Frightening Tales of Customer Loyalty

Posted on October 17, 2011 by Vicki L. James

It’s that time of year again – ghosts and goblins and all things scary.  Good times – especially when fun-size candy bars are involved.   But when it comes to customer loyalty, scary is . . . well . . . just plain scary.  Lately I’ve read some terrifying stories of retailers’ frightful attempts to reward customers and solidify relationships.  I’d like to share one of those spine-tingling tales with you.  Hopefully it doesn’t creep you out too much.

A Trick rather than a Treat

A recent blog post described a Best Buy customer’s harrowing experience as she tried to redeem a $20 reward that was sent to her.   Excited to receive her treat, she happily entered the local Best Buy – unsuspecting of the horror that awaited her.

Rigor Mortis Rules

Standing in the check-out line only to be told that she needed to wait in another line at Customer Service to redeem her “reward” was enough to make her scream.  But it got worse.  After waiting yet again, she was told that she could not redeem the reward because her purchase was $19.99 – a penny short of the face value of her certificate.  Apparently, that was against the rules.  She offered to give them the additional penny – but that didn’t fly.  Reluctantly, this customer added a tube of lip balm to her purchase so that the total amount would exceed the required $20.

RIP Customer Loyalty

I left out a lot of the gory details but ultimately the length of this customer’s nightmare was 35 minutes.  The last line of her blog post encapsulated her new sentiment:  “Way to make me feel rewarded Best Buy!”  Sounds like her loyalty may have met the Grim Reaper.

Turn Chilling into Thrilling

There are some ways that dreadful outcomes like this can be avoided:

1.  Make it easy for customers to redeem.  If this customer didn’t exaggerate her story and indeed had to wait in two lines to use her reward – shame on Best Buy.  Every customer experience needs to be easy and convenient.

2.  Empower the front line.  Clearly this customer had a frustrating experience.  Trained customer-facing employees should have recognized this and had the latitude to rectify it immediately.  Never, ever let a customer go home angry. (See the 5-Second Rule for an example of a retailer who did it right.)

3.  Don’t be so rigid.  Retailers tend to get so caught up in their rules that they risk estranging their customers rather than endearing them.  It is a bit mind-boggling that a customer relationship would be jeopardized over a single penny.

Keep an Eyeball on the Big Picture

Customer relationships are much bigger than a single reward.   Retailers can’t afford to let trivial rules frighten away their future business.  Disenchanted customers tend to be vocal and share their experiences with the world.  In fact, 25% of shopping conversations are posted online while the customer is still in the store – a definite sign of the times.  Monitoring social media and rectifying those issues as soon as possible can help mitigate irreparable damage.

So, what loyalty experiences have you encountered lately?  Were they tricks? Or, were they treats?  Please share!

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90 Degrees of Customer Loyalty

Posted on February 21, 2011 by Vicki L. James

An article in an online trade publication recently caught my eye.   “Retailers on a Quest to Rekindle the Personal Touch of a Bygone Era”, the headline read.  Naturally, I jumped all over it and quickly learned that some retailers – department store, specialty, and grocery – are trying to make the customer shopping experience more intimate – kind of like how it used to be, way back when.  These retailers are hoping to build customer loyalty by capturing some of that old magic from the days when sales clerks not only knew their customers by name but they knew the styles and the brands they liked as well.

Someone’s doin’ it right!

“What was this — an initiative that actually considers the customer’s entire experience; all 360 degrees of it?  Why, that’s unheard of in this world of points and rewards!” (I apologize for the sarcasm, couldn’t help myself.)  I read on about how these companies recognize that customers want to shop retailers that know them, that understand their lifestyle and what is relevant to them.  This was great stuff.  These retailers were creating “My Experience” types of interactions – from merchandising to special events to relevant catalogs and communications.  It was all looking so good to me but then, out of the blue, the proverbial shoe dropped.  A special call-out in the article stated that these special initiatives were totally separate from these retailers’ respective customer loyalty programs. Why, you ask?  It was further explained that My Experience type initiatives are meant to focus on understanding the customer and delivering relevant products and information whereas the focus of the loyalty program is to reward frequent shopping.

