Try this. Conjure up the name of a brand - one that features in your life. Now, without thinking too deeply, is that brand on your side? I realise it's a simple question but it evokes an immediate response. One that forces you to process a vast number of criteria in a flash. It’s a simple way to solicit an instant indication of your brand loyalty - or lack of it.
Big brands need to fight on so many different fronts to win our love and respect. Think Apple. Not content with being just a hardware manufacturer, Apple launched physical stores to humanise and demonstrate Apple’s magnetic magic. It spent vast sums of money and effort optimising the Out Of Box Experience (OOBE) for its physical products. It created services like Music, News, TV and Pay. Apple knows that each positive customer experience, at every touchpoint, adds together to create and amplify customer appreciation and loyalty.
Many of today’s brand relationships are cloaked in such complexity that we've learned to trade suspicion and doubt for the practical benefits they bring to our lives. A good example might be Facebook which offer masses of utility, while sucking our private data to use in ways that we are not always privy to. Nevertheless, some of us still tolerate this semi-Faustian arrangement. These brands are our ‘frenemies’.
Other companies have simply forgotten the connection between customer service and customer loyalty. Their locked-in, paying customers are often the ones being treated most shabbily. Anyone with a mobile phone knows that by letting the service contract roll over and renew automatically is unlikely to generate a good deal - let alone a discount. It usually makes more commercial sense to threaten to cancel a contract at the end of its term and shop around for a better one. The same can be said for insurance policies, maintenance contracts, pretty much anything that has a fixed term renewal.
The final group are the companies that have sold their services to us for years at one price, only to remove services or support, unless we are prepared to pay for a plethora of new products, features or services that we have no need for. My personal bête noire here is Adobe - a company that forces most of its users to pay a subscription for products that we never wanted and will never use.
So, as you can see, businesses are often working against the best interests of their customers. Why have things gone so wrong? Is it shareholder demands for increased profitability? Is it customer demands for lower prices? Whole business sectors seem to compete to offer the least worst service which seems at odds with most company's desires to grow market share.
Any marketer or economist will tell you that customer retention is almost always a cheaper activity than customer acquisition. So squandering customer loyalty is short term thinking. The rules to grow a business are extremely simple.
- Get more customers.
- Get them to buy more.
- Keep them for longer.
Apple shows that sales are not always driven by low prices. Nor are sales much affected by points, miles, rewards or prizes.
The accepted wisdom in marketing circles is that customer relationships have been reduced to just data. Customer lifetime value is managed and measured with statistics and data. Yet at its heart, customer loyalty, like all relationships, is driven purely by emotion.
Business success is driven by everybody winning - shareholders, employees and customers. Winning starts with a great product or service. Retention requires the forging of a meaningful and valuable relationship with a customer - one built on empathy, transparency and above all, integrity. Companies need to relate to their customers and empathise with them more. For example:
- Understand grievances, failings and shortcomings and fix them (don't just offer excuses or workarounds).
- Forget those Terms and Conditions that are written by lawyers.
- Don't keep customers on hold for 40 minutes when there is no online alternative to a call.
- Forget pricing models that are designed to drive up airline seat yields (and leave ticket holders on the tarmac as they wait for the next flight).
- End downgrades and unjustified price hikes.
- Start thinking about customer lifetime value meaning precisely that - A customer that you keep for life.
As brands start to realise the value of empathy and customer trust, they will grasp the financial significance of serving as a portal to deliver fresh products and services that are not currently part of their offering. If you trust Apple, Amazon or Tesla, why wouldn't you buy medical insurance from them? Or home security? Especially commoditised products like electricity.
There is no doubt that a small number of trusted providers will claim more of our wallets in future. And the number of brands that we are prepared to have such meaningful relationships with, will shrink.
So, Brands, may I plead with you to revisit these 3 crucial questions:
- How long can I keep my customers?
- How much is a customer worth?
- How much would I spend to get one?
Customer Loyalty has never been more important - nor has it ever been so badly under appreciated or poorly understood.
Thank you for reading this article. If you haven't already, we would love you to join the 'Who's On My Side' study here.