How owning up to mistakes leads to better loyalty

The dynamic of admitting our mistakes to customers is not a one-and-done transaction. Our customers are not surprised to learn we aren't perfect, and they judge us by the process we use to handle mistakes. When deciding how to handle a mistake, consider the following issues: IStock_000023751696XSmall

  1. What will our customers have to do to minimize or recover from any damage?
  2. How can we help? (Consider assistance to their customers and employees first, refunds and credits last.)
  3. How can we use this opportunity to demonstrate our trustworthiness?
  4. Where does this mistake fit into our history... and how does it revise our story? 

Signal VS Noise: What Kind of Company Are You?, 2015-Aug-25 by Claire Lew

I decided to personally email the eighty-some CEOs affected by our mistake. In a short note, I explained what we messed up, and how sorry we were.

I offered a small credit as a token of how bad we felt, knowing of course that it wouldn’t make up for it. I gave folks my personal cell phone number and told them to call me anytime if they had questions, concerns, etc.

Then I braced myself for the reaction.... read more


Using Customer Data to Find New Profit Streams at Fox Networks and American Apparel

When I started my marketing career as an account executive at Ogilvy, we focused on advertising campaigns, but I was quickly drawn to direct marketing, starting with the mailings which Compaq was sending their customers. I enjoyed analyzing the data we gathered. When I left Ogilvy for Service Corporation International, I was thrilled to discover we could create entire new lines of business based on customer data analytics. Tq150824gdFor customers who had purchased funeral prearrangements, we offered estate planning, prepaid legal services, and senior fitness programs. They began to see SCI as a resource for their immediate future, not just their family's support after their passing. Marketing departments are often seen as 'overhead expense,' but this profit-seeking practice is one of the most tangible ways we can contribute to the success of our enterprises. 

ClickZ: How American Apparel is Moving to Value-Driven Data Analytics, 2015-Aug-12 by Susan Kuchinskas

According to [Chief Digital Officer Thoryn] Stephens, the lifetime value of a customer is an important metric, but it's not necessarily the most revealing. A former executive at Fox Networks, Tillster and Beachbody, he recounted how Fox used Adobe analytics to understand how to drive video ad starts and views of long-form video. It came up with four segments: "Foxaholics," casual watchers, international viewers and passive users.

Here's where the data versus insights story got interesting. While passive users seemed to be the least valuable because they didn't watch video or see ads, further analysis showed that these people used Fox's schedules to find out what to watch. That data helped justify billions of dollars' worth of agreements with Fox's distribution partners.

"This was a major epiphany for the business," Stephens said. Fox then segmented these users and showed them a home page with a more prominent schedule.


We profit from the customer loyalty process, not the tactics or the technology

Loyalty programs with incentives and CRM tools enable us to build customer loyalty, but they often get in the way.  IStock_000019813515XSmall

The foundation of loyalty is understanding and support of the customer. When the customer feels valued, they support us with more transactions, feedback and advocacy. In many ways, the discounts we offer them and the database we use to track their actions are just the ways we measure ourselves, not them. We have to use the tools, tactics and technology to create a loyalty-building process we can sustain. 

Retail Touch Points Blog: Dispelling Five Major Myths of Customer Loyalty, 2015-Jul-13 by Ryan Rose of Clutch

Here’s a look at five fundamental myths that commonly snag brands’ loyalty initiatives.

  1. The backbone of customer loyalty is discounts.
  2. The key to loyal customers is rewarding the transaction.
  3. Customer loyalty is an expense only 'big brands' can afford.
  4. Customer loyalty technology is too complex to integrate.
  5. There's just too much customer data to keep up with.

Better ways of monitoring customer "satisfaction" lead to loyalty

I used to be co-owner of a company focused on administering customer satisfaction surveys, and I become well aware of their flaws back then. The surveys were easy to game and seldom stimulated the customers to open up or feel appreciated. That's not to say they weren't a huge improvement over the lack of interest in post-transaction followup that existed before. They were just a crude tool, and I'm amazed that they are still so commonplace. I don't participate any more, no matter how happy or mad I am.  IStock_000019483561XSmall

Starwood is now looking at reviews and social media comments as part of the process of getting customers involved. Measuring satisfaction is less important than improving service and learning about customers. So loyalty is being built, not satisfaction being measured. 

Skift: The Evolution of the Hotel Guest Satisfaction Survey, 2015-Aug-7 by Dan Peltier

“We overhauled our entire survey in 2011 to narrow that time and space between when a guest provided feedback and when action was actually taken,” said [Starwood's Matt] Valenti. “We listened to our guests during this overhaul and one of the things we heard from them was that they really like our brand and wanted to complete our surveys, but they wanted us to show them that we used their feedback and said they’ll give us more if they saw that.”

“We moved into asking guests to compare their expectations of their stays versus how their stays actually were and that’s important because for us to be able to provide the best guest experience your expectations will change depending on your trip persona. A seven for you on the ten-point scale might not be a seven for me.”

Starwood’s Survey Overhaul

A guest leaving a review on a property’s site is emphatically different than someone completing a survey with pointed questions measuring the satisfaction of multiple aspects of a stay. While hotels give guests’ various options to express how their stay was and provide convenience this of course makes hotels’ work more difficult to determine how they weigh a negative review left on a site against a negative survey.

“We would describe [surveys and reviews] more as complimentary because we know that people choose to give feedback at certain points,” said Valenti. “Someone might choose to complete a survey and someone else will choose to complete a review. Part of this overhaul was to make sure that our surveys are also aligned with our ratings and reviews.” 


Making loyalty a sustainable advantage

Loyalty is a trick word, especially in the business world. The airlines proved that you can turn it into a ruthless game. Wireless companies specialize in 'locking up' their customers. Many companies destroy it by misunderstanding why their customers chose them in the first place.  IStock_000023004662XSmall

True loyalty is based on two ends of the transaction understanding and committing to serving the needs of the other. It's not indestructible because our needs can change. But it does provide the only sustainable advantage in growing and preserving an enterprise. What most people fail to grasp is that being loyal isn't easy. It's hard. 

NY Times: SoulCycle: You Say 'Cult.' I Say 'Loyal Customer Base' 2015-Aug-7 by Josh Barro

...[A] potential source of sustainable advantage is a complex business model that must be replicated in full. Mr.[Jan] Rivkin [strategy professor at Harvard Business School] cited Southwest Airlines as an example. Imitators have failed to turn Southwest’s no-frills airline model into similarly consistent, high profits. It turns out that convincing people it’s fun not to have a seat assignment is harder than it looks....

SoulCycle does seem to offer something unique: a sense that what it sells is more than a workout. Devotees of the chain cite benefits from their engagement with SoulCycle that go well beyond the physical.

“It’s sold convincingly and addictively as personal growth and therapeutic progress through fitness,” said Ben Dreyfuss, the engagement editor at Mother Jones magazine, who lives in Manhattan and estimates he has taken an average of one SoulCycle class a day for the last 45 days. “It’s got the calming bits of yoga mixed with the group pack mentality of team sports and the weird psychological whatever you want to call it of following a squad leader into battle.”...

The brand is closely associated with a transcendent experience other gyms don’t offer. Replicating that experience is not simple for would-be imitators, because convincing people their workout is a path to personal growth involves more than setting a few candles onstage in front of an indoor cycling instructor.