Loyalty is not build by reward points or incentives, but by a strong foundation of serving the basic need and expectation of a customer from your product or services A friend of my recalled his summer training experience which bolstered my belief around the enigma called “Loyalty”. The pal had shortlisted a project to understand the loyalty in soft drinks selection among consumer. A simple question asked by his project guide left him speechless. During a hot summer a retailer offers a customer you to choose between a Diet Coke or chilled Pepsi, which one would you select? Loyalty has been an integral buzzword in all functions of business right from Human Resources vouching for employee loyalty to customer service department seeking to retain a one. The revenue custodian marketing looks not only for retention but also a better share of her wallet. Loyalty is critical for organizations’ success as it symbiotic and rewarding proposition for both parties. In the customer centric context we have been taught a basic equation that “It costs five times more to acquire a customer than to retain a customer”. For many organizations, loyalty is limited to reward points or incentives used as a carrot to ensure customer stays and provides steady revenue stream. During my weekend grocery shopping, I observed a lady with stack of loyalty cards of all supermarkets ranging from Payback (Future Group) to Star Bazaar Rewards and from Reliance Select to Landmark rewards along with single brand loyalty cards. In this situation, the loyalty is overshadowed by the zest to “extract and encash” the value of every paisa spends on these departmental stores. But definitely this is not “Loyalty” (still some stores may be happy over her visit frequency and average spend per visit to the store) It has been observed that customers does not have any explicit reasons for using a product or service but customers have valid reasons for ending relationship with a service provider or product. The customer serving costs are spiraling, brands are becoming commodity and the switching cost and effort for a customer are becoming low which aggravates the task to make her loyal. Creating a loyalty for all can be tricky and costly proposition. It needs empowerment and investment at multi-layers of customer interfacing layers. Along with it, different customers have different expectations and many often leave you (red faced) without giving warning signals as the switching costs are low. Technology has also enabled her not only to compare your services but also provided her a medium to vent out her anger in different social forums. While rewards may not actually retain customers, serving at par of their expectations may help you so as they do not turn disloyal to your services. As basics, we marketers need to understand and evaluate the thin line of functionality and utilitarianism of the product and the cost paid by her. Higher the gap more is the trouble. With this, serve the customer with a bare minimum (floor) benchmark of her expectations and watermark levels (term used by wealth managers to ensure returns to HNI’s) created by your sales pitch claims or marketing activities at any given point of time. The right return for gaining the loyalty is to invest in right infrastructure, technology and manpower to enhance her experience to make the moment of truth a wow experience as you may not be able to create a loyalty akin of cult brands like Apple, Harley, Disney, Ritz Carlton but you can definitely prevent her to be disloyal with a limited resources. In case if you are planning for a loyalty scheme I suggest you to first check the basics (foundation) on which the castle of loyalty is to be built. (c) Sunil Singh Rana, 2016
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A working professional with 19+ years of experience in Sales, Marketing, Strategy and Operations, I am an avid reader and quizzer.
My areas of interest are Business Strategy, Marketing, Customer Management and Digital Media. With my blogger mission as "Learn, Think and Share", I would love to share my thoughts on business strategy, leadership, management, marketing and business quizzing. If my blogs help you out in your professional growth or my quizzes provides a perfect match of infotainment, then I will consider my little attempt as rewarding. - Sunil Singh Rana ABOUT AUTHORArchives
December 2018
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