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The equation has changed – now loyal and disloyal customers account for a similar share of the market as opposed to the earlier situation of 20% customers accounting for 80% of income.
Research indicates that customers stay with brands that add value to their lives or to society but are not loyal to brands in general; they tend to jump ship at small provocation.
So why is customer loyalty going for a toss in recent times? Let me take you through my thoughts on this subject.
Customers today are very demanding
They want the “best” at all times. It does not matter if you offer them better services or products compared to last year or last month – they want something better than the other available alternatives. If Brand X delivers 150% satisfaction then customers want others, including local companies to provide 150% or more.
Loyalty programs of companies are not money spinners
They eat into the company’s profit margins and hence are being deactivated.
Thanks to the modern world of instant connectivity, customers can access brands and compare prices and discounts and other benefits over their smart-phones and other electronic devices. They opt for brands that give greater value for money, which may not be the brand they bought last time.
Many companies fail to look at the customer experience as a whole
They parcel out different responsibilities to different departments which then fail to work in unison, thus marring the customer experience and driving them into the arms of the competition.
Customers want products that are relevant to them specifically
If the product or service fails to satisfy their personal, individual wants and needs, customers move to the ones that do – they decide basis cold logic and rationale.
Today most products are getting commoditized
There is little to differentiate them except their price. So you need to fight on the price platform.
So how do you get back to the business of drawing in customers and retaining them?
I find that there are only two solid ways of doing this in today’s commodity market – offer a cheaper product by increasing your company’s efficiency ( NOT by downgrading your product) or keep the price high but offer a perceptible value-add that sets your product or service apart. It will be more to your advantage if you do both.
Research has also shown that consumers have three major expectations from the companies they patronize:
- Par-excellence customer service – customers favor companies that spoil them with their service
- Par-excellence employee-care – companies that look after their employees well are vastly preferred over companies that exploit their workers and emphasize profits over people.
- Caring for society – Customers have respect for companies that have a moral and social compass and do their bit towards the world they inhabit.
Thus for a company to hang onto their customers and bring in some level of customer loyalty the top management needs to be clear on what added benefits they are offering customers and society and this should be communicated to both employees and customers in a convincing manner.