I often encounter the confusion between frequent purchase programs and Loyalty strategies. I don’t believe these are equivalent and would like to address it.

For a long time, the marketplace has endorsed the lowering of prices as a justifiable form of value-add. And, although a lower price does, in fact, constitute value (more for less), it is hardly productive.

By now, most of us have figured out that the incremental sales achieved by a lowering of price will only last as long as the price advantage. We would all agree this increment should not be attributed to Customer Loyalty.

Points, free merchandise or discounts through frequent purchase programs, no matter how well camouflaged, still result in a perceived reduction of price. And, although customers may act more loyal due to the accumulated points in their frequent purchase accounts, they are in fact, attached to the points, NOT the brand. We should be careful not to equate captivity with LOYALTY.

I have a Delta SkyMiles account. Although I am somewhat captive, I took a United flight to LA (which I don’t like) because it was $200 cheaper. I am somewhat captive, but certainly not LOYAL. Captive audiences will stay as long as it is advantageous, but let’s not say that we are creating LOYALTY.

LOYALTY is the ultimate goal in a commoditized market. To have customers that have accepted our brand as part of their life’s value structure is a privilege and takes hard work. We can’t buy this kind of LOYALTY. If we want it, we’ll need to think about adding value to our customers’ lives, and making them emotional in the process.

Most companies have not been able to quantify the ROI on Customer Loyalty and therefore, find it difficult to commit the resources to creating it.

Instead, we continue to feed the price-erosion monster through masqueraded lower pricing, and add insult to injury, by calling it LOYALTY.

If we want Loyal customers we’ll have to do more than offer double points on any purchase before the end of the month.

Rudy Vidal
Committed to XCS

Different types of customers have different needs and thereby, benefit from different customer satisfaction strategies. One type of customer is the Business to Business (B2B) customer.

Due to the symbiotic relationship between supplier and customer, the B2B customer can have a heavy and seemingly uncontrolled reliance on the supplier’s ability to meet their operational expectations. Whenever there is potential lack of control, we see a need to manage trust.

Customer relationship management is more of an art than a science. But it’s one of those art-forms more easily managed when the basic principles of the craft are known and followed. In my view, one of the most important of these CRM principles is response velocity.

The Inherently weakness in the armor of a CRM relationship is the customer’s fear in not being able to control a supplier’s personnel or business processes and thus not being able to control their own fate. “Will they deliver as promised? Am I one of many customers and will they give me the attention I need to be successful? Will they add value to my business?

This fear is tested every time a customer reaches out and makes a request. The manner in which the request is acknowledged and followed is used as a measure of a suppliers intention to serve. A high perceived intention to serve will translate to trust.

So, few things strengthen a CRM relationship more than high response velocity. Even when we solve a customer issue within the expected time frame, if the response velocity is slow, trust will be diminished.

Bottom line – When our B2B customers calls, answer right away. When we get an email, answer it immediately-not one hour later, even if just to say, “I got your email, I’m on it”.

Build internal expectations and standards for response velocity.

Delays in getting back to our customer or in reaching out when we should, creates lack of trust and weakens the relationship.

Giving them more than they expect, feels better on both sides of the relationship.

Committed to XCS !

Rudy Vidal

]]> http://rudyvidal.net/2009/04/faster-is-better/feed/ 0 http://rudyvidal.net/2009/03/all-customers-are-not-created-equal/ http://rudyvidal.net/2009/03/all-customers-are-not-created-equal/#comments Fri, 27 Mar 2009 05:12:51 +0000 Rudy Vidal http://willtheybuyagain.wordpress.com/?p=235

Your contact center is suffering from unexpected staff shortage. Two queues are are in trouble. Michelle, one of your super agents is skilled in both queues. Where do you place her?

Actually, it doesn’t matter. The point is you will decide to put the agent in one of the queues, which ultimately means, for whatever reason, you will consider one queue, a set of customers, to be more important than another.

Because service and the idea of serving people has an ethical taste, it is easy to adopt a general altruistic philosophy towards customer satisfaction. As a humanist you may believe all customers should be addressed with the same attention regardless of their economic weight on the organization, however, for a business person managing limited resources, some customers are worth more than others.

Depending on your company’s priorities customer may be more important because they purchased a strategic product or because your company needs quick market share growth in a particular segment to win a positioning battle. For whatever reason, when in a resource constrained situation, some customers are in fact more equal than others.

Great customer centric organization work hard to avoid this dilemma altogether. When Customer Centricity becomes part of our corporate DNA, we begin to proactively manage the incessant pressure of limited resources, always including the customer in our business plans, our contingencies and our innovation.

Customers are resources just like cash. The difference is that customers can appreciate the value we add and the difference we make in their lives, and therefore, can offer long term loyalty.

The benefits in the transformation of corporate DNA towards customer centricity is not only external in the way customers see us, but more internal in the way we begin to see ourselves; holding ourselves to a different standard for the benefit of our customers, and therefore our own, as a member of a social group.

“Recognizing our responsibilities as industrialists, we will devote ourselves to the progress and development of society and the well-being of people through our business activities, thereby enhancing the quality of life throughout the world.” – Konosuke Matsushita, 1932

At some point we will all have to make the decision to place super agent Michelle in one queue over another, but our intention to work towards avoiding the dilemma altogether, speaks volumes about our future.

Committed to XCS !
Rudy Vidal