Wait, I was mistaken

I had to read that sentence a couple of times just to make sure I got it right.  I must confess, I don’t understand.  The point of customer loyalty is just that – customer loyalty – all of it, not part of it.  Programs that focus solely on rewards essentially stop at the 90 degree point of the relationship.

That leaves a whole 270 degrees disjointed from the loyalty building effort.  It’s not all about points and rewards; it’s about relevance and meaning throughout every customer touch point, from the shopping experience to the online experience to promotions and offers. That’s what builds customer loyalty.

While I applaud the efforts of the companies cited in the article, I still think they are missing a tremendous opportunity by keeping their My Experience initiatives separate from their loyalty programs. The two go hand in hand and could only serve to strengthen the impact each has on customer relationships if they were unified.

So what do you think?

Anyone care to weigh in on the subject?  I’m interested in your thoughts.  I’m also interested in hearing about any loyalty programs that take the entire experience into consideration.

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Customer Loyalty Starts at Home

Posted on December 30, 2010 by Vicki L. James

I wanted to elaborate on a comment I made in my last post regarding the correlation between employee loyalty and customer loyalty.  Often, companies treat those two issues as if they are distant cousins or completely unrelated, but in reality, customer loyalty is the offspring of employee loyalty, and as such, it needs to remain top of mind.

Studies, such as those by Walker Information, suggest that employee loyalty and customer loyalty run on parallel paths –  as one ebbs and flows, so does the other.   While correlation and causation are two completely different things, the link between the two is indisputable.  Think about the role that a consistent excellent customer experience has on building customer retention and loyalty.  Now consider the following stats compiled from Walker’s annual studies.  Which type of employee do you want interacting with your customers?
But how do you ensure that you are building employee loyalty so that you can in turn build customer loyalty? Here are some tips to consider:

Articulate
Make sure to articulate your expectations to your employees.  Don’t take anything for granted.  You’d be surprised at the employees who don’t inherently acknowledge or offer assistance to customers as they encounter them.  If you want your employees to greet and acknowledge customers, articulate that expectation to them – and reward it.

Communicate
Let your employees know how their behavior impacts your business.  If you’re establishment is ranked high on customer loyalty, let them know that.  If you’ve had a particularly successful business month, share that information as well.  It gives them a source of pride and you an opportunity to communicate the role their contribution plays on the success of your business.

Demonstrate
Always, always, always lead by example.  In a recent blog post, I mentioned how impressed I was with the level of service delivered by a Macy’s store manager.  She acknowledged customers as they passed in the aisle and proactively offered assistance to those who looked like they had a question or needed help.  Your employees will follow your lead so make sure you are exhibiting the same behavior that you expect from them.

Motivate
According to Dr. Linn Ann Tyrrell, employee loyalty expert, employers should engage in regular one-on-one sessions with employees to gather feedback and understand their motivations and aspirations for growth.  She recommends quarterly sessions that are separate from performance evaluations. Understanding how they want to grow and advance doesn’t necessarily mean that you have to have open positions into which your employees may be promoted.  Use special projects as a motivator.  Giving special assignments to employees will help them develop professionally and give you an opportunity to get stuff done.

Appreciate
Just as you want to acknowledge your appreciation for your customers, you should acknowledge your appreciation for your employees – particularly those who go above and beyond the call of duty.  Creating an incentive program to reward exceptional customer service works well and reinforces the desired employee behavior.

These are just a few suggestions.  Do you have some examples of what has worked well within your company?  Share what you’ve done to engage your employees and build their loyalty.

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Is your Loyalty Strategy Holly Jolly or Humbug?

Posted on December 7, 2010 by Vicki L. James

Every December I drive past several Christmas tree lots to a small church lot to buy my tree.  It’s not that this lot has a particularly huge selection – just a few rows of trees, or that the prices are so great – not sure about that one because I haven’t price-checked my trees lately.  I go out of my way every year because the experience there is so great!  There is something different about the people working that lot.  They’re always friendly and seem genuinely happy to be there – even in the arctic temperatures.  Last weekend I made my annual trek to the lot and emerged with a beautiful, fresh tree (the scent in the car was incredible!) AND a warm, festive feeling – just as I have done for the past 15 years. 

