Essence of Consumer Loyalty

consumer loyalty can be bought

Forget deals galore; it is time to treat customers as business partners and make good of their insights if companies want to thrive in the long run.

Consider this. I am a loyalty member of Jet Airways, Vistara, Emirates, Etihad, Air India and a few other carriers. I am also a member of the loyalty clubs of Marriott, Hyatt, Taj, ITC, Hilton, Leela and a few more. I am a gold or platinum member of Shoppers Stop, Lifestyle and Westside. Then there are various other memberships to travel and e- commerce portals. However, I cannot be all that loyal to all these companies if I am a member of the loyalty programmes designed by competing brands. I will be more of an opportunist. It seems these so-called loyalty-marketing programmes have failed to create any sense of loyalty among millions of customers. Perhaps they are also trying to be opportunistic in a world where customer expectations are always changing.

Enterprises seem to think that loyalty can be bought or forced on customers. In reality, they should try to engage people more deeply if they want to create loyal customers who bring value to the business. When people do not get involved, they do not care and have no reason to feel loyal. By treating them as partners, one can engage customers beyond the traditional buyer-seller connect. But if this were the case, why had not anyone done it?

We can get customers involved by treating them with respect, and they will reward companies with more business. Amazon is an excellent example of this policy, but Flipkart, the new Wal-Mart of India, may take a long time to master this strategy. Amazon invites customers to review the products they purchased, encourages them to publish lists of other favourite brands/products and also allows them to sell used items on its platform. Such opportunities often provide anonymous consumers with a chance to participate in the company’s business. Also, it has a noquestions-asked 30-day return policy in place and refunds your money within 72 hours, again a gesture of respect.

Incidentally, many customers complain that Amazon has blocked them permanently for returning too many items, but many of these issues have been resolved; overall, the company is quite lenient in this respect.

What Companies Should Do

Businesses desiring to differentiate their loyalty programmes should start by seeking feedback from customers. As they always have great ideas/insights, inviting them to co- create things will have a long-lasting effect. But this must go beyond conventional market research techniques. One should seek suggestions at all contact points and may even reward people if their recommendations are acted upon. It will be a good idea to set up a centre where customers are thanked for their input and updates are given on what the company is doing with their ideas.

As of now, personalised e-mail messages from these loyalty clubs seeking our feedback are quite rare. Businesses expect their customers to get in touch via the ‘Contact’ tab on websites. But very few would like to submit their opinions using those forms as they doubt whether their comments would reach the top management. By personalising the feedback, large corporations can overcome the perception that all suggestions go into a black hole. Consumers are more likely to communicate when they know whom to address and especially if they know that someone will act on it. Two recent examples prove this point. A skin allergy complaint sent to Nivea via its website was acknowledged but never acted upon. Another complaint was sent to L’Oreal and the company named an official who would look into it. The issue was quickly addressed. Resolutions happen fast if issues are pitched on social media platforms as they have high visibility and inaction could instantly lead to massive customer backlash.

In a bid to take customer loyalty to the next level, some companies are setting up customer advocacy centres. These will invite select customers so that feedback can be obtained before or during the launch phase. Companies can hold customer get-togethers regularly and use these occasions for specific group sessions. By closely involving them with the company’s plans to improve its services or expand its product offerings, insights could be gathered and leveraged, thus ensuring a higher degree of loyalty. The company will also be way ahead of competitors which do not engage in such activities.

Some of the companies I had worked with have given ownership to their customers. They have also formed a strong bond with their constituents by giving them firm shares. For instance, a pan-India jewellery retail chain headquartered in Kerala quickly set up 100- plus stores in India and the Gulf region using this route. Also, similar to an employee stock ownership plan, which is an excellent way of linking a company’s fortunes to its employee compensation, giving a customer a piece of the company via outright stock grants or options would, in the customer’s mind, position him/her as a partner.

Consequently, they will be keen to bring in more business by trying to influence family, friends, colleagues and neighbours. Enterprises can also extend ESOPs to their most valued customers. They can also issue loyalty certificates, allowing most active customers to earn actual stock after fulfilling specific criteria such as doing a certain amount of business with the firm over a specified time frame.

Customers cannot be bribed into loyalty. The proverbial carrot, in the form of frequent flier miles or other incentives, is not the primary impetus any more. Think of creative ways to engage customers so that they become passionate about your products as well as the business. That will lead to strong advocates, repeat business and long-term sustainability. In fact, brand equity can go on even after a business fails. For instance, frequent fliers in India miss Kingfisher. When the carrier was in business, we all loved it for its unique services. If it makes a comeback, it might give Vistara a run for its fleet.

That is the kind of loyalty one cannot buy.


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