Where Did Your Customers Go?

Marketing researchers have obsessed over customer loyalty for ages. Large corporations have devised elaborate customer loyalty programs. But things are changing, quickly. Nowadays, customer loyalty is slipping through the fingers of corporations. I sifted through several market research studies on loyalty and brand loyalty. I concluded that when it comes to keeping customers loyal, there is no one magic bullet or best practice.

Here’s an example of a customer (me) going from loyal to disloyal. I used to be a loyal customer of United Airlines. I attained the status of Premier Executive, got all the perks, and enjoyed life in business class. Then Southwest entered my local market. Cheap fares, no frills, easy to book. I had reservations (is there a pun somewhere here?) about the cattle-car feeling at Southwest and its policy of using a first-come, first-served seat selection process. Before I switched, I considered what it meant to me to give up my status on United and hop on an all-steerage airline.

When I started writing this piece, I realized I was Mr. New Consumer. I wanted more for less. Maybe Southwest would give me more for less. Let’s see, there were more Southwest flights available at all three of my local airports. Not only were there more flights, but Southwest also flew to more places than United.

Fares were considerably cheaper. To make matters worse with United, I became skeptical when United started limiting perks for frequent flyers. And, I was more doubtful about the future of this airline when United merged with Continental Airlines. I started to see tangible value by flying Southwest. I decided to switch from United to Southwest. I thought I made a good decision.

To complicate matters about customer loyalty, I know that by using one of my credit cards, I could use points accrued from making purchases on my credit card to pay for airfares, hotels, gas, or airline baggage fees. For example, there are credit cards that earn about 2 percent rewards per $1 spent when you redeem for travel. Credit card customers acquire 40,000 (or some other amount) bonus miles when they charge $3,000 worth of purchases within a given time period. This translates into about $400 in travel statement credit. The beauty of using this type of credit card is you are not limited to using any one airline.

 

What did I do? I closed out my old credit card, signed up for this new one, and started accruing points. So much for being a loyal credit card customer. Now I could pay for my Southwest trips using points from my credit card, and get great fares, too.

 

A Bit of Recent History

The story doesn’t stop here. In 2008, Airbnb bursts on the scene. You all know Airbnb. According to its website:

“Airbnb is a community marketplace where guests can book spaces from hosts, connecting people who have space to spare with those who are looking for a place to stay.”

Through their experiences on Airbnb, guests and hosts build real connections with real people from all over the globe.

Airbnb has taken the idea of renting rooms to a whole new level. Prior to booking your room, you can read customer reviews as well as read what the property owners say about past renters.

The arrival of Airbnb type services brought up a key fact about loyalty. Customers now rely more on information about hotels from other customers rather than from the hotel’s advertising.

There goes loyalty down the drain

According to a recent study, there has been a drop in customer’s loyalty to hotel brands. Only 8 percent of those polled who stay in hotels said they always book

at the same hotel chain. Two reasons for this mass defection might be consumers can quickly find cheaper hotel prices and customer reviews on websites such as Trip Advisor, Kayak, and Trivago. Who wouldn’t want to pay less for the same or better quality hotel room? Remember today’s customer demands high quality at reasonable prices.

 

Customers are on high-alert, searching for the best value for their money. Kiss loyalty goodbye.

 

Now back to the beleaguered airlines. The market research firm Colloquy found “54 percent of U.S. airline loyalty-program members
are ‘unhappy’ with their reward options”. And, 48 percent say they’ve been “frustrated” by the reward redemption process.

 

Let’s look at the chronology of this story.

  • First, I defected from United to Southwest
  • After that, I used up all of my hotel points
  • Then, I applied my credit card points to pay for hotels or airfares
  • Finally, I switched to using Airbnb properties and paying for it with points from my credit card.

When I seriously began to rely on other people’s reviews, I became more and more aware of the impact other customers had on my purchasing decisions. The customer’s needs were no longer driven by loyalty, but by quality and value.

Did You Ask a Good Question Today?

questions

This is one of my favorite stories. Isidor Rabi (1898 – 1988) was a Polish-born American physicist and Nobel laureate. He was recognized in 1944 for his discovery of nuclear magnetic resonance, which is used in magnetic resonance imaging. When asked if there were any significant influences on his life, he said, “My mother made me a scientist without ever intending to. Every other Jewish mother in Brooklyn would ask her child, “So? Did you learn anything in school today?” But not my mother. “Izzy,” she would ask, “did you ask a good question today?” That difference – asking good questions – made me become a scientist. (As quoted in “Great Minds Start with Questions” in Parents Magazine, September 1993). The lesson I learned is profound and forms the basis of my work.

Izzy’s mother got it. She understood that asking questions is about engaging in meaningful dialogue.

I wish I knew about Izzy and his mother when I started my first job after graduate school. One of the managers where I worked took me under his wing and gave me two pieces of advice I’ll never forget.

