March 14, 2010

Dear Catalog CEOs: Customer Loyalty

Dear Catalog CEOs:

Here's a question I get all of the time. "Hi Kevin, I stumbled across your blog, it's really informative. Say, could you offer me some free advice? I want for my customers to become more loyal. We all know that it costs 27 times as much to acquire a new customer as it costs to keep a loyal customer. Could you please tell me three best practices that I can implement right now to make my customers more loyal? Thanks, I'm really looking forward to your answer."

The most interesting part of the question is the word "make". Most of the time when somebody asks this question, the word "make" is included in the question.

I honestly don't think you "make" customers do anything. Go make your spouse stop playing Farmville sometime. If you can't make your spouse change behavior when standing alongside him/her, why do you think you can make a customer become more loyal, based on a relationship that lasts for all of five minutes a month, at most?

In every analysis I do, customers who have a relationship with a real human being have better long-term value than do other customers.

Let me say that again: "In every analysis I do, customers who have a relationship with a real human being have better long-term value than do other customers."

Nobody wants to hear that. We want customers to be dazzled by a shopping cart abandonment e-mail message that "wins back" the customer along with a 20% off offer coupled with free shipping and a big blue buy button that was tested to increase conversion rates by 9.2%.

Algorithms and tech solutions are good.

Humans are better.

Human interactions come in many forms.

Example: I mention on Twitter that Zappos has a new home page design. Zappos sends me a thank you message via Twitter in less than sixty minutes. That's a human interaction.

Example: A customer spent $750 last year. Instead of enrolling her in a points-based loyalty program, you assign an employee to this customer. This employee is there to meet every need the customer has. What do you think would work better, a points-based loyalty program, or an employee who will go above and beyond to exceed customer expecations?

Example: Imagine if you, the CEO, participated one hour a week, helping in live chat sessions. You think that wouldn't leave an impression in the mind of a customer. You think that wouldn't create Social Media "buzz"?

This advice is opposite of just about everything you hear out there. It is easy to set up a points-based loyalty program. It is easy to send a direct mail piece that appears to be handwritten but in reality is just fancy printing technology. It is easy to use the best paper quality. It is easy to offer 20% off or free shipping. It is easy to send a shopping cart abandonment e-mail. It is easy to change the size of buttons on your homepage.

It is hard to add humans to the customer relationship process. The more digital our world becomes, the more cold and sterile the buying experience becomes. Why not leverage your customer service team, transforming it into a customer loyalty team that uses Social Media and your call center and live chat and your sales staff, creating a humanized shopping experience?

3 comments:

  1. Great post Kevin! The human factor is so often ignored, even by the small merchants. Add a bit of a personal touch, make it sincere, and you'll see great rewards as a store owner. It's so simple, but the technology often trumps this neglected practice.

    You don't have to go overboard like Zappos, but like you wrote, an hour a week by the CEO, a targeted profitable customer that is catered to, etc... is all it takes to get quite a bump in word of mouth advertising.

    Rob

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  2. Tremendous article, Kevin. I spoke with the Hyatt customer loyalty person last week, and she had some really interesting ideas along these same lines. They gave a king sized bed to one of their club members who stayed with them 160 nights last year.

    Personal is harder because it requires people making good judgments. That's also why it's better when done well.

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  3. Thank you Rob and George for your comments! It isn't easy to put programs in place that are kind to customers.

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