Frosty the Sales Clerk

In contrast, a friend, who recently rejoined the workforce part-time as a cashier for a big box retailer, was lamenting to me about the environment of indifference at the store.  Not Grinch-like, per se, but there were very few heartfelt “hellos” or genuine “thank-you’s” expressed to customers.   “It’s the holiday season for crying out loud” she sighed, “and no one seems to really care.”  Sounds a little like a line from A Charlie Brown Christmas, doesn’t it? Unfortunately, it’s the storyline of many businesses today.  Customer loyalty is the stated goal but customer experience is the overlooked step.

Protecting your Silver and Gold

Implementing a loyalty strategy can be an expensive undertaking, particularly if there is a formalized program involved. Don’t underestimate the role that your customers’ experience will ultimately play in your success.  The best program in the world is destined to fail and take a bunch of your silver and gold with it if you don’t have a deep level of employee commitment.   

 Here are some tips:

1.  Good Will to All starts at the top.  Recently, I wrote about how the manager of a large Macy’s store exceeded my expectations with her customer service.  One of the readers commented that probably all employees at that location were just as helpful because the manager would tolerate nothing less.   That assumption is very true – leadership sets the example for everyone else.  So make sure your managers are on board.

2.  Hire Merry and Bright.  I worked with a bank that recruited new tellers from restaurants, retailers, and any other place that employed friendly people.  This client’s rationale was that it could train someone to open an account, but it couldn’t train someone to have a personality.  Not everyone is suited for customer-facing positions.  Make sure you are hiring people that will be friendly and engaging with your customers.  No Jack Frost or Ebenezer types.

3.  Ensure Happiness and Cheer.  You won’t have customer loyalty if you don’t have employee loyalty.  High employee churn will naturally have an impact on your customer’s experience.  It takes time for new hires to learn and it takes even more to establish customer rapport.  Keep employees happy and retained, and you’ll keep customers happy and loyal.

The Weather Outside is Frightful

The overall business climate is still pretty cold these days.  You can’t afford to risk your customer relationships by delivering average or below average customer experiences. 

So what do your customers feel?  Holly Jolly or Humbug?

If you liked this post, do your friends (and us) a favor, tweet it, like it, or share it on Facebook.  Thank you and Happy Holidays!

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How to Create a Sugar Addict

Posted on November 9, 2010 by Vicki L. James

Last time, we talked about how “too much candy” is bad for a loyalty program.  Consider a recent NY Times article “When 50% Off Just Won’t Do” or a DM News article highlighting how marketers are “beefing up” their loyalty rewards, and it becomes clear that the trend of added-sugar is alive and well and growing sweeter every day.  While sugary deals and rewards may attract swarms of shoppers, they inadvertently create a customer base of sugar addicts – customers who can’t or won’t shop without a sweet deal or reward.  That’s bad news for marketers – sugar is a tough habit to control.  (Ever try to eat just one M & M?)

Think before you sweeten

Sweetening the rewards pot across the board is not only unhealthy for your program, it’s expensive.  Loyalty programs yield a wealth of customer information – so if any sweetening needs to occur; it should at least be done in a targeted manner.  Otherwise, you’re just throwing margin out the window while you create rewards-dependent customers – which is unhealthy for any business.  Sure your sales will experience a burst of energy but like all sugar rushes, it’s short-lived and the crash can leave your business more lethargic than before.   Yes, the ripple effect of sales declines can be huge, but piling on the rewards, willy-nilly is not the answer.

Please don’t misunderstand; I’m all for tweaking loyalty programs.  In fact, I suppose that the majority of programs out there have become bland over the years and could use a little spicing up – but in a proper and well-thought manner. 

Here are some quick steps to keep your program tasty yet healthy:

1.  Objectively assess your program’s performance. The key word here is “objective”.  When doing a thorough assessment of your loyalty program, you may find that it’s not delivering the results you need.  Are you objective enough to determine whether your program has become tasteless and unappealing? If not, let a professional do it for you.  It’ll cost you a little bit but it’s definitely worth it – you’ll spend more money funding an unproductive program than you will on a professional assessment.

