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Posts Tagged ‘loyalty’

How Social Media is destroying brand loyalty

cheating

Last week, I wrote about my trysts with Scotty’s diner. I had been there a couple of times, and rather enjoyed the food and the conversations with the staff. On my walk to Scotty’s I noticed another place called Bloom’s Cafe. Wondering, what it was like, I went on-line to read about it. And there were some pretty good reviews of the place. So the next morning, I went to Bloom’s.

There was nothing wrong with my experience at Scotty’s. I was quite happy there, but the temptation to try out an option was too hard to resist, buffeted as it was with great reviews. Quite frankly, there was nothing Scotty’s could have done differently to prevent me from trying out Bloom’s.

And that is the risk that brands are facing with the advent of social media.

Used to be that there was a category of goods called ‘impulse purchase’ that were always susceptible to consumer moods. Typically candy/snacks and the type, where the risk was low and the financial downside was minimal.

Higher involvement categories were pretty much inured against this. These were considered purchases and the sales outlet, the salesman and word of mouth  of friends mattered a lot.

Till the mid 1990s ones awareness was limited to what we read in the media and heard from friends. With the advent of the internet the choices before us exploded. Brands we had dreamt of, or never heard of were all available at the click of a button. But how do you decide on what you were willing to spend your hard earned money.

Enter the concept of reviews. First on amazon, now showing everywhere. From a pair of socks to apartments there is no shortage of opinions being expressed that is changing consumer decisions everyday.

Emirates or Etihad

Hyatt or a Westin

Mobilio or Ertiga

Sobha or Prestige

And so on..

What we are seeing is that with social media, words of strangers carry as much weight as that of friends.

Much as people are willing to try out new options, bad service from their own brands is instantly shared on-line as well.

It appears that the days of lifelong loyalty are long gone.

So what are brands to do?

I believe it is a combination of 3 elements.

Customer Satisfaction: Ensure that existing customers are happy and their issues/concerns are instantly resolved. Don’t give them an opportunity to complain publicly. If they do, ensure the problem is addressed publicly as well.

Consumer Advocacy: As reviews play an important part in prospect decision making, there is need to run a continual consumer advocacy program. Some companies incentivise consumers to post advisors on trip advisor, for example. Similar programs exist, or should be created, by other brands as well.

Consumer Acquisition: Acquisition has to be a continuous program as there will always be people who drop out, seduced by a good review somewhere else. Hence it is important that brands are always on the hunt for new prospects, who may well be loyalists of another brand.

In my opinion consumer decisions will be shaped by

Advertising + Media (editorial) + Social Media.

Brands will need to play in all these spaces and have distinct, integrated, strategies that work across all.

 

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Penny wise is very foolish

About 15 years ago I was on a domestic flight in India, on Indian Airlines. Like many flights in those days it was delayed and no one knew why. Nor when it would depart.

Many irate customers were screaming at the counter staff who didn’t know, nor care about the flight status. There was no food offered, nothing and finally some 7 hours after it was scheduled we departed on an alternate flight.

Fast forward to last week.

A Kenya Airways flight to Amsterdam was diverted to Greece due to a technical problem. Image

A big issue no doubt on its own.

But hearing this rant from a passenger it appears the issues of not treating the consumer well continue to be rife.

No doubt, that there’s nothing the airline can really do as the flight’s had a technical problem. And until it is fixed the passengers are stranded.

But there’s a lot the airline can do to mitigate the hardship of passengers stuck in a foreign country.

Get them food, make them comfortable, if possible put them on a sight seeing trip of the new place, put those who have deadlines on another flight. Basically, treat them as humans.

For a few thousand dollars you’ve just converted a bunch of inconvenienced passengers to be your champions.

Yet the approach often by airlines, and other service providers, in such situations is extremely short sighted. We’ve all read about Life Time Value of the customers. So when there’s a chance to really protect it, I am surprised that such modest investments are often ignored.

