Digital Matters -- Issue 45

Given that business has never been more competitive, given that the Internet enables both richness and reach, given that peer-to-peer computing will soon offer nearly infinite processing power and data storage to everyone -- given all of the imperatives of a networked world: What is the deal with coupons?

What, exactly, is the value proposition of 25 cents off a tube of Crest toothpaste? Do companies such as Procter & Gamble really think that coupons work? Do they think that we'll be loyal to them after we spend 10 minutes scissoring out the damn slips of paper, storing them in some kitchen drawer, promptly forgetting which drawer, then hunting for them before going to the supermarket -- only to find that most of them have expired?

Companies such as P&G spend millions of dollars on coupons every year. In 1999 alone, 256 billion coupons were distributed in the United States, which is a stunning statistic because it runs counter to a central demographic fact of our age: No one has any time.

Just as important, it speaks volumes about how clueless companies continue to be about a subject that is arguably essential to their survival in the newly networked world. That subject, in the marketing argot of the old economy, is customer loyalty.

Here's the thing about customer loyalty: It's mostly a one-way street. We customers are loyal to certain companies, products, and services, but the companies that provide us with those products and services, in the main, exhibit little loyalty toward us.

Let me give you an example. I am a devoted Diet Coke drinker, a loyal Frito-Lay customer, and a dedicated drinker of Tropicana orange juice. If PepsiCo ever made one step in my direction (rewarding me for my loyalty to Frito-Lay and Tropicana), I would switch from Diet Coke to Pepsi One in a second. Likewise, if Coke would move my way on Diet Coke, I would happily toss Tropicana and drink Minute Maid instead.

But they don't. I drink a case of Diet Coke a week, and as far as Coca-Cola is concerned, that's it. Once I buy the product, that product is no longer connected to the company. Rather, it belongs to me -- and I am thus alienated. I get no discount for my devotion, no price break or special status for my loyalty. When I walk into my local Stop & Shop to buy my soda, I'm just another customer -- even though I have been drinking Diet Coke for 27 years. That's crazy. I am not just another customer -- I happen to be one of Coca-Cola's best customers.

To make matters worse, at the same time that Coke is taking me for granted, it is trying to entice my kids, through advertising, to drink caffeinated soda. That's what those polar bear TV spots are about. So not only is Coke not rewarding me, it's actually working against me (by trying to get my kids to drink a product that I don't want them to drink before they're old enough). And the same is just as true, of course, for Pepsi.

All of which goes against the basic tenets of the networked customer relationship. The whole point of a networked world is to be connected and to remain connected at all times. I don't buy the Wall Street Journal for 75 cents every day, throw it away, and then become a new customer the next day. I buy it, read it, and have read it every day for the past 25 years. Do you know what the Wall Street Journal's response is? It charges me $30 annually to use its Web site! Hello? I actually pay more annually for my Wall Street Journal subscriptions than does a new customer who gets the "special deal" for the first 12 weeks. What is wrong with that picture?

It is true that certain companies have good customer-loyalty programs. MSN Messenger enables me to make free phone calls from my desktop computer in my home office to anywhere in North America. We loyal customers like that. American Airlines, Delta, and United have given me many free airline tickets in return for my loyalty to them. We like that too. Amazon.com, Banana Republic, and the Gap frequently send us gift certificates that we can use over the Internet to buy things for our children. We appreciate that. And as a result, we are fiercely loyal to those companies.

It is also true that many companies (such as American Express, Garnett Hill, General Motors, L.L. Bean, and Washington Mutual) provide such superb customer service that we keep coming back for more. And many other companies provide a sensational customer experience, as anyone who has ever purchased a Dell computer or who has been to a Wal-Mart will attest.

But the vast majority of companies still view customers as alienable and disconnected. They think in old-economy terms. They say that they don't think that way: Their senior managers all talk a good game about customer-relationship management, customer care, customer service, and customer outreach. But in the thought bubbles that float over their heads, most senior managers see customer service as a cost center. The only customers they really care about are the ones that they can play golf with.