Customer Loyalty: Obligation or Happy Marriage?
News Alert: Marriage today has reached an all-time high and all-time low. According to research referenced in a recent Time magazine article, married people describe marriage as “more satisfying or less satisfying” than any other generation ahead of our time, meaning the degree of happiness or the opposite is higher than ever.
The author of “30 Lessons for Loving,” Karl Pillemer, also referenced in Belinda Luscombe’s Time magazine article, sums up marriage as “really, really hard work” and a “commitment device”-like a program or system that locks people into situations they may find dreary or inconvenient in order to achieve a goal or reward later on. For some, those temporal states of dreariness or inconvenience are worth it as the good outweighs the bad in the end. For others, it’s not worth even the slightest bit of dismay.
Not hard to see where I’m going with this, but it is important to ponder.
Consumers cheat on brands in many of the same ways lovers cheat. If you don’t like your spouse, or are bored with pillow talk or household conversations, you can easily go online and “meet up” with someone new behind the closed doors in Skype, Facebook or any other online “chat” room. Pretty much the same way we hook up with new brands. Without social listening devices to help identify those who are happy with us vs. frustrated, and who are “chatting” with our competitors, we brand marketers are set up to be the “last to know” — and often, it’s too late to repair the damage.
With all the alternatives for just about any product and brand these days, and the easy access to new flings, making your brand experience a “marriage” worth enduring vs. “easy to replace” is critical, no matter what business you’re in. The divorce rate for marriage is about 50 percent, and according to reports on loyalty by various research firms, that’s roughly the same percentage of customers who stay loyal to brands these days. Accenture puts the customer loyalty rate at about 48 percent, indicating that 52 percent have switched brands due to poor customer service. And around 30 percent of customers switch just for fun, which makes it that much more “fun” for brands to secure lifetime value.
Growing apart is one of the top five reasons marriages fail. And yes, it’s a big reason why many brands lose around 40 percent of their customers every year and have to spend their valuable time and resources rebuilding their base vs. enjoying their profits.
With all the attractions out there luring customers from one brand to another, and all the demands and high expectations customers have today, is there really a way to keep marriages between consumers and brands alive?
Yes. Here are just a few ways to help assure you and your customers can celebrate many anniversaries ahead.
Many sources reporting on infidelity, from Fox News to WebMD, state that women cheat because of loneliness and a need to feel emotionally connected to a man, and of course, to have someone listen to them. Customers are really no different.
According to statistics on customer loyalty compiled by Access, a report by Apptentive shows that:
- 55 percent of consumers out there are likely to switch to another brand if their feedback or needs are being ignored by a current brand they patronize.
- 97 percent say that they are somewhat likely to increase their loyalty to a brand that listens and acts on their feedback.
Creating dialogues with your social media rather than monologues you hope they’ll “like” and “share” or “heart” and “retweet” is more than just good social manners. Per the above statistics, it’s critical to long-term commitment and sustainable revenue.
Engagement is not just about putting a ring on it! It’s about interacting with customers in meaningful ways that spark those warm fuzzies when we feel noticed, appreciated and connected with someone who has like values and seems to like us, too. By engaging with customers in ways that allow them to speak and be heard, and providing them with experiences that enable them to be part of the brand via user-generated content, applications, events or more, customer loyalty can soar.
Just look at the video game industry that now generates about the same revenue per year as Hollywood’s film industry. Gamers love to generate ideas for the games they play, attend their events in full costume to represent their favorite characters and avatars, and they bring others to their virtual worlds as they evangelize in ways that rival the success of even the best of religious missionaries.
Engagement does not just pay off in terms of keeping customers loyal and referring others, it pays off in increased transaction value, too. Cap Gemini research shows that fully engaged customers are worth at least 23 percent more in revenue and profitability than other customers. This same research shows that actively disengaged customers — who have chosen to find new relationships due to negative feelings — represent at least a 13 percent drop in share of wallet, profitability and revenue due to spreading bad vibes about a brand. With how quickly we can share our bad experiences via social media, this is a pretty serious issue facing all brands.
Brands need to engage with customers on customers’ terms, not via the channels that are most convenient to them. In today’s climate, those terms most often mean “mobile.” According to data from the Mobile Marketing Association, more than 4 million of us in the U.S. have shopped while driving our cars (please stop!), and 9 million during a business meeting. Brands that don’t let us shop via mobile are losing attractiveness. Consider more data from Apptentive that shows that 66 percent of companies that do not have a mobile app experienced a drop in customer loyalty during the past year, and 55 percent of customers who don’t get a response to an inquiry made via their mobile phones are likely to switch brands as a result of being ignored.
Customer loyalty programs that succeed are not comprised of commitment devices, like punch cards and points, but rather interactions that create emotional fulfillment and bonds.
While the most successful marriages in our “real” worlds are those based upon an equal partnership of both parties sharing financial and family responsibilities, it’s not quite the same in customer-brand marriages. Our expectations are high. When we decide to purchase from a given brand, after many hours of “courtship” through research, reading reviews and engaging online with chat agents, we expect the moon when we finally make that purchase.
Thanks to the foundation set by Neiman Marcus a few decades ago, we believe that “the customer is always right.” And we believe another precedent set by Nordstrom’s, that we should be able to “return anything for any reason any time.” Brands that don’t meet these expectations often get discarded for those that will, as we can typically get the same product elsewhere — especially in retail.
However, we brand champions need to find ways to serve others and make them feel we are giving 110 percent to the relationship (even if they give 50 percent); while of course preserving the dignity of our brands and our rights to do business in a responsible way. Brands — like spouses — should hold our ground and maintain respect. Our customer service policies need to be designed to make customers feel appreciated and engaged, and be fair to all involved. When we do this, we will likely generate reciprocal respect. Those who take advantage of generous customer service protocols are likely those with whom we can never have a healthy long-term marriage and in these cases, “breaking up” is a good thing.
Customer service is more than just being friendly and offering to take items back when customers are not happy. It’s about engagement. It’s about listening. It’s about making customers feel recognized and appreciated. All of the time. Customer loyalty and lifetime value are dependent on all these attributes and more.
With close to 80 percent of customers, per Nielsen’s research, choosing not to assign loyalty to any brand, the “dating” race is on, the field is open, and its anyone’s game to win. So instead of marketing to consumers, we need to start courting them by “listening, engaging and serving” in ways that will enable us to have healthy, long-term relationships and many happy anniversaries ahead.
Jeanette McMurtry is a psychology-based marketing expert providing strategy, campaign development, and sales and marketing training to brands in all industries on how to achieve psychological relevance for all aspects of a customer's experience. She is the author of the recently released edition of “Marketing for Dummies” (Fifth Edition, Wiley) and “Big Business Marketing for Small Business Budgets” (McGraw Hill). She is a popular and engaging keynote speaker and workshop instructor on marketing psychology worldwide. Her blog will share insights and tactics for engaging B2B and B2C purchasers' unconscious minds which drive 90 percent of our thoughts, attitudes and behavior, and provide actionable and affordable tips for upping sales and ROI through emotional selling propositions. Her blog will share insights and tactics for engaging consumers' unconscious minds, which drive 90 percent of our thoughts and purchasing attitudes and behavior. She'll explore how color, images and social influences like scarcity, peer pressure and even religion affect consumers' interest in engaging with your brand, your message and buying from you. Reach her at Jeanette@e4marketingco.com.