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Beyond Brand Loyalty: Creating Sustained Customer Loyalty in a Do-Not-Call World
May 06, 2009
By Charles Koskovich, TeleTech senior vice president, North America operations
For successful firms in competitive markets, customer loyalty is the final frontier of brand development and marketing. As the traditional marketing tools of the twentieth century give way to the digital video recorder and Do-Not-Call lists of today, firms must rethink how customer loyalty is ‘bought,’ maintained, and measured. Achieving brand loyalty alone is no longer sufficient without adding emotive loyalty to ensure high-value customers not only consistently purchase a brand but remain receptive to new offers, more easily absorb ‘system shocks’, and serve as a virtual marketing channel.
Most firms don’t feel they are prepared to create the ultimate customer loyalty in their current state. In a February The State Of Customer Experience, 2009 teleconference, Forrester (News - Alert) Research’s Q4 2008 Customer Experience Peer Research Panel Survey found that 71 percent of respondents (among 90 North American companies with $500 million or more in revenues) felt that their company had a problem or major flaw when it comes to treating the customer experience as a competence. And 35 percent felt that their overall approach to customer experience management was either somewhat or very undisciplined.
Importance of Emotive Loyalty
In the past, traditional marketing was pushed forth through a variety of conventional marketing tactics including slogans, jingles, taglines, and even colors. With the rise of consumer review sites and price aggregation portals, consumers no longer have to trust the brand promise when they can read documented experiences of hundreds of consumers before making a choice.
Research shows that when consumers post a positive or negative product or service opinion on a Web site, emotive responses are skewed strongly to one side or the other. Few consumers with an acceptable — mildly positive or negative — experience take the time to document their product or service findings. The result of this skewed response distribution, the emotive acceleration cycle, is a strong indication that emotive loyalty is a very powerful tool.
As emotive response increases linearly, demand increases exponentially. Conversely, as emotive response declines, demand tends to collapse quickly. For this reason, it is more important than ever to launch products that are well architected, have been extensively pretested and fault-proofed, and that have a knowledgeable, well-trained customer service and support staff standing behind them.
Increase Profitability
Emotive-loyal customers are more profitable than brand-loyal customers. On a regular basis, they tend to purchase higher-margin products from their preferred brand. Over the course of the relationship, the firm’s cost to serve these customers declines significantly.
Firms run aground with brand loyalty by failing to segment and target the correct customers in advance and then make a significant `deposit’ in their emotive loyalty bank account. As a result, these firms must continue to spend on customer retention while their competitors spend on customer development. Falling behind in this investment cycle reduces a company’s per-customer profitability. Conversely, staying ahead in the cycle allows leading firms to put their dollars toward attracting and developing customers, rather than simply holding on to them.
Customers with strong emotive loyalty tend to act differently. Firms recognize emotively loyal customers because they actively discuss their brand preferences with friends and colleagues. They appear immune to a service blunder that might send the average customer packing, because there is a balance in the emotional bank account upon which to draw. These customers are less likely to stray from their preferred brand to chase one dimensional competitive offerings such as a lower price, a slightly improved product or a new packaging scheme. And, they are more likely to purchase new product or service offerings from their preferred brand. Most importantly, these customers don’t wait for focus groups or surveys to provide feedback — they’re proactive.
Differentiate Your Firm
So how do firms begin developing emotive loyalty among their customers? Any organization, in any industry, is capable of building emotive loyalty — regardless of their target market or product niche. It’s about owning the customer relationship better than anyone else in your market. Emotive-savvy companies focus on five common elements:
- The brand’s reputation is the result of sustained excellence, not one-time heroics.
- Quiet consistency is often chosen over ‘flash’ to deliver what customers really want, followed by doing it better than everyone else does.
- Customer service is not simply a department but a deeply held belief across the entire organization.
- Listening to the voice of the customer (VOC) is continuous and focused on all forms of customer communication from blogs to annual business reviews.
- Emotive loyalty is valued and managed as a strategic asset via an effective VOC process that marks the brand’s progression from competitive ‘outside’ or market trailblazer through accepted brand, to brand loyalty, and finally to emotive loyalty.
Crossing the Bridge to Emotive Loyalty
Remember the source of emotive loyalty is the customer. There are three top-level initiatives that companies use to bridge the gap between brand and emotive loyalty:
- Revisit the customer service environment. Customers who perceive that a company cares about them begin to develop an emotive tie to that company which can then generate positive VOC information. Within the customer care environment, traditional metrics like first-call resolution and average handling time remain important, but next-generation tools like real-time analytics and employee management will ultimately be the difference in maintaining a sustainable competitive advantage.
- Reinvent the VOC listening process. Few firms can make the jump directly from an existing voice of the customer program to a leading-edge listening process. The best form of VOC `listening’ is continuous collection across a wide variety of channels by adding in more non-traditional information gathering techniques. Commit to improving the interval of collection until your firm is closer and closer to continuous collection.
- Re-engineer the product development process. The great failure of many emotive loyalty initiatives is not in addressing the first two areas satisfactorily, but rather in not closing the feedback loop with ‘rapid reaction’ product development. The key is to create emotive loyalty through continuous improvement in the customer experience.
Firms that embrace emotive loyalty initiatives have the opportunity to significantly enhance long-term business results by prioritizing customer needs and feedback in their operations plans.
Charles Koskovich is senior vice president, North America operations for TeleTech.
Edited by Greg Galitzine
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