Is Customer Loyalty relevant nowadays?

“In the world of Internet Customer Service, it’s important to remember your competitor is only one mouse click away.”
Doug Warner

We hear about customer loyalty, customer experience, customer engagement, customer relationship management, customer focus... But are businesses in this world of online subscription services and e-commerce really focused on customer loyalty and retaining these loyal customers?

Customer loyalty is an act of choosing a company’s product or service over their peers and competitors consistently and repeatedly. When a customer is loyal, they are not easily influenced by price for instance. They prefer quality of service and product. Customer loyalty comes with time, it requires investment, patience and interaction with the customer.

Loyalty comes from several possible areas:

Brand – consumers may select based on reputation of the brand, and be loyal to products produced by such brands,
Product – where consumers consistently purchase the same product, due to maybe the features or quality,
Service – either quality of the service delivered, or maybe through subscription based monthly reoccurring revenues,
Relationships –loyalty from an individual/relationship built that has instilled trust and respect,
Price – where loyalty is driven by paying the same or cheapest price amongst its peers,
Distribution – based on location and convenience

Be it brand loyalty, product, price, the business is relying on these aspects to ensure they can retain these customers, but do business wish to retain customers and strengthen loyalty, sometimes I have to question this assumption…

But I have to question this when in the space of a week, I have had to call a well-known vehicle emergency breakdown service, to ask them why my loyalty has been rewarded with an increase of over £100 from previous fees… now this is not the first time I have done this, in fact for the last 5 years I have undertaken this very same call and I get the same frankly rather lame answers.

We all know it, we sign up for a defined subscription for a service, be it streaming TV, breakdown cover, magazine subscription, vehicle insurance, house insurance, a mobile phone, etc. for a determined period of time, maybe 6, 12, 18 months etc., we provide our credit card details/direct debit information and the service is automatically renewed time after time.

At the end of the day, the company is competing in the marketplace, it offers a competitive price among its peers to attract the consumer, it may differentiate by highlighting its coverage, quality, etc. and the consumer makes that decision, in my case six years ago, when I made that decision to take the services of this emergency breakdown service, it was probably simply based on brand loyalty.

So why do companies think they can dupe the average consumer, to renew without questioning the new fees, or maybe this is the plan… do they rely on the laziness and inertia of the consumer to simply continue paying without paying much attention.

https://www.theguardian.com/money/2018/apr/07/the-aa-fees-prices-introductory-offer

Is this the new marketing initiative that overwrites previous rules and assumptions on loyalty?

Of course, the AA, are not the only business undertaking such ploys and I only highlight these due to my own experiences. Today anyone in the UK, can change their bank, utility provider and phone provider in a press of a computer key, there are several price comparison sites, where the customer can identify best deal. The consumer has become fickle, and maybe also a little lazy, maybe this gives the right for businesses to try and make as much as they can in any way, they can…

“Business must be run at a profit, else it will die. But when anyone tries to run a business solely for profit… then the business must die as well, for it no longer has a reason for existence.”

Henry Ford

While it’s obvious that customers who come back and reopen their wallets and purses is good for business, there are more subtle benefits… They recommend to others, they are likely to purchase other offerings the company may offer, they substantiate the company revenues, cash-flow and profits with regularly and repeat business, increasing shareholder value. And there is of course less overhead on that call centre with disgruntled customers calling about their latest subscription renewals…

So, is loyalty a good thing anymore? Maybe loyalty these days is only left in one of those inordinate number of plastic cards stuffed in your wallet, where you get your free ‘n’th coffee free, or discounted cinema tickets with your insurance broker, or your discounted restaurant meals with your phone provider, or your ‘n’% off your next grocery shop…

Has Brand, Product, Service, Relationships Loyalty been lost and only Price (cheapest) and Distribution Loyalty (closest and quickest) really mean anything in this fickle faceless online world we now reside?

Lateral Alliances offer professional and dependable consulting for all aspects of your company. From initiating and supporting marketing strategies, including PR, web design, graphic design, social media, business development, sale, right through to business and exit strategies, we have the skills and experience to support your business. We are a 'hands on' organisation, who prefer to get deeply involved in your business and challenges, not hide behind aimless discussions.

Insightful business thinking...