Thoughts on entrepreneurship, startups, and tech.


What Happened To Customer Loyalty?

Remember the days when companies scrambled to keep you as a customer, albeit making sometimes obscure and timid propositions, but whenever things went down to the line, they would make sure you stayed. Well, nowadays it looks like the most recent customer always wins.

Take just banking, insurance, and telecom for examples (there are others) and walk into any one of their branches, mall shops, corners or online and inquire about a new account. Now, once you’re done, go find a family member, friend, colleague or neighbor who ‘has’ an active and long-standing subscription and compare. The terms and conditions you were just offered most often come up more advantageous and cheaper than those who already are customers of those brands. Unusual? A recent study found that 72% of North American finance and telecom services offered better rates to new consumers than those that were already customers?!

Let’s not overlook the service and tourism industry where loyalty takes a more intimate, if not dramatic, form. It’s frequent to see scenes of disorder in restaurants, retail, and hotels where customers politely claiming repair and compensation get their requests resolutely rejected and when voicing their discontent and intention of dropping their business get simply — ignored (often based on some peculiar procedure written in an incomprehensible service manual).

What’s happened to customer loyalty?

Lazy economics and short sighted management are the principal culprits. Freshly minted newbie analysts that feed isolated and vertical data sets to zealous managers eager to appear smart in meetings. Proof, most customer loyalty programs are driven solely by customer lifetime value and customer profitability analysis results. Although these complex calculations are very pertinent in targeting certain segments that are disrupting customer service excellence and those that are underserved and might benefit from additional attention, they are equally damaging to those that are erratically active, momentarily idle or have declining engagement habits. There are of course the other obvious blindspots to managing loyalty exclusively via math; the subtleness of information regarding the competition, brand recommendations, brand emotion, ease of grievance, depth of forgiveness and omnichannel abandon reasons (some of which can be partially measured). Add to these the whims & impulses of consumers catalyzed by the ever-changing winds observed in the social-media sphere today (which to understand take meteorological data firepower to even scratch the surface) that is in turn heavily influenced by the media and you get a better idea of why internal statistics are only one piece of the pie. Combine this marching order with short term focused inexperienced management (who forget they are customers too when they’re out of the office) and you get the chaos described above at points of sale.

Today, everyone is a customer.

But why do companies continue to use an analytical only approach with their customer programs? Is this trend reserved for large corporations because of pressure on shareholder returns or does it affect other sectors of the economy that are more independent? Are brands in the service sector more inclined to alienate their customers driven by the characteristically high customer churn or do manufacturers adopt similar policies because of low margins? Is there a similar disparity between brick-and-mortar and online? No, everyone seems to be somewhat affected by the virus. Some large networks have to a certain degree adopted programs that “listen & adapt” to their customers but nothing comes close to small independent commerce who know that it’s this distinctive quality that set’s them apart and that if well played, no one, large or small is capable of challenging.

In my view brands of any shape & size and in any layer of the economy that do not privilege “analog” methods today in their customer strategy and going to lack important human characteristics when making decisions and their livelihood is going to be put at stake. Companies should take a more complex and nuanced position on the results of cold data sets and start with the fundamentals of human behavior that Maslow’s hierarchy describes and, that people of different races, ethnicities, sexes, and nationalities share in roughly the same measure.

You care about getting it right. You’re willing to keep going until you get it right. The customer is the one who determines what “right” is.

Despite all the talk about Internet disintermediation, pressure from competition, endless bargain hunting at specialized outlets, Apple still maintains one of the best brand loyalty biases in the world. That loyalty is the key to the constant innovation, it’s the key to earnings per share, and it’s the key to their growth. And the best place to start to learn why that level of loyalty subsists is by interacting with any of their customer touch points because — caring is the most powerful marketing strategy there is.