We try so hard to make our customers satisfied. At least most of us do. Sometimes we underestimate them. We think they are fickle and promiscuous and will move to another supplier just to save a penny or two. This is a misguided view. Imagine that we treated our staff like this. But we don’t. We give our staff bonuses, we thank them, we try to draw them closer to us. In this article from the FT this week Michael Schrage argues that if we treated our customers more like our staff, we would be more successful in winning their loyalty.
Customers want loyalty not perfection
By Michael Schrage
Published: May 2 2007 With frustration verging on despair, marketing gurus and brand managers worldwide bemoan the erosion of customer loyalty. The global power of consumer brands is not what it used to be and marketers resent it. They think their customers fickle ingrates. In the pungent phrase of WPP’s Marian Salzman, an executive “trend spotter” at the world’s second largest advertising conglomerate, consumers today are “brand sluts” who are most loyal to instant gratification.
This “consumer-as-slattern” attitude is a far cry from advertising grand master David Ogilvy’s marketing admonition that: “The consumer isn’t a moron. She’s your wife.” But look at a ty-pical block of network advertising in the US. You will see at least a quarter of the prime-time brand advertisements portray their target customers and prospects as idiots and nincompoops. These are meant to be “edgy” and “humorous”. Mega-brand fast food, breakfast cereal and telecommunications companies such as McDonald’s, Kellogg’s and Verizon in effect cast their own consumers as wimps and wea- sels even as chief marketing officers complain that brand loyalty is dead.
In reality, the declared demise of brand loyalty is 180 degrees misunderstood. A review of the past decade reveals customers have not been cavalierly unfaithful to established brands; quite the opposite. Established brands have cheated on and betrayed their most loyal customers. They charge more and more for less and less; they chase after the youth market or the hot segment du jour; their “innovations” frequently add more complexity than value; and their willingness to apologise and compensate for errors or mistakes is nil. The more provocative marketing argument is that “brand inertia” far more than “brand loyalty” has kept so many customers for so many companies for so long.
Consumers are neither sheep nor fools. They can sense when companies are consistently more loyal to investors, employees and regulators than to the people who buy their products and services. They behave accordingly. Customers are not being disloyal; they are being discriminating. The central marketing question confronting brand leaders therefore is not “how can we radically increase customer loyalty?” but “how can we radically increase our own loyalty to customers?”
The distinction is enormous. It is analogous to companies that say they promote a culture of “employee loyalty” even as cutbacks and lay-offs surge during economic slowdowns and mergers. Top management demands loyalty from below while regretfully declining to reciprocate. Yet the moral authority and value of loyalty comes from the courage to hold fast during difficult times. It is the defiant unwillingness of enterprises to be loyal to their best customers that has produced the promiscuous consumer behaviour they deplore. The real sin here is that companies have wilfully confused “brand loyalty” with “customer retention”. Just as with sullen employees, that is the perfunctory loyalty of compliance, not of pride or passion.
This challenge is not complex. Companies demonstrate loyalty to employees by investing in them, fairly compensating them, tapping their expertise and declining to throw them overboard when times get tough. Why should customers deserve any less?
This is where traditional marketing and brand advertising fail. Often, it is not the brand attribute of flawless service but the real-world performance in rapidly recovering from a mistake that wins customer loyalty and return business. Examples are legion: airline reservationists who waive “change fees” for inadvertently misbooked flights or mobile telephone operators who politely and without complaint remove rightly disputed charges from the bill. These are less acts of “customer service” than demonstrations of loyalty to customers. “Brand value” comes not from promises of perfection but gracefully compensating for acknowledged weakness. At least one global luxury hotel chain and a British telecoms provider have conducted customer research revealing that their most persuasive “word of mouth” support comes more from individuals who have had an unpleasant problem happily resolved than those who simply enjoyed “good” or “excellent” service. The willingness and ability to see a difficult situation through to success despite cost and risk is what defines loyalty. Many companies already know this and invest accordingly.
To be fair, financial pressures, increasing transparency and the demands of hydra-headed corporate social responsibility movements make it more difficult than ever for companies to balance “customer loyalty” with “loyalty to customers”. Consumers are far quicker to see a brand as a mask the company hides behind.
However, this is where new technology creates new opportunities for reciprocal loyalty. Increasingly, cutting-edge companies such as Google and Apple - strong brands in their own right - create online spaces where customers can collaborate and interact around new features and technical problems. Established brands such as Procter & Gamble and the BBC have used digital media to listen to customer ideas and shape new products. Customers know that these organisations have invested millions of dollars, pounds and euros into taking them seriously. In this millennium, brand value comes from investing as much in valued customers as in valuable products and services.
