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’ respectivecustomer 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 that remains 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. 

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 anincentive 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.

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. 

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-
dependentcustomers – 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.

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 programshave 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.

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.

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 Mindsare 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

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.