You may be shocked to learn this (or not...), but according to CRM Guru guy Bob Thompson (registration required), business leaders are only paying lip service to loyalty, and not backing it up with budget or action:
Most business leaders say they are devoted to loyalty, but new CRMGuru.com research shows that management systems and budgets often don’t back it up.
As a customer, you know this is true. You are on hold, listening to "your call is important to us". You get caught in the "blabberynth" of automated phone directory systems, or the new and even worse voice recognition systems that won't let you press zero.
And yet execs continue to believe they are doing everything necessary for loyalty.
It's the "everything necessary" element that is the problem, of course, because it often gets translated into the minimum necessary.
Bob's article references a number of leading authors and researchers, and reminds us that:
- More customers leave over service issues (70%) than price or other issues
- Loyalty leaders have faster revenue growth rates than companies with poor customer retention (twice as high, according to Frederick Reicheld)
- It costs much more to get a new customer than to keep an existing one
- Sales efforts targeted at existing customers are much more likely to be successful (60 - 70% probability) than sales efforts targeted at lost customers (20 - 40%) or prospects (5 - 20%)
Bob's prescription begins with understanding customers using data, not anecdote:
In customer loyalty, there's no substitute for good research and planning. No matter the size or type of your business, you must start by understanding why customers stay and why they leave. Taking this customer-centric view will enlighten your management on why customers behave the way they do so that you can create a profit-generating loyalty strategy
The full paper is worth the registration required to read it.
What Bob does not say, and that needs saying, is that the chief issue is not tactics, it's motivation. The first objective in moving the business forward on loyalty is to create an experience for the executives that is so compelling that the see the whole issue in a new way and can get mobilized. Once that happens, the tactics will be relatively easy.
Picture: I found a bunch of wonderful images in a 1945 edition of Grimm's. Companies aren't really evil witches luring innocents with promises of candy. But sometimes it feels that way. And of course, trapping your customers with high barriers to exit only works in the short term.