That is the truth – organizations that focused on customer loyalty are taking the wrong path to customer retention. Mea culpa, I was one of those people who saw Customer Loyalty as the end-all for customer service. If you could just achieve high levels of loyalty, the idea goes, you won’t have to worry about customer retention. I have since learned through work I have done with several clients, that loyalty carries no reward with it. There is no higher wallet-share, there is no higher likelihood of repeat purchases — there is nothing that foretells that Customer Loyalty helps an organization, and plenty to show otherwise.
Maria Palma wrote in her blog (Customers Are Always) a couple of days ago that Bargains and Deals may just trump customer loyalty. I commented in that blog that loyalty only brings up your cost of customer maintenance, and it does not provide you with the benefits you expect. Let me expand on that. Customer Loyalty and Customer Satisfaction are similar concepts: they rely on feelings that are not easy to manage or control, are expensive and cumbersome to measure appropriately, and they have not really shown any correlation between what they cost and the benefits they bring. It is just another way to look at a customer feeling about a company, instead of a product or experience, that cannot be used to predict future behavior.
In the movie “Nothing in Common” Jackie Gleason plays an older salesperson who prides himself in having the best relationships with his clients. They all admire him, respect him, and have great loyalty towards him. Early in the movie, a brash young new VP of sales calls him into his office to discuss his performance. He is truly impressed by the relationship he has with his clients, but when he looks at the performance he is dismayed. Abysmal sales numbers have been trickling in for the last few years. Turns out all his clients are now buying from the competition because they have better shipping policies and cheaper prices. So much for loyalty, and for Jackie’s job.
I said it before, and I will say it again. Don’t focus your metrics on your customer’s feelings. Instead, focus on what matters. There are three things you can do to ignore customer satisfaction and customer loyalty and come out ahead:
1. Build a solid infrastructure (technologies and processes) to deliver great customer experiences across channels.
2. Extend it to include feedback, sales, marketing, operations, and to create end-to-end commendable customer experiences
3. Ensure that the delivery of your experiences meet customer expectations, and use expectations to improve your delivery
Then, you won’t have to worry about loyalty, satisfaction, or anything like that. Then you will be able to simply focus on doing the best possible job for your customers – and get rewarded for it.
Are you focusing on the right metrics? Are you doing the right thing?