Building customer loyalty

Finding a loyalty perk that's perfect for your customers

Our customers don't expect us to fulfill their every need. IStock_000021588865XSmallHowever, they appreciate when we recognize their needs beyond our business. Starbucks has actually been bringing the news with the morning coffee for some time, but this new partnership has the most synergy. Complimentary products make the best partners. 

Loyalty360: Loyalty Lessons from Starbuck's New York Times Rewards, 2015-Aug-31

We sat down with Joe Pino, Director of Client Success at Clutch, who works with an array of leading brands to design and execute customer loyalty strategies to get his perspective on the Starbucks / New York Times loyalty partnership.

Q: What are overall thoughts on Starbucks delivering New York Times content as a loyalty perk?

JP: In a lot of ways this partnership makes a lot of sense; not because they’re two major brands, but also because of the synergy it delivers. Our team is always advising our clients to deliver relevant experiences to customers beyond mere discounts or specials.

The news and coffee go together like bacon and eggs. Given the general nature of a Starbucks loyalty member grabbing a coffee, often en route to work, it provides relevant value to deliver free access to the New York Times and gives the paper added exposure for upsell opportunities and Starbucks and additional value-add for their loyalty program. It also will presumably widely engage the mobile channel for consumers, which has been at the core of Starbuck‘s strategy.

Understanding Apple's iPhone Loyalty Strategy

Apple has innovated loyalty more than any other company. When I'm consulting, I tell my clients, "we have to interact with our customers." But that's not what Apple does. Apple allows you to avoid interacting with them or the carriers. Reliability and functionality create a user experience that allows you to buy and use with the minimal amount of support. IStock_000019813530XSmallNow that you can subscribe for an iPhone, pay every month, and get an upgrade once a year, these phones even more like vehicles. We'll pick a carrier like we pick a car dealer, with minimum commitment. 

Quartz: Apple's iPhone Upgrade Program, 2015-Sep-11 by Dan Frommer

...the iPhone has already transformed the mobile industry in many ways. That started at launch in 2007, when buying and owning an iPhone was immediately a different experience than any prior mobile device. Apple handled phone activation, media management, and software updates independently through iTunes, and made its built-in “visual voicemail” a feature of the phone app instead of a carrier service that could be sold separately as an add-on fee.

In 2006, carriers were pushing lousy, Windows-powered smartphones branded after themselves—the AT&T 8525 is just one forgettable example. Meanwhile, Apple didn’t even allow operators to put their logos on the back of the iPhone.

Don't reward Harris County Toll Road Authority, and others, for being disloyal.

So I really like the toll roads in Harris County. They make my life easier. I have driven through many of their toll booths and happily paid the toll.  IStock_000019396853XSmall

Now one of their toll booths is not reading my toll-paying sticker. I got a TxTag sticker because Harris County Toll Road Authority told me that I can drive their roads and pay with a TxTag sticker. Although I have paid tolls at dozens of HCTRA booths, it's now my responsibility to contact TxTag and make them prove to HCTRA I'm a good customer. Even thought I have no control over the relationship between HCTRA and TxTag. 

Uh, no. That's bad customer service. HCTRA can take one look at my record and see that, over many months, I've paid at many of their toll plazas but one. The time periods covered indicate the problem is with the toll booth, not the sticker. 

If I were NOT a customer loyalty expert, I would pay the $36 and/or avoid that toll booth. But that would reinforce to HCTRA that they are treating their customers well. But they aren't. And I have to stand up for myself and other customers. I will boycott HCTRA roads until they address their problem. 


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

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.