Dec
3
Here’s a thought for moving forward: Not just frequency, but loyalty
ONE FINE DAY amid the airline deregulation of the early 1980s, a visionary at American Airlines reasoned that it would cost nothing—and might just earn goodwill—to give unsold seats to frequent customers. In no time, the idea bled into other airlines and, later, into other verticals, from sandwich shops to financial institutions.
Not that the idea was new. Over a century ago, retailer L.H. Parke created Parke’s Blue Point Trading Stamps. Customers earned stamps by paying with cash and were able to use them to buy merchandise. Parke’s idea was a hit. Soon grocery stores, gas stations, and other merchants across the United States were offering the likes of S&H Green Stamps, Top Value Stamps, Gold Bond Stamps, Plaid Stamps, Blue Chip Stamps, and more.
The trading stamp heyday has passed, but points-toward-freebies to incentivize frequency and spend is alive and well. Such programs are ubiquitous to the point that the term “rewards program” has risen from industry jargon to common usage.
If your rewards program increases frequency and spend, congratulations are in order, for not all do. It doesn’t follow, however, that loyalty necessarily rises in sync. In fact, loyalty may remain flat. As direct response marketing guru Steve Cuno recently blogged, “If you think a bribed customer is a loyal customer, just wait until a competitor comes along and offers a richer bribe.”
Want to see real loyalty? Try selling a Kawasaki to a Harley rider, a Yamaha piano to a Steinway pianist, a PC to a Mac user, Wrangler jeans to a Levis wearer, Pepsi to a Coke enthusiast, or a Mets T-shirt to a Yankees fan. If you try, you may want to wear body armor.
Some of the above-named products have rewards programs and some do not, but every one of them has loyal customers. That’s “loyal” not so much as in “frequency and spend” and more as in “wild horses couldn’t drag ’em away.”
Loyalty of that variety is not the sort of thing you buy or bribe your way into. It’s something customers bestow. To date there is no sure formula for making them bestow it. Come up with one and you’ll be rich.
But here’s a clue. Recall any time that you have heard someone rave about a favorite product or place of business. Chances are that behind the rave were one or more anecdotes, not about technology and systems, but about treatment beyond the norm. Perhaps it was a problem solved, a name remembered, a courtesy extended, a generous policy, extra time taken, or a human approach.
In the financial services industry, we hear and preach ad nauseam that ours is a relationship business, and that, as interactions and transactions continue their march to digital platforms, strong relationships can save us from morphing into lookalikes.
Therein lies the opportunity. We’re dealing with people’s money! Few business transactions, legal ones, anyway, are more intimate. If any industry is in a position to perform in a way that deserves loyalty, it’s the financial services industry.
I have often blogged and spoken about the need build into functional systems a compelling customer experience. High tech shouldn’t mean detached.
Looking for a New Years Resolution? Consider that with no shortage of ordinary customer treatment out there, it doesn’t take much to be extraordinary. Besides frequency and spend, why not go for earning true loyalty?