Does computer code increase customer loyalty?

I have a very disheartening annoucement. Although there are a plethora of pills available from pharamcies and overseas Web sites to help you shed pounds in your sleep, regrow lost hair, or incite miracles in the bedroom... there is still no magic pill (nor any pill cocktail) to increase customer loyalty.  Similarly, you cannot increase customer loyalty by installing new software — no matter how expensive, shiny or well-engineered the code.  Sure, everyone wants to increase customer loyalty. We all understand that it is five or ten times more expensive to acquire new customers than to retain existing customers.  We know that loyal customers are more likely to spend more money, to buy more often, and to refer new customers.  We desperately want to believe that we can increase customer loyalty by changing the font color on our website.  But unfortunately, it is not so.  Dogs and soldiers might offer unquestioned loyalty; customers do not. In truth, it is very difficult to increase customer loyalty.  There are really only two effective methods of increasing customer loyalty: 1) by implementing a comprehensive loyalty management program, and/or 2) offering superior customer experience.

The first method is to implement a comprehensive loyalty management program.  Such a program will often includes a points-based customer reward system, such as the very successful airline frequent-flyer programs.  Other industries have also adopted this approach — with less or mixed success — including hotel chains, credit card companies, or rental car agencies.  Even grocery store chains have tried it.  I personally carry three grocery-store “club cards” in my wallet and I routinely present my Safeway card at Albertson's, and vice versa.  In fact, the grocery chain that I am perhaps most loyal to doesn't even offer a membership program — although they do have a "frequent sandwich eater" program of which I am a “Triple-Platinum-with-Diamond-and-Sapphire-Inlay” member.

The second method of increasing customer loyalty is to offer superior customer experience.  This means offering products and services that delight the targeted customer, without wasting resources developing features or services that the customer doesn’t care about.  Every company thinks that they provide superior customer experience, but few actually do.  Harvard Management Update found that while 80% of companies feel they provide “superior customer experience”, only 8% of customers agree!  Let’s take an example of a company who does it right, my favorite grocery store, Whole Foods Market.  Instead of using membership-card based costs savings to promote loyalty, they provide natural and organic foods along with friendly customer service.  Their prices are not cheap; however, their customers are gladly willing to pay more in order to buy healthy food in a friendly setting.  This is what customer loyalty is all about — providing enough value to customers so that they are willing to repeatedly do business with you instead of shopping around for the lowest price.  This is the type of loyalty that inspires cult-like followings (think Starbucks, BMW, Harley-Davidson, Tiffany’s, iPod.)

So how do you start your own cult-like following of devoted customers?  You could dress in robes and speak in riddles, saying mysterious things like, "the answers your seek are known only to themselves." Or... you could just think about what your customers really need, and then provide it in a simple, usable, understandable manner.  If you build value, they will come (and they will buy.)  And they will probably bring their friends.  And their friends will probably buy too!

Comments

[Henning]

Hi John,

like allways: realy a pleasure to read your excellent blends of sensible poetry and technical considerations!

Thanks! Henning

[Simon - manticore blogger]

Hi - Thanks for the comment on my blog, and congrats on setting up your blog.