Penalising customer loyalty

15 October 2014 07:26 am Views - 547

There’s a huge reservoir of loyalty floating around out there.  People are loyal to their nation. People are loyal to their president. People are loyal to their political party. People are loyal to their club. People are loyal to their school. People are loyal to their religion.  People are loyal to their job. People are loyal to people.

There is loyalty and then there is blind loyalty which to a lot of people, means, that they shouldn’t under any circumstances, criticize that which they are loyal to; be it their country – right or wrong, their president – right or wrong. Their political party – right or wrong, their club – right or wrong and so on. Now, “That’s some bad hat,” as the American would say. Nevertheless, like it or not, that hat is here to stay.

Any company that provides better pricing and service for new customers than it does for existing customers is institutionalizing disloyalty and ‘tinkering’ with its integrity

Loyalty is a word that is used often in the business community. Establishing loyal customers is always a challenge and a worthy pursuit. At the same time organisations can ill afford to take customer loyalty for granted. What’s even worse is when businesses arrogantly cross that line assuming that customers can be conned into blind loyalty! Shane Warne once said that part of the art of spin bowling is to make the batsman think something special is happening when it isn’t.


 

Reward customer loyalty, not disloyalty

We appreciate your business. And as our way of recognising you for being a loyal customer all these years, we’re going to overcharge you. Service providers don’t say this explicitly, of course. But that’s the cryptic message conveyed via the rates they charge different customers. I’m not alone in that I have experienced plenty of betrayal. When people experience betrayal — or even the mildest forms of disloyalty— they begin to show a lack of distinct interest.

Any company that provides better pricing and service for new customers than it does for existing customers is institutionalizing disloyalty and ‘tinkering’ with its integrity. Last month I received a letter from my mobile service provider who claims to be futuristic. It was signed by the Chief Manager – Device Management Mobile Telecommunications (quite a mouthful) and informed me that they were offering their loyal customers their newest Android smartphone on a special 06 month or 12 month installment plan.

The CM-DMMT in his letter goes on to state “As we continue on our journey to value our customers we are pleased to offer this new smartphone. So hurry, this offer is only valid till 31/10/2014. Walk into any of our Customer Care Centre and present this letter to avail yourself of this exclusive offer”. Eight days later, I happen to see this identical offer from the same mobile service provider, advertised in a Sunday newspaper.

Astonishingly, the same Android smartphone on a 12 month installment basis was 17 percent cheaper to ‘Tom, Dick or Herschel’ than the claimed ‘exclusive’ offer to its loyal customers! This service provider’s interpretation of loyalty requires loyal customers including ‘privileged’ members, not only to dish out more but also submit the organisation’s letter as proof of loyalty. What a load of hogwash!  My message to this telecom service provider and to all others - please do not embark on this perilous journey. Stop such spurious practices immediately.
 

The times are changing

Most of us couldn’t imagine life without money, cable or satellite TV and if you reside in the city - supermarkets. A recent survey done in the US revealed that TV and Mobile service providers, and Medicare have the most of the very unhappy customers, which shouldn’t surprise too many people.

Banks, on the other hand, have fewer of these sulking customers, but they have the highest percentage of customers that aren’t satisfied with customer service and who aren’t forgiving. I ask you could it be any different in Sri Lanka? My experience tells me no. Infact, I would add supermarkets to my list of those who make customers unhappy. People are powerful, and they outweigh the combined effects of products, advertising, celebrity endorsements, layout, technology, and—all of the various components that brick-and-mortar retailers often think define their competitive advantage. While there may be various drivers of satisfaction in retail, customer engagement comes down to the human encounter.

Very recently, I purchased some fruit and when presented the bill noticed that the price tag on the bagged items were different to that which was on the bill that I had settled with my credit card. When I queried this from the female cashier she looked blankly at me, and then at the price tags on the sealed items, scrutinized the bill, before summoning the supervisor. She then told him something in hushed tones, where after the supervisor cast a surreptitious glance towards me and with nary a word, walked away towards the fruit display section. The cashier resumed work attending to another customer, leaving me reminiscing about Samuel Beckett’s tragicomic play ‘Waiting for Godot’. During the wait, I stood forsaken, and unlike the larger-than-life ‘cutout’ of the Sri Lankan cricketer who swears by this supermarket brand – unnoticed. Inwardly, I suspected that the problem arose due to a breakdown in the scale management process, (system that links different weigh scales and labelers throughout the perishable departments in the store).

After keeping me waiting over ten minutes, the supervisor emerged out of nowhere and spoke to the cashier – who then returned me the overcharged amount in cash. What peeved me the most was that I was not given any explanation or even a simple apology! It mattered little to this supermarket that I was a member, of what it declares as ‘perhaps the most rewarding loyalty programme in the country’. On a scale of 1 to 10, the customer service miscues I was rewarded with that day rated a 10 plus. The bottom line: Don’t count on celebrity endorsements to disguise the disappointment of customers who make that loyal leap of faith.
 

Paying more to stay

Running a modern day home can be expensive. It’s impossible to do without electricity, water, cooking gas and a telephone. It’s also difficult to leave out television from this basic list of ‘must have’ utilities- all of which can hit you with steep monthly fees. One expense, in particular, stands out: cable television.

Cable television delivers both local broadcast channels (Don’t they broadcast that for free?), and premium programming to your home. Basic cable isn’t very expansive. However, if you start adding premium channels such as Star, Cinemax, Nat Geo, HBO and more, the bills start to add up. My monthly package consists of 93 channels. This includes a large number of local and nondescript channels that my cable provider has digitally compressed to squeeze in more channels than I need – merely to inflate the ‘offering’ in order to justify the high fees. The truth of the matter is that like me, most people never watch a vast majority of the channels they are forced to pay for. We simply don’t have time.

According to a 2007 Nielsen study, the average American household received 104 channels—and watched only 15 of them regularly. So if statistics are any measure, a broad selection of content is important to viewers, but sheer quantity is not. It does tick me off that we will never get true menu-pricing on cable. Why can’t you and I pay for just what we need? It won’t happen – not at least in the near future. Why?  Because cable companies are a supreme example of a natural monopoly. The inexplicable, but obviously profitable business model, in which the oldest, most loyal, best customers are “thanked” with bills that escalate over time, is standard practice among pay TV and cable service providers. I have tried flirting with other service providers and other supermarkets and have learned the following:
 

•     I see no advantage in switching because all operators were more or less the same.
•     I am not sticking with my providers as a result of loyalty – it’s just too inconvenient to change.

Service operators who feel they have created a loyal customer base may be under a fundamental misunderstanding of allegiance. The danger comes from subscribers like me who tend to stay with them due to a mixture of practical apathy and a general air of anguish with the alternatives. This is certainly no real emotional attachment, or loyalty, to operators.

(Shafeek Wahab has an extensive background in Hospitality Management spanning over 30 years. He has held key managerial responsibilities in internationally renowned hotel chains, both locally and abroad. Now focusing on corporate education, training, consulting and coaching he can be contacted on shafeekwahab@in2ition.biz. Website: www.in2ition.biz)