2.  Tweak the Recipe.  Chances are you’ll find that the program is no longer fully supporting your evolving business needs.  If so, don’t be afraid to change it.  Sprinkling the entire program with greater rewards is probably not the way to go, but you can let the performance assessment guide you to the areas that need a little added spice.

3.  Sweeten the pot with co-marketing partners.  Consider hooking-up with a few relevant, non-competitive marketing partners to offer rewards.  They can help shoulder the financial burden and will likely provide a fresh source of new customers.

Keep the big picture in mind.  Go ahead, sweeten your promotional discounts (moderately, of course) to stimulate incremental spending during leaner times, but make sure you keep it separate from your program.  Too much added sugar may taste good to your customers right now but it’ll form a bunch of cavities in your loyalty program over the long-term.

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Is Your Loyalty Program Haunted?

Posted on October 27, 2010 by Vicki L. James

Ghosts and goblins; tricks and treats – it’s that time of year again. No, I’m not referring to election season (although here in Chicago, the elections are more tricks than treats!), I’m referring to Halloween.   It’s a fun time for kids of all ages but for loyalty marketers, a haunted customer loyalty program is frightening indeed.

Cobwebs and Creaky Doors

If you haven’t spent time evaluating and updating your loyalty program recently, chances are the cobwebs have taken over.  There are a host of external factors that can impact the performance of your loyalty program – economy, unemployment, and consumer confidence come immediately to mind.  For that reason alone, it’s critical to “carve out” some time to evaluate the ability of your program to deliver the results you need.  If you don’t, the cobwebs and creaky doors may soon get replaced by tombstones.

Too Much Candy

Rumor has it there are houses that give out full-size candy bars to trick-or-treaters.  What?  I don’t recall visiting any of those houses as a kid, but I would’ve liked to know where they were!  In response to sluggish sales, many companies have started to distribute “full-size candy bars” to their customers, that is, they’ve begun to unilaterally add richer rewards to their program.  This is an expensive and risky action.  Sure, it’ll make them more popular with customers, but just like distributing full size candy bars, it’s an expensive behavior to maintain over the long term and may have to be discontinued at some point.  If you do that, you risk losing the business you gained – or at best, getting your “house egged!”

Skeleton on Your Doorstep

This is the opposite of too much candy.  A solid customer loyalty program design must walk the fine line between too many and too few benefits.  Sway heavily on the too many side, and your program becomes too costly.  Leaning toward too few benefits will make your customers yawn and unresponsive.  Soft benefits such as advance notice of sales and vaguely defined “member only” events are commonplace and have little perceived value.  The most successful loyalty programs have a benefits structure that blends tangible and non-tangible rewards with relevance and meaning.  So if your program only offers “soft” benefits, better get some meat on those bones.   Most people find a skeleton on a doorstep uninviting and even a little scary.

Ghosts of “Mist” Opportunities

Every touch point with a customer is an opportunity to strengthen the relationship.  Yet so many companies only focus on interactions as they relate to sales promotions or the loyalty program and are haunted by a myriad of missed opportunities.  In another blog post, I detailed an experience where a store manager at Macy’s turned a potential relationship-threatening event into a relationship-strengthening one.  (Click here to read about it.)  Take steps to ensure that at every customer touch point, be it in the store, on the phone, via mail, or online, you are strengthening the relationship.

So, leave the haunted houses and trick-or-treating to the kids this season.  Bust the ghosts in your program and clean out the cobwebs.  It’ll be far less scary that way.

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Finding the Right Cause for Your Cause

Posted on October 19, 2010 by Vicki L. James

So, we’ve learned from the stats that customers would rather do business with companies that help those in need.  You believe in the strategy and want to make a difference, but with so many worthy causes, how do you select one that is meaningful to your customers?  Well, creating an integrated strategy that considers the different types of causes and how they intertwine with your business and customer base is a good start. 

