly cheaper than a direct mail campaign and offered immediate and measurable results — our client saw 20% more Friday night traffic than any other night in recent memory and 25% higher day traffic than any day over the last.
Exemplary customer engagement comes down to knowing what kind of information customers want, as well as how and when they want to receive it. This level of customer engagement redefines the customer experience and perhaps may gain some customer loyalty along the way.
Thank you for the post.
Scott Zimmerman, President of http://www.televox.com
Guy Stephens says:
September 20, 2010 at 10:15 am (Edit)
Thought provoking article as always. Here are my less well thought through observations:
– Definition of loyalty perhaps needs clarifying? Do we confuse loyalty with repeat purchase, and try to reduce it to a transactional action, rather than a conceptual strategy (Wow, where did that come from, not sure what it means, but sounds good?!).
– Does the definition of loyalty change depending on what the desired outcome is and which department the person talks about it is from? Is loyalty different from a customer service, marketing, sales perspective? From a sales perspective, I would imagine loyalty is about what you do to increase the likelihood of a customer coming back or for them to recommend you to someone else. From a customer service perspective, loyalty is not about getting a customer to come back with a problem, but it might be creating a positive experience which influences them to come back for another purchase or to make a recommendation. Loyalty cannot happen in a silo, it needs a company-wide approach. Loyalty currently seems to be based on a specific programme or an action that the customer has to do, rather than an approach.
– What has a ‘loyalty card’ got to do with loyalty? Buy something, get points. But if you buy with a company for ten years, are the points you earn worth more because you have been with them longer or are they worth the same as someone who has only just signed up for the loyalty card?
– Loyalty isn’t a one-size fits all approach, and yet we often bandy this word about as if it is. What does loyalty look like from a customer’s perspective? I daresay current definitions of loyalty are business-centric.
– Businesses like to focus on the outcome – loyalty as the end game – as opposed to the steps that help us reach that desired outcome. What would loyalty look like if we focussed on the opportunities across the different touchpoints a company has to engender this thing that ultimately results in ‘loyalty’.
– In a changing world where customer-company interactions are very much about the moment – perhaps the result of our increasingly smartphone-dependant culture – what is the impact of this on engendering loyalty?
– I have been buying from Amazon for over ten years. What have they done to keep me coming back? Is creating a sense of ‘convenience’ part of loyalty? Is simply having a book I want part of loyalty? Do I get anything from Amazon for being with them – being loyal – to them for such a long time? I also shop from Waterstones and other bookshops because I happen to see something in the window or I have a few moments to spare. I come back through no sense of loyalty, even though I lie Waterstones and they have a Waterstones card now.
I can see that dogs are loyal to their masters, cats are loyal to whoever feeds them, people are loyal to their overdraft/bank loans/credit card repayments/mortgages, my children will be loyal to me until they become teenagers, and I am loyal to my wife (although sometimes loyalty and faithfulness are confused or interchangeable by some people!). Am I loyal to Amazon? No, but I am loyal to books and reading.
Daryl Choy says:
September 20, 2010 at 12:15 pm (Edit)
No firm can build loyalty, but earn it through delivering consistent positive experience across employee-customer-brand touchpoints.
Guy Stephens says:
September 20, 2010 at 3:00 pm (Edit)
A thought-provoking article as always. Here are my ill-thought through random observations:
– businesses tend to think of loyalty as an outcome, rather than the steps that engender loyalty. Either way, customers see through it.
– Are customers loyal, or are they simply interested in a good deal? Give me a good deal, and I will be as loyal as you want me to, for as long as you continue to give me a good deal.
– definition of loyalty changes depending on who is talking about it within an organisation. However, very few companies that I know of define loyalty or are clear about it from a company-wide perspective. Do sales, marketing, PR, customer service all share the same definition of loyalty?
– how do customers define loyalty? I would imagine it could be all things to all people? How does a company respond to this multitude of definitions?
– Loyalty cards: why do people get the same value of points whether they are a new customer or a ten-year old customer?
– I shop for books from Amazon (convenient), my local Waterstones (waiting for someone or passing by), I go to my local library to borrow books. Where does loyalty lie in all of this? What am I loyal to? In-store experience, convenience, physical experience?
– dogs are ‘loyal’ to their masters, cats are ‘loyal’ to themselves (and whoever feeds them), people are ‘loyal’ to their overdrafts/mortgages/debts, people are loyal to some brands (Harley Davidson), my children are loyal to me (until they become a teenager), I am loyal to my wife (although sometimes loyalty seems to be confused for fidelity).
Kelvin Smith – Competitive ADDvantage says:
September 23, 2010 at 3:59 pm (Edit)
Hi Dean,
Excellent and thought provoking topic which rings true for many. I do believe that loyalty schemes for today’s customers aren’t the differentiator that organisations think that they are. Customers are seeing them for what they are as a way for the business to keep the custom, these customers won’t be telling their friends and colleagues about the ‘great loyalty scheme’.
However, when a organisation provides a great or even poor experience you can almost guarantee our customer will end up telling someone. Providing great experiences can be worth some much more when looking to develop increased business results, and for the business they’re so cost effective. None of the additional costs associated with Loyalty Schemes and when the experience is replicated time and time again our customers become advocates.
My Nectar or Tesco Card will never get the same positive PR, and if these organisations provide a poor experience guess what – I won’t be that loyal.
So what comes first? Experience is the differentiator today and organisations should become passionate in their endeavour to create great experiences. Once they’ve licked that then they could add a loyalty scheme but it would have to be well thought out and in keeping with their vision and values as an customer centric organisation.
Once again Dean, excellent and thought provoking.