Customer loyalty or customer hostages?
January 16th, 2010 | by Shaun |A few days ago, as I was busily writing a bunch of pieces for our newsletter, I had a bit on an epiphany about “customer loyalty.” I had just finished reading yet another article on how good old customer loyalty has gone the way of the dinosaurs. Our new global marketplace is giving people so many choices, the author claimed, that “loyalty” is simply just an unrealistic goal. Her arguments were compelling, to be sure, but they somehow just weren’t sitting well with me. If loyalty is dead, how do we explain the rabidly loyal customer base of companies like Apple, Starbucks, Four Seasons, Harvard University, Lululemon, Southwest Airlines - the list goes on.
It was then that it hit me. This new global marketplace hasn’t killed loyalty. What it’s really doing is shining a bright light on loyalty’s true nature. Hear me out on this - and I’m anxious to hear what you think: In the “good old days,” we customers shopped in the same stores over and over again. We bought from the same suppliers for years and years. Because of this, we were classified as ‘loyal customers.’ But were we really? When you stop and think about it, why was it that you went to the same bookstore month after month? Why did you buy your groceries from the same store? Why did you get all your hardware from the same retailer? In all likelihood, you did business with them because your choices were limited. They might only have had one or two competitors, or they might have been the only game in town. It wasn’t loyalty that drove you to those stores - it was a hostage situation.
Rather than kill customer loyalty, what our new global marketplace has really done is free the hostages. Consumers are now free to choose from a mind-numbing array of alternatives, and because so few companies are truly engaging these free spirits and providing consistant value, we end up with a colossal revolving door - or “churn” as the communications industry terms it.
What the extraordinarily successful companies have done (like the companies mentioned above) that others have not, is they have made the real shift in their organizations to a customer focus. It’s not just lip service to them, or a like item on the mission statement. They truly understand that loyalty is a two-way street. if you want loyalty from someone, you first have to demonstrate loyalty to that person. You have to give them value - not just a convincing marketing spin, but true value. Customers have to believe that you care more about them than you do their wallets. Your structure, policies, practices and people all have to be focused. The exciting news, I believe, is that all these free spirits genuinely want companies to be loyal to. All it takes is a company with the courage and vision to deliver it.