In every marketer’s life there comes a time that you have an unhappy customer. Deal with it swiftly and positively and you’ve converted that bad moment of truth into a favorable one.

In some big hotel chains the customer facing staff are given a ‘cash limit’ to resolve a issue on the spot. eg if you order a dessert in a restaurant and you’re unhappy and you complain to the staff member. There are 2 approaches. One involves ‘let me talk to the manager’. The other is ‘I am sorry let me replace it for you right away’. The cash limit refers to the latter approach.  Not really sure what the first approach achieves, save irritation and aggravation.

Spend those pennies and gain pounds of customer satisfaction and loyalty is what I say!

 

Loyalty : Points or Surprise & Delight

So often I have been engaged in conversations with clients about building customer loyalty. Rather quickly the conversation turns to loyalty programs, points, cards and so on. At some point it all looks too difficult and it is shelved. Rather infrequently, a half hearted attempt is made to run something to get that tick box in the marketing scorecard.

Yet as I look at the many loyalty programs being run how wonder how many of them genuinely build loyalty to the brand. How many make you feel better about the brand?

Here’s an example of what I mean

Going by the cards I have, I am loyal to Singapore Airlines, Cathay Pacific, Kenya Airways, Emirates and Qantas. Yet when I booked tickets for my family last night, I booked Qatar because they had better timings.

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Going by the cards I have, I am loyal to Starwood, Marriott, Hyatt, HIlton yet when I travel I look for the hotel close to where I need to be.

For sure I first look to see if any of my ‘loyalty’ brands have an option that suits me best, but final decision is based on other factors.

I have flown Singapore Airlines for many years. I love the airline for any number of reasons. But I don’t know that the fact that I am a krisflyer member makes me feel better about the brand.

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I totally get that in this day of intense competition one needs to recognise and reward one’s most valuable customers. And putting together a point program seems like the most obvious way to go.

But what about if you sell a breakfast cereal? Or a detergent? What do they do? They don’t know their customers at all. The current trend seems to be facebook pages and driving likes.

I recall, many years ago, a paint brand in India would drop a silver coin in its paint cans. Every painter knew that. This drove painters to recommend this particular brand and drove loyalty.

A toothpaste brand used to put in little figurines of animals in their pack (not the tube!!). Guess which brand kids forced their parents to buy.

So there are ways around the ‘but I don’t know who my customer is’. Sometimes, you don’t have to know who your customer is, to build loyalty.

Four Seasons hotel till recently did not have a loyalty program. For them ‘every customer is an important customer’. However, from their reservation system they were able to identify who their frequent customers were and arrange little things like room upgrades, a free drink etc that made customers genuinely feel attached to the brand than being busy tracking points. They too have, however, recently succumbed to the need to have a points progam and will launch one any day now.

And finally a most recent example. There’s a guy who sells flowers from a little shop, outside a mall, near where we stay. And we’ve bought flowers on the odd occasion from him. I would hazard, not more than a dozen times. Last time we visited the mall, we mentioned to him that the last set of flowers we bought from him didn’t last very long. Not a complaint, just a mention. When we came out of the mall, he was waiting with a whole bouquet of flowers. For free. Because we were not happy with our last experience. Guess who just got a 100% loyal customer.

Other examples like amazon.com and zappos come to mind immediately.

Yes I completely understand that this is the basic requirement to build loyalty. Have a happy customer. Surprise and delight them.

But how often do brands get caught up in systems and processes and let the points do the talking.

Marketers that construct systems that keep that fundamental principle in mind will build real loyalty. Others will be caught up with ‘value of a point’, ‘value of a like’ and the ilk.

 

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Recession and loyalty

Research report that says National brands in the US are seeing reduced brand loyalty.

I guess no surprise there given the economic challenges in the environment.

What I like is the smart moves by stores to create store brands that still gets the customers dollars, ensuring no store switch.

I wonder if this will the rise of store brands that give national brands a run for their money.

Imagine Wal-Mart starting some brands. That would be a scary move for many a brand manager.

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