Immediate Relief Cause

Hurricane Katrina and the Haiti earthquake come to mind as examples of causes in which temporary yet immediate relief was necessary.  Coming to the aid of those who have been directly impacted by a disaster is not only a humanitarian response but a response that your customers will appreciate.  According to a recent study by Cone LLC, nearly 75% of Americans believe that companies should engage in immediate disaster relief efforts.  However, supporting the occasional relief effort is only one component of a strategy that should be two-pronged in its implementation.

Long-Term Cause

Providing longer-term support to a cause is the second prong of the strategy.  According to the Cone study, health and disease, education, and hunger rank high on the list of issues consumers think companies should address.  Unfortunately, that still leaves a myriad of causes from which to choose, so answering a few questions may help you winnow it.

1.  How does the cause relate to your business?  Years ago I worked for a sporting goods retailer.  At the time, we were working with the Women’s Sports Foundation to promote female sports participation, so we introduced a scholarship program for female athletes.  This not only supported education but it added a nuance that was meaningful to our business and our customers.   

2.  How does it affect the communities in which you do business?  Community involvement is fundamental.  Your customers live in those communities, and anything you can do to make life better will be well received.  A great example of adding a community focus to a national cause is Target’s Take Charge of Education program which allows customers to register any school in their community.  

3.  Is it important to your employees?  Your employees are ambassadors of your brand so selecting a charitable cause that they will embrace is an important component of your strategy. Consider that employees who rally around the cause are 36% more likely to feel loyalty toward their company, plus their support can have a direct impact on customer behavior.  According to the Cone study, 70% of consumers are more likely to make a cause-related purchase or donation if an employee recommends it.

Share the news

Don’t forget to complete the process by communicating results back to your customers.  I am fully aware that Target has contributed over $18 million to schools since 2009.  Why — because Target shares that in its customer communications.  Sharing the results not only reinforces your altruistic effort, it reminds customers of the direct impact their shopping can have on their communities and the lives of others.  

Everyone wins

Cause-related marketing is important on multiple fronts:  Charitable causes receive much-needed support, customers feel a sense of contribution, and companies strengthen their customer relationships.  Essentially, everyone wins.

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When You Give, You Grow

Posted on September 28, 2010 by Vicki L. James

Box Tops for Education, Save Lids to Save Lives®, Meals for Minds are just a few examples of the many charitable tie-in programs that have become an integral part of their sponsoring company’s strategy.  Take a look at the inserts in your Sunday paper, and the trend will become apparent.  Cause-related programs are much more plentiful today than when I was a kid collecting Campbell’s Soup labels for my school.  And for good reason –not only is it socially responsible, but if executed properly, it will help you grow customer relationships.

 The Switch Is On

According to the 2010 Cone Cause Evolution Study, 80% of American consumers would switch to brands of equal quality and value if it supported a cause.  Taking it a step further, support for a cause would motivate over 60% to try a brand about which they are completely unfamiliar and motivate nearly 20% to purchase a more expensive brand.  While these numbers present a compelling argument, exercise extreme caution before embarking on the cause-related path.  One or two missteps will result in customer alienation rather than customer loyalty.

 Is Your Heart In It? 

Make sure your heart is in the right place – right out of the gate.  If customers think for a second that you are supporting a cause because you want to grow your profits or deflect negative publicity, you’re doomed to fail.   The $100 million donation to Newark schools recently made by Mark Zuckerberg raised a few eyebrows.  No doubt the money will do a lot of good but some are questioning the timing of the donation.  Was it made to divert attention from the portrayal of the Facebook CEO in the film, The Social Network?  The two may be totally unrelated, but the questions being raised detract from the good will that would ordinarily result from such a generous donation.

 No Room for Dabblers

Integrating a cause-related program into your customer loyalty strategy requires 100% commitment.  If you can’t commit to it, don’t do it. The Campbell’s Soup label program has been in place for over 35 years, and Target’s Take Charge of Education for over 12 years.   Short term programs that respond to disasters such as hurricanes or oil spills are also effective at building an emotional connection with customers and stimulating purchase behavior.   This is particularly important in tougher economic times when consumers may not feel they can directly support charitable causes but would still like to contribute at some level.   According to the Cone study, 81% of Americans WANT to buy products in which a portion of the sale is allocated to support a cause or issue.

