The Customer Loyalty Mistake
Posted by Deborah Chaddock Brown on December 3, 2009 under Loyalty | 
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I feel strongly about developing relationships with customers which I believe, in turn, develops loyalty; customers who remember, refer and return.
So I’m often on the look out for other’s opinions on the topic. This morning I read a post by Susan Abbott entitled Loyalty or Loyalty Programs: There is a Difference. She gives a great example that shows how a customer’s use of a loyalty program could APPEAR to mean that customer is loyal when in fact that isn’t the case.
If you need loyalty points to get repeat purchase you may have a great loyalty program, but you might not have much true loyalty…It’s a mistake to confuse consumer commitment to your loyalty program with the true preference for your service offering. We just love the points.
Developing a loyal fan base of customers requires more attention to the relaltionship than just a good deal or accumulating points against a future purchase. It involves understanding your customer’s needs and expectations and then working hard to make it easy to do business with.
Valerie Maltoni talks about the importance of our reputation as it relates to customers referring us to their friends and family in her post entitled The Value of Reputation. She offers up a study that shows the seven key areas that relate, in the customer’s mind, to our reputation:
Valerie goes on to explain that “according to the Institute’s research, if you improve reputation by 5 points, support goes up by 6.75%.”
Her article explains the importance of every department – even those traditionally not connected with the customer – needing to focus on the customer in order to positively impact the corporate reputation.
In my last corporate job I spent most of my years on the operations side – directly connected to the customer, but in my final two years as Director of Communication – I was in the “shared services” department of the company. You know – those departments that never talk to customers; HR, finance, real estate, and IT. I found that the employees felt no connection to the company performance on a day to day basis because it didn’t mean anything to them. They had blinders on to their tasks at hand. There wasn’t any connection between what they did and how it impacted the customer.
I wonder how many companies operate that way – assuming that only the operational folks need to worry about how the customer views the company reputation. If every person in every department understood their value in making it easier to do business with, I wonder what impact that would have on reputation and thus recommendations and ultimately loyalty.
Valerie asks the question
How many of you are actively working on communicating with the people and communities that contribute to influencing your brand’s reputation across these seven dimensions? Customers, employees, partners, investors, and so on.
You know that reputation has an impact on the perceived value of your company and brand.
Are you actively working to improve your company reputation in the eyes of your customer or do you rely on loyalty programs to keep them coming back. As Susan stated – if it is just for the points – then what happens if you take away the program or reduce the point value? Wouldn’t you rather have customers coming back because they know you understand them, you care about their needs and you strive to make life easier for them?
How are you building loyalty? Through a points program or through customer relationships?
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