Loyalty: extremely difficult to loose..

Usually I stick to Customer Services and Contact Center stuff on this blog. Nevertheless I will be branching out, over the next couple of months, to other areas that focus more on the Customer Experience and Loyalty-drivers. I will not quit writing about Customer Services and Contact Centers, and also the Goose chase will return. You can see this post as the starting point for branching out.

Loyalty: extremely difficult to loose

Loyalty is an extremely difficult thing to measure due to the semantics involved. It is therefor also perceived as extremely difficult to obtain. I think differently: Loyalty is extremely difficult to loose. When people start to do business with a company they rarely think: I’ll do this once and then never again. When they try the service or product they have the intention of re-using or maybe even buying more if they are happy with the service or product. Because people need confirmation about their purchases, they really want to shout it out loud and sell it to you too. Once you have your prospect actually buying, he is in, with mostly positive feelings, intention to buy more or re-purchase and the intention to tell all his friends. All customers start out as loyal customers. That is:

Unless you are in the price fighting business

If you are in the price fighting business you will attract less loyal customers. They come for low prices and they will go for low prices too. Some will stick around for some longer to avoid the switching hassle. Some might be compelled to stay because of the great service experience and usefullness of the product or service (if you have that to offer). Most will leave though when the grass looks more green on the other side of the fence.

In these difficult times quite some companies are desperate to get some new business. Specifically those that were not in great shape before the crisis. They will try to not lower prices when they don’t need to. As soon as the next best buy comes along though, and customers start moving, what will their instinctive reaction be? Fight back with great new customer offers to attract new customers too and show the market place that they still have the best offer.

How to destroy value

Whilst doing so, these companies forget about the one and only thing they should be focusing on: their current customers! As a result the current customer, who was not that loyal to start with, feels completely left out and is compelled easily to go with the offer of the next best buy. The result: more customers will run away compared to coming in. At best there is a balance, but even then a lot of money has been wasted on financing the marketing campaign and the offer. Value is destroyed. How difficult is that to swallow?

How to create value

Creating value is a lot more easy and less costly: everybody knows that it costs ten times more to gain a new customer over keeping one. If you are willing to spend as much as you would be on getting in new clients, how many customers could you keep inside (if you do the math: Just one tip: be proactive with the “loyalty” offer. A retention offer, after the customer has decided to leave, does not have the same mathematical advantages)? and what would that do to the loyalty mix in your customer base? What will it do to the Word of Mouth? from my perspective the answers to these questions have a far more likely positive outcome than the answer to the questions: how likely is it that the new customers you attract are loyal customers? How likely is it that you create value for your customer and your company?

You can even increase your chances when you focus your efforts on improving the Customer Experience. How that’s done cannot be answered in one simple blog. Esteban Kolsky is writing a series on Crafting Awesome Experiences and Bruce Temkin has some solid proof that the Customer Experience Matters.

Bottom line: Growth starts from the inside! Where are you chasing yours?

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