Today’s guest blogger is Dean van Leeuwen, an intellectual adventurer, scholar of the new world of work and customer experience alchemist. He is a co-founder of TomorrowToday International, a company that shows businesses how to succeed in the new world of work.
You can’t get customer loyalty so stop trying. This is a controversial statement; it’s meant to be. Loyalty is big business and an entire industry of consultants and loyalty scheme companies convince their clients to spend millions each year to make raving fans out of their customers. The quandary is that customer loyalty is no longer a realistic goal. It is a red herring and managers who seek to measure and achieve customer loyalty are creating a rod for their own back. I’d actually go as far as saying that the word customer loyalty should be erased from your company’s vocabulary.
That companies even expect customer loyalty is just a tad arrogant. The relationships that customers offer to companies are privileged ones and should be treated as such. Business is about people – and of course, profits – but the people part needs to come first. My problem with the term loyalty is that it focuses on the end goal and not the steps in between that are essential in building mutually beneficial relationships with customers.
New generations of customers, the lack of trust in businesses and a growing ability to know immediately which are the best companies to buy from has made customer loyalty defunct.
No customer in their right mind sets out to build a loyal relationship with a company. But customers do want relationships. The explosion of social media clearly demonstrates that people have an insatiable appetite to build relationships with people and even companies. But let’s not confuse this behaviour with loyalty. Here are three reasons why measuring and trying to achieve customer loyalty should no longer be a goal for any customer-centric businesses.
Business lacks credibility and trustworthiness. The 14th September 2008 is an important day in corporate history. It’s the day that Lehman Brothers collapsed and we entered a confidence-draining global recession. It’s also the date that talented people gave business a bad name because over the ensuing months, it has become blatantly clear that a number of very talented business leaders, politicians and even sports stars have been behaving very badly. Today, trust in business and business leaders is at an all time low. Today, customers recognise that most businesses are only in it for themselves. Bottom line – if you don’t have trust, there is no hope of ever getting loyalty.
Customers have changed. Citibank did a recent research survey and identified that seventy-five percent of their customers believed that their attitudes and behaviours had changed as a result of the financial crisis and great recession. It is true that the past two years have had a dramatic impact on shaping the behaviours of customers, but there is an even bigger reason for this shift than the recession.
From companies selling the hippest youth fashion-wear to those selling pension products, all are discovering that their customers’ behaviours and attitudes have changed. The reason for these changes is a massive social and demographic shift – new generations of customers are entering every major life-stage.
Our extensive research at TomorrowToday shows that the oldest of each generation is entering a major new life-stage. Baby Boomers are entering retirement. Generation X is entering midlife with established families and becoming influential leaders (for example, Barack Obama and his UK counterparts Nick Clegg and David Cameron are all Generation X cuspers). Lastly, Gen Y are entering the workplace en masse.
Each generation has its own unique worldview and set of values. These values were shaped and formed by the global events happening as they were growing up during their formative years. On the surface, each generation entering a major new life-stage may not seem like a big thing but in reality, it is massive. These kinds of social value shifts only happen on this scale every twenty years.
The fact that this shift has happened at the exact time when the world has entered one of its most serious economic crises merely heightens our awareness that customers’ values, attitudes and behaviours have indeed changed dramatically. Of course there has always been a multi-generational marketplace. The difference this time – and why generational values are so important today – is that the generational divide has never been greater. The rapid pace of change over the last fifty years means that each generation has effectively grown up in different worlds. Each generation has a very different view and take on life and what they expect from companies.
The younger generations, Generation X and Gen Y, are naturally less loyal, believing in instant gratification and knowing that they hold the power to choose the companies they want relationships with. These Generations have grown up cynical and jaded by the attempts from companies to woo them with glossy adverts and false promises of customer experiences that were rarely the reality. They are better educated than generations before and have no desire or need to be loyal to companies who do not provide them with a compelling WIFM (What’s In it For Me). These generations are concept loyal, not brand loyal. Not even the coolest brand like Apple can rely on customer loyalty from these generations. All it took was for Blackberry to come up with a hipper concept and droves of Gen Ys migrated across.#p#分页标题#e#
Boomers have also wised up. They have a natural distrust for institutions but believed things would be different once they came to power. They have learned, sometimes the hard way – as failed pension plans, medical schemes that don’t deliver and bank foreclosures have hit them hard - that even though Boomers now run the show, it does not mean that they as customers are getting things the way they wanted them.
Customers now have a sixth sense. The third reason is that technology has given customers a sixth sense – an ability to determine in real time which companies are offering them the best benefits. The combination of the internet, social networks and mobile devices has dramatically shifted the balance of power in favour of customers. Companies are now more transparent than ever before. With just a few clicks, customers can compare your product offering with those of your competitors, check out comparisons and hear what other customers are saying about you. This trend is set to have a greater and greater impact as social media communities like Foursquare, Facebook, Yelp and Gowalla become more influential in using social networks for location-based marketing.
This customer sixth sense is going to get even more powerful. Just Google “Patti Maes’s sixth sense device” and have a look at the device that is sure to be on the next generation of smart phones.
Where to from here? New generations of customers, the lack of trust in businesses and a growing ability to know immediately which are the best companies to buy from has made customer loyalty defunct. However, the demise of customer loyalty as a concept is actually a good thing because rather than focusing on the end goal of loyalty, using coupons, points schemes and glossy advertising, companies are now being forced to build genuine and mutually beneficial relationships with their customers. Companies that focus on the relationship and the customer experience will be the winners in this new world of work. The irony of the demise of customer loyalty is that it may actually result in the nurturing and building of mutually beneficial customer relationships, creating genuine two-way loyalty.
For those action-minded individuals reading this article – if you shouldn’t be measuring customer loyalty what should you be measuring? There are three things I suggest companies should measure. Firstly, will the customer buy a product from you again? Secondly, will they refer you to a friend? Thirdly, did the customer experience make them happy? My suggestion is get rid of the complex customer and brand loyalty matrixes that you are using to measure customer loyalty and focus on measuring and delivering on these three questions only. Focus on building customer experiences, for both internal and external customers, that result in a “yes” to all three questions and then strong relationships will follow.
Dean van Leeuwen has an insatiable appetite for exploring how businesses can become more successful and increasingly contribute to society. His real gift is an ability to take complex information and identify creative, innovative and practical solutions. A sought after speaker and consultant, Dean challenges conventional wisdom revealing striking new realities and his approachable style quickly engages audiences leaving them wanting more. For more information about Dean, visit http://tomorrowtoday.uk.com/
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