What Makes Us Loyal?

In a comment posted this morning, reader Joseph Price mentions two things that make him loyal to a brand:

  • A great deal -- a price or unique combination or price and service that no one else can match, and
  • The "my little secret" angle, or that feeling that you have a leg up on a trend or great deal before everyone else in the marketplace.

Guest host John Moore mentioned a couple of companies who leverage the "my little secret" strategy, one of them being In-n-Out Burger with its secret menu that includes burgers served "animal style," as West Coast Bureau Chief Carleen Hawn wrote about in our September 2003 issue.

I'd like to add a third criteria for loyalty:

  • Great customer service.

Or even just acceptable customer service. If it's easy and convenient and not outrageously expensive to remain loyal to a product or company, I will continue buying until I have an interaction that falls below my lowest acceptable service threshold. In this case, that was an hour on the phone, a mistake on my account, and then a rude follow-up call. My perception of the Starbucks brand is now turning around again as a result of terrific customer service since that fateful day in November.

According to Wharton marketing professor Barbara Kahn, companies in recent years have made a fundamental shift in their branding strategies: they are increasingly trying to brand themselves based on psychological associations -- perceptions of positive experiences and emotions that customers associate with a brand, rather than basing brands on more tangible qualities such as price or taste.

This new approach allows corporations more flexibility in extending their brands across multiple products (think: The Virgin brand means young, hip, cool -- and it fits airlines just as well as music stores and cell phones, versus Clorox which is all about making things white and clean -- hard to extend much further than the bleach bottle in the laundry closet).

Therefore, it is that much more important for companies to provide great customer service -- because it is the human interactions that will reinforce these warm and fuzzy emotional perceptions that a company has paid so much money in advertising dollars to create. Too many companies spend the lion's share of their time building their ad campaigns and product packaging strategies, then decimate those efforts (and waste those precious budget dollars!) by allowing poor customer service interactions to kill the image they've built.

So: if customer service is the bottom line, the thing that ties it all together, why is it so hard to do well?

Guest hosts: how do your companies talk about customer service? How do they teach it, and how do your corporate leaders embody the company's service principles (or do they)?

Readers: are there companies out there who have the elusive customer service formula right? Tell us about them...

In the meantime, I'll be trying to track down an answer to reader Bodie Le Monz's question, which was: are there any statistics available on how many bad experiences it takes, on average, before a customer is lost?

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1 Comments

  • Jackie Huba

    Regarding research about customer complaints, several years ago, TARP, a firm that specializes in measuring customer satisfaction and loyalty, found that keeping unhappy customers coming back is dependent on the customer actually contacting the company and how quickly the company reacts.

    For example, customers who experienced a problem with a potential loss of under $5.00, TARP found:

    * 37 percent who did not contact the company said they would continue to buy the product
    * 46 percent who complained but were not satisfied by the company remained loyal
    * 70 percent who complained and were satisfied remained loyal
    * 95 percent who complained and were satisfied quickly remained loyal

    For customers who experienced a problem with a potential financial loss of over $100, TARP found:

    * 9 percent who did not contact the company about the problem remained loyal
    * 19 percent who complained but were not satisfied remained loyal
    * 54 percent who complained about the problem and were satisfied remained loyal

    Botton line of the study: Encourage customers to contact you should they have any problems, and respond quickly. In fact in some industries, TARP found that a satisfied complainant is more loyal than a customer who never experienced a problem.

    Jackie Huba