 If you don’t have a cause related component in your loyalty strategy, you could be missing a key opportunity to connect with your customers.  It’s all about building the relationship and emotionally connecting at all levels.

 Next up:  How to Find the Cause to Fit Your Cause

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How to Create a “Pointless” Loyalty Strategy

Posted on August 27, 2010 by Vicki L. James

The concept of customer loyalty is often misunderstood.  For many, it is synonymous with a formal rewards program – “the path to loyalty is paved with points”.  For others it’s a bit like Santa Claus –you believe in it during the early years, it’s a nice warm thought to have, but the cold reality is that it is “just a myth – there is no such thing as loyalty”.  The purpose of this post is to debunk both of those misconceptions and set the record straight. 

 First and foremost: “Yes Virginia, there is Customer Loyalty!”

Customers can and will be loyal – with and without points.  You just need to know how to go after it. It’s basic psychology. In general, people want to feel like they belong, and they want to feel valued.  Note the word “feel.”  Loyalty is rooted in emotion, and if you can make that emotional connection with your customers, you will be well on your way –even without awarding a single point.  It takes a little work, a bit of patience, a lot of common sense, and a business-wide commitment.  But loyalty does exist, and it can be built with your customers – you just have to believe (and work at it!)

 Secondly:  Loyalty Strategy ≠ Points Program

Let’s clarify one thing right out of the gate, the words “loyalty strategy” and “points program” are NOT synonymous.  As a life-long loyalty marketer, it is very frustrating when people confuse the two.  Much like the frustration when people use the word “agnostic” when they mean “neutral,” or the word “schizophrenic” instead of  “split personality”, (but I digress.)  There are plenty of programs that shell out points and rewards but do nothing to build relationships.  Remove the rewards; lose the customer.  Conversely, there are plenty of strategies that have no points, nor do they shell out rewards but are successful at building solid relationships.  Since points based programs are often quite costly, you may be wondering “what are some strategies that don’t involve points and rewards?”  Okay, let’s talk about a big one – relevance.

 The Magic of Relevance

Think about your personal relationships and what makes them tick.  Chances are you have much in common with your friends; you talk about things that are relevant to each other; you do things together that you each enjoy.  It works because your interactions primarily center on your mutual interests.  But what would happen if you started talking only about subjects YOU are interested in or doing things only YOU want to do.  After a while, you probably wouldn’t be spending much time with your friends.

 Now think about your customers for a minute.  Are your interactions relevant to both of you or just relevant to you?  A great example of this can be found at my bank.  Char has been my relationship manager for a number of years.  One day I received a booklet in the mail from the bank containing a variety of information related to policy changes and whatnot.  I noticed there were little post-it notes with arrows drawn on them on a few of the pages.  At the bottom of the first post-it note was a message from Char: 

 “I know you don’t read this kind of stuff, so I’ve drawn arrows by the topics that apply to you.” 

 How awesome is that?!  First of all, my banker knows I don’t read all their propaganda and secondly, she knows me well enough to highlight what is meaningful to my situation.  That is relevance, and that has built my loyalty to my bank.  No points.  No toaster ovens.  No rockin’ interest rates.  Just relevance.

 No intelligence; No relevance

To engage in meaningful interactions with your customers, you must have customer intelligence.  Gather information about your customers and their transactions from multiple sources such as private label credit cards, on-line purchases, data append, and existing loyalty cards.  Then mine that information so you can market smarter by moving away from one-size-fits-all to placing the right offer in the right hands at the right time. Furthermore, when disseminated across the enterprise, it will enable you to make every touch point a meaningful one for your customers. 

 Your customers are vulnerable

Your competition is actively pursuing new customers, and if you don’t have a solid strategy in place, your customer base is left vulnerable.  You need loyal customers, particularly these days – they’re the ones you can count on to shop in the leaner times, and they’re the ones who’ll stick around even if things go wrong (and much as we’d like to believe every customer experience is great, the reality is that is things go wrong at times.)  Focusing on customer loyalty is not an option, it’s a requirement.

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