Building Customer Loyalty: “If you can’t say anything nice, don’t say anything at all”

Posted on March 15, 2012 by Vicki L. James

“Welcome . . . See inside for great savings just for you” read the cover of a mailer I received from a pet retailer.  As the doting parent of twin kittens and a new member in this retailer’s loyalty program, I was happy to see that piece sitting in my mailbox.  While I couldn’t relate much to the picture of the dog on the cover, I definitely could relate to the “great savings” message. (I am quite the indulgent pet owner.)  My happiness was short-lived when I opened the mailer to discover my special savings coupon: 25% off any one dog treat or toy.

Really, Mr. Pet Retailer, this is all you’ve got?  After I have told you I own cats, given you their names / birthdays on the program enrollment form, AND spent a lot of money buying cat supplies at your stores, you decide that my special savings should be a dog offer?  Baffled by the logic, I decided to send an inquiry to this retailer’s customer service department.  Even more baffling, is the response:

We apologize for any inconvenience. Please know that the promotional coupons are coming directly from the manufacturer and I am sorry to inform you that we don’t have the capability to check any of those.

What?!  There was not a single manufacturer listed on the mailer.  The 25% coupon savings was for ANY dog treat – so this customer service person clearly was unaware, untrained, or simply did not care. Regardless, this response does not bode well for the future of our relationship.

Why should I even bother to give my pet information on the loyalty club enrollment form and continue to spend hundreds of dollars on cat-related purchases at this retailer’s stores if it can’t control the messages sent to its customers?  Contrast that with the promotion I received this morning from the competitive pet retailer.  The headline read:

Meow. Get Exclusive Savings For Your Cat!

Now that’s more like it!  I don’t know about you, but when I was growing up, I was taught “if you can’t say anything nice, don’t say anything at all.”  I think it’s nice to receive communications acknowledging my type of pet and motivating me to shop.  On the flip side, the other pet retailer did more damage to our relationship by sending me something meaningless than had I received no “special savings just for me” at all.

Great advice when building customer loyalty:

Keep it relevant or keep it away from your customers!

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Rule of Customer Loyalty: “I Brought You into This World and I Can Take You Out”

Posted on November 16, 2011 by Vicki L. James

“How can I whine about the cost of my DVD-by Mail service when there are real problems in this world?” uttered the character, Abby Sciuto, on last night’s NCIS episode. As someone who lives and breathes customer loyalty every day, I was rather impressed that a company actually pissed off enough customers to warrant a reference on the number one show on television. Congratulations Netflix.

Netflix, along with Bank of America, are recent examples of companies that seem to have ignored the mom-ism (and Bill Cosby-ism from the 80’s) “I brought you into this world, and I can take you out.”

Netflix was made by its subscribers. Likewise, Bank of America would be nowhere without its account-holders. It appears that both companies forgot about that and proceeded to trounce all over those customer relationships. And both companies were very quickly reminded that the customers who built their business are the same customers who can destroy it.

As always, there are numerous customer loyalty lessons to be learned here. We’ll just highlight a couple of the biggies for today:

1. Raising prices without adding value
My business partner was a loyal Netflix subscriber but he promptly dropped his subscription after the 60% fee increase was announced. Could he have afforded the $16.99 a month? Sure. But there was no way he was going to pay that much more and get nothing more in return.

I completely understand the need to raise prices, but it’s all about value – perceived or real – it needs to be there or you risk a tremendous customer (and shareholder) backlash. Had Netflix provided some added value to its services, they wouldn’t be scrambling to regain the 800,000 plus customers they lost in the third quarter this year.

2. Eliminating “free” rarely goes over big
A Harris Interactive poll released just this month indicates that nearly 10% of customers with Bank of America accounts are “not likely at all” to remain with the bank. Can a bank really afford to lose 10% of its customers? I guess that depends on which 10% defect, but if I’m Bank of America, I’m not so sure I want to roll the dice that my best customers are in that group.

Again, completely on board with needing to maintain revenue, but again, be smart about it. One has to believe there were alternative tactics to making up for the lost debit revenue. There better be because B of A backpedaled on their monthly debit fee pretty quickly and now needs a Plan B. Unfortunately for them, their ill-conceived Plan A dented many customer relationships.

