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My IBiz Weekly |
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In This Week's Issue:
Feature Article #2
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Note From Your Publisher
Client Relations In A Post-Loyalty Era
Most folks adore simplistic business slogans, such as, "Build a better mousetrap and customers will beat a path to your door." But they're not always true. Prospective buyers have to hear about your innovation, find it accessible, be able to afford it, and not already have something in their basement that can do roughly the same job at a fraction of the price, or be able to keep limping along without your novel gizmo. "The customer is always right” is another adage that is also coming under suspicion. With the advent of CRM, customer relationship management, more companies are actively repudiating the idea that customers can do no wrong. If, for example, they require too much of our attention, i.E. They’re too expensive to serve, we’ll do what was once never thought acceptable: we’ll fire them, while trying to keep the less attention-seeking, and therefore more profitable clients, in our portfolios. Sprint is a case in point. It just “terminated” its contracts with 1,000 cellular customers because they required too much service, calling in, from the view of that carrier, way too often. This is especially incongruous when companies like sprint say they’re interested in achieving customer loyalty. How can companies that fire clients expect to get loyalty when they’re not willing to reciprocate? And then firms bemoan the fact that customers will not tolerate price increases and bolt to competitors that woo them with special sales or perks. I think it’s helpful to stroll down memory lane for a minute to determine how we got to this particular bend in the road. A good spot to start is by examining the unintended consequences that so-called customer loyalty programs have had on the psyches of sellers and buyers. Let me turn back the clock. Once upon a time in the united states it was considered unethical, if not illegal, to pay customers for their business. The belief was that if you accepted a gift, which was known as a “bribe” from a vendor, inevitably the cost of that booty would be passed on in the form of higher prices to your employer. So, if an airline, before the advent of frequent flyer programs, “gifted you” with a perk, they were offering a forbidden temptation and you were suspect if you accepted it. It was seen by many as being tantamount to stealing from your employer, if he or she was paying for that seat. (Remember when corporations tried to get their employees to turn over their miles to the firm, claiming they belonged to those who were footing the bill?) for a while, these programs operated rationally, while creating a win-win situation. airlines, especially, were able to create brand preferences in an industry known for customer fickleness. And carriers could fill otherwise empty seats with award travelers, who would be grateful for the free getaways. If flying those discretionary trips on american versus continental airlines would bump you up to executive platinum status, you (or your company) would get more for your money by earning miles faster and getting cheaper or no-cost upgrades. Plus, rewards programs softened the blow of having to be on the road for business, away from home and loved ones. But here’s what happened that transformed reward programs into punishment programs. Consumers would fly some of the most indirect routes imaginable, on too many segments, simply to maximize miles. They also started earning bonus miles for nearly everything, when using charge cards, applying for mortgages, and so on. Airlines awarded so many miles that they couldn’t fill the demand for free seats. They introduced blackout periods and then restricted the number of award seats available on popular flights and routes. They jacked up the number of miles needed for various routes, especially to popular “premium” venues, such as Hawaii and Europe. Next, they inaugurated one of the greatest “takeaways” in consumer history by making miles “expire,” if unused by certain dates. On the one hand, miles became easier to amass, but on the other, they became too difficult to use. Buyers were being paid for their loyalty with funny-money. But customers are not stupid. They can do basic math, and the figures not only don’t add up, they make people downright cynical. For example, if you can save hundreds of dollars by flying a discount carrier, and actually get on flights when you want, that means more than racking up miles with a more established carrier that are worth less, or practically nothing at all if you can’t use them. When airlines started their awards programs I'm sure they didn’t seek customer cynicism as an outcome. Nor did they want to create a populace that believes earning miles is meaningless, because they won’t be able to be redeemed. These results create disloyalty, the very opposite of what airlines had in mind. I believe we’ll look back on frequency marketing schemes, whether they’re offered by your airline, dry cleaner, favorite Italian restaurant, or hair stylist, as wasteful and ultimately, as dysfunctional. For instance, I only eat at a certain restaurant when it offers double or triple points, redeemable for free food. Certainly, they expected me to continue to patronize the place, but find a reason to do it more, if I stood to gain. But like the experimental mouse that will stop pulling the level when its rewards stop, I'm behaving exactly as I've been programmed to do. This isn’t loyalty, though it might be self-interest or perfectly rational. Or, if it is loyalty, it is bought and paid for loyalty, and not gratuitous loyalty. Surprisingly, it is the latter, exactly what is not built into today’s reward programs, that is most powerful in tethering clients to those that serve them. We’ll explore the different kinds of loyalty in a later article. Dr. Gary S. Goodman is the best-selling author of 12 books and more than a thousand articles. A frequent expert commentator on radio and TV, he is quoted in prominent publications such as The Wall Street Journal and Business Week. President of Clientrelations.com and Customersatisfaction.com his seminars and training programs are sponsored internationally and he is a top-rated faculty member at more than 40 universities. Dynamic and fun, Gary brings over two decades of management and consulting experience to the table, with the best academic credentials in the speaking and training industry. Holder of a Ph.D. from the Annenberg School For Communication at USC, an MBA from the Peter F. Drucker School of Management, and a J.D. degree from Loyola, his clients include several Fortune 1000 companies and successful family owned and operated firms. He can be seen on CNBC at: http://www.cnbc.com/id/15840232?video=417455932# and reached at: gary@customersatisfaction.com Article Source: http://EzineArticles.com/?expert=Dr._Gary_S._Goodman
Pulling The Salesman’s Leg
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