Alienating the bystanders
What about the impact on future relationships – relationships with prospective customers who have been sittin’ on the couch watching all the negative press? I suspect those folks won’t be flocking to the B of A or Netflix doorstep any time soon. When you consider the hit that acquisition is taking in addition to the exodus of many existing customers, the impact of these two gaffes is truly monumental.

The most important lesson learned here:

Don’t mess with your customers. They brought you into the world, and they’ll take you out!

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Part 5: Are Your Customer Loyalty Initiatives Attracting the “Wrong Crowd”? – Questions and Answers

Posted on October 18, 2011 by Vicki L. James

Part five of our six part webinar series. During the webinar, there were quite a number of questions asked of the Loyalty Hound.  This video picks up with a lively question and answer session about “the Wrong Crowd” and strategies to transform them into the “Right Crowd”.

Part Five in our Webinar Series Video: Click Here to View

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Part 4: Are Your Customer Loyalty Initiatives Attracting the “Wrong Crowd”? – Refining Your Initiatives

Posted on October 12, 2011 by Vicki L. James

Part four of our six part webinar series. Now that we have talked about who the “wrong crowd” is, there impact on your business, and how to transform them.  Now it’s time to refine your initiatives to make a lasting impact!

Part Four in our Webinar Series Video: Click Here to View

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Part 3: Are Your Customer Loyalty Initiatives Attracting the “Wrong Crowd”? – Transforming the “Wrong Crowd”

Posted on October 4, 2011 by Vicki L. James

Part 3 of our six part webinar series. Now we know who the “wrong crowd” is and their impact on our business.  What can you do to make a positive impact on your business?  You need to transform them.

Part Three in our Webinar Series Video: Click Here to View

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Part 2: Are Your Customer Loyalty Initiatives Attracting the “Wrong Crowd”? – Impacts of the “Wrong Crowd”

Posted on September 26, 2011 by Vicki L. James

Part 2 of our six part webinar series. Now that we have talked about who the “wrong crowd” is, what about the impact that they are having on your business?

Part Two in our Webinar Series Video: Click Here to View

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Part 1: Are Your Customer Loyalty Initiatives Attracting the “Wrong Crowd”?

Posted on September 15, 2011 by Vicki James

You may not know it, but there are 4 types of customers that are secretly eroding your margins.  If you don’t identify them, they can get you into big trouble down the road!

Growing up, we were always warned to stay away from the “wrong crowd”.  Mom always said that hanging out with them would lead to nothing but trouble.  That was valuable advice for teenagers and GREAT advice for retail marketers!

You can’t build a stable, loyal customer base with the wrong crowd.  Watch the first in a six part series of videos taken from our recent webinar.  Find out how to:

  • Identify the 4 key customer types that are the wrong crowd for revenue growth
  • Transform these customers so they contribute revenue rather than consume margin
  • Attract more of the “right crowd” that will sustain and grow your business

Webinar Series Introduction Video: Click Here to View

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“Put that Loyalty Program Back; It’s Too Expensive”

Posted on September 13, 2011 by Vicki L. James

Every Friday my mom dragged us kids grocery shopping.  It was sheer drudgery for both my mom and us!  “Can we have this?” was the question at every aisle.  “Put that back, it’s too expensive” was the reply at every aisle.

Not a big deal – we heard it all the time.  But what if my mom had agreed to buy something really cool and then reneged on the offer?  My mom would have never done that, but it’s exactly what some companies are forced to do with their loyalty programs.

We Can’t Afford It!

It seems that recent financial reforms have sliced pretty deep into the profits of FIs.  As a result, loyalty programs that once offered rewards for using debit cards are no longer affordable.  My bank recently disbanded its loyalty program by sending a letter to cardholders notifying them of the legislation, why it could no longer afford the program, and introducing an alternative – tied to credit card use.

Exiting a loyalty program is risky business as it can very easily alienate customers.  On the flip side, not correcting a program that has become too expensive can have a major impact on profitability.   So, what is a company to do if it is in that situation?  Here are a few tips:

1.  Avoid that situation at all costs.

Companies may feel compelled to load-up their loyalty programs with extra goodies to stimulate shopping.  While this may result in some short-term sales boosts, the expense of shelling out those extra rewards can linger for much longer – which can make the program too costly over the long-term.  This is easily avoided by making sure the benefit structure is commensurate with incremental purchases.  That way, you can ensure your rewards are always funded by the behavior they motivate.

2. If you must scale-back or disband:

  • Communicate to members early and often. Make sure that every member is aware of the changes and why.  That means you must communicate your message directly in a letter or email or both.  You may also want to post notices in-store and on your web site.  But, be careful with this channel, you want to protect your image with customers who may not even be in your loyalty program.
  • Communicate internally.  All customer-facing employees should be aware of the changes in advance of notifying members.  Provide them with guidelines on how to answer questions and reiterate your company’s appreciation for their business.
  • Reassure your commitment to customers. My bank made sure to communicate that it is retaining its free services and is focused on meeting the needs of its customers.  Reinforcing this message is essential to mitigating customer alienation.
  • Offer an alternative, if you can.  Just like my bank offered to transition members to its credit card loyalty program, offering an alternative option will be important to your customers.

Remember, nobody likes to be given a reward only to have it taken away.  But careful planning to avoid that situation or special handling if you are in that situation will help you protect and even strengthen your customer relationships.

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All I Need to Know about Customer Loyalty, I Learned from Mom

Posted on August 16, 2011 by admin

Announcing the kick-off of our Lunch ‘n Learn Series!

All I Need to Know about Customer Loyalty, I Learned from Mom

Webinar Series Introduction Video: Click Here to View

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Loyalty Programs: “Easier to keep up than to catch up”

Posted on July 12, 2011 by Vicki L. James

Remember the days of trying to read an entire book the night before a test at school?  Or hurrying to finish a research paper the morning it was due?  Every year, my mom’s back-to-school advice was “Remember, it’s easier to keep up than to catch up.”  And every year, I would think about that as I was frantically trying to start and finish a project in the same night!

This Mom-ism is particularly wise advice for loyalty programs.  Innovations in technology have helped fuel a retail digital revolution, but according to recent Aberdeen research, 75% of loyalty programs have failed to keep pace.  This has resulted in disjointed loyalty tactics that are impeding program results.

Here’s a quick test to see how well your loyalty program has kept up with the times:

1.  Are points, discounts, and “advance notice” of sales the heart of your program?

2.  Are your communications to members almost exclusively promotional?

3.  Do your customers need to print out the coupons you email to them?

4.  Are your coupons primarily “blanket discounts” (e.g. 20% off any purchase, Get $10 off any $30 purchase)?

5.  Do all of your customers pretty much receive the same offer or reward?

If you answered yes to all 5 questions, look around you – Partridge Family posters adorn your walls and The Brady Bunch is on your TV.  Sadly you are stuck in the 70’s.

If you answered yes to 3-4 questions, you dress like Miami Vice and you’re probably talking on a cell phone that weighs three pounds as your program is firmly entrenched in the 80’s.

If you answered yes to 1-2 questions, congratulations, you’ve made it to the 90’s as you watch episodes of “Friends” with your “Rachel” haircut.

All humor aside, loyalty programs are a serious investment, and the fact that 75% are outdated is a major concern and a waste of good marketing dollars.  But alas, all is not lost — it is never too late to catch-up.   Here are the some key areas for modernization:

  • Communications – need to be cross-channel, timely, and meaningful.  Real time is best – the technology is there, and it allows you to impact your customers’ behavior while they are still shopping.
  • Promotions – It’s a digital world so ditch those paper coupons!  Printing is not only costly for you but clipping and carrying is a pain for your customers.
  • Relevance – Loyalty programs yield a treasure trove of customer data – use it to create relevant offers and messages.
  • Rewards – Points and rewards are so last century – get creative with your benefits.  If you don’t, you’ll look like everyone else, and that’s not an effective loyalty strategy.

This may sound a little self-serving (as I am a loyalty consultant), but my best advice is to look externally for help.  An outsider will be able to bring the resources, objectivity, and fresh perspective you need to update your program NOW – versus “whenever,” if you try to do it internally.

It’s time to bring your loyalty program into the 21st century.  If you don’t, its impact on customers will be a thing of the past – just like that old brick phone!

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