  1. During your first few months on the job, don’t impress the employees with how much you know. Don’t offer up solutions or suggestions. Just ask questions. Ask as many questions as you can to as many employees as you can.
  1. When you are walking around the office, always carry a yellow pad with you.

There are two reasons to do this. The first is that it would not look good to others to walk around the office empty-handed. After all, “Idle hands are the devil’s workshop.” You need to appear as though you’re doing something work-related. When you ask a question, surreptitiously write down what others said. Keep this list handy and use it as a reference when you would be in a position to answer questions.

From that point on, I never stopped asking questions.

Here’s a brief example of how to ask questions in a business situation. A customer asks you a question about your product or service or states a frustration. Instead of trying to answer the question or solve the problem, the very first thing you do is to take their question or their stated frustration, throw
it back to them, and ask for clarification. You might say, 
“What exactly do you mean?” “Tell me more about this.”
“Can you clarify your question?” Sometimes, people just want to be heard and are not looking for solutions. By asking questions, you’ll begin to engage in a dialogue.

Next time a customer asks a question or states a frustration, start asking questions.

How to Destroy a Business Relationship – Part 1

explosion-147909_640You can use the most effective sales techniques in the world and have a great product or service to offer your customers, but if you don’t watch out for and address the three most common business relationship destroyers, you might as well close up shop. Today, we’re going to be talking about Business Relationship Destroyer #1: Focusing on Negativity.  

Negativity begets negativity.

Take the case of business owners Debbie Downer and Walter Whiner. All of you have, at one time or another encountered Debbie or Walter in a business situation. Debbie and Walter perceive most customer communication as negative. These two people are lost in the netherworld of negativity. The opposite is also true. Everything (well, almost) that comes out of Debbie’s and Walter’s mouths sounds negative. The negativity can be heard in tone of voice and or in the subtle off-putting messages that are communicated to customers. You can easily ruin a sale and possibly sabotage your reputation by acting like a Debbie or Walter.

It seems like some people’s brains are wired for negativity. For those people, it doesn’t take much to activate their brain’s emergency alert system. When their emergency alert system is activated, their ‘thinking brain’ goes off-line and their negative emotions take over.

As a businessperson, you have to recognize what types of situations might trigger an emergency alert response. I am dramatizing the point here but, at some point in time, you’re going to be faced with a situation when you’ll feel reactive in a business situation.

In these types of situations, you don’t have the time or place to meditate or to sit back and take deep breaths. In Critical Connections, you’ll read about what’s going on in your brain and how it relates to being a successful marketer.

Stay tuned for the next episode of How to Destroy a Business Relationship in Three Easy Steps – Destroyer #2: Taking Things Personally.

What Happened to Customer Loyalty?

Marketing researchers obsessed about customer loyalty for ages. Large corporations have devised elaborate customer loyalty programs. But things are changing, quickly. Nowadays, customer loyalty is slipping through the fingers of corporations. I sifted through several market research studies on loyalty and brand loyalty. I concluded that when it comes to keeping customers loyal, there’s no one magic bullet or best practice.

Here’s an example of a customer (me) going from loyal to disloyal. I used to be a loyal customer of United Airlines. I attained the status of Premier Executive, got all the perks, and enjoyed life in business class. Then Southwest entered my local market. Cheap fares, no frills, easy to book. I had reservations (is there a pun somewhere here?) about the cattle-car feeling at Southwest and its policy of using a first-come, first-served seat selection process. Before I switched, I considered what it meant to me to give up my status on United and hop on an all-steerage airline.

When I started writing this article, I realized I was Mr. New Consumer. I wanted more for less. Maybe Southwest would give me more for less. Let’s see, there were more Southwest flights available at all three of my local airports. Not only were there more flights, but Southwest also flew to more places than United.

Fares were considerably cheaper. To make matters worse with United, I became skeptical when United started limiting perks for frequent flyers. And, I was even more doubtful about the future of this airline when United merged with Continental Airlines. I started to see tangible value by flying Southwest. I decided to switch from United to Southwest. I thought I made a good decision.

To complicate matters about customer loyalty, I recently realized by using one of my credit cards, I could use points accrued from making purchases on my credit card to pay for airfares, hotels, gas, or airline baggage fees. For example, there are credit cards that earn about 2 percent rewards per $1 spent when you redeem for travel. Credit card customers acquire 40,000 (or some other amount) bonus miles when they charge $3,000 worth of purchases within a given time period. This translates into about $400 in travel statement credit. The beauty of using this type of credit card is you are not limited to using any one airline.

What did I do? I closed out my old credit card and signed up for this new one and started accruing points. So much for being a loyal credit card customer. Now I could pay for my Southwest trips using points from my credit card, and get great fares, too.

The story doesn’t stop here. In 2008, Airbnb bursts on the scene. According to its website:

Airbnb is a community marketplace where guests can book spaces from hosts, connecting people who have space to spare with those who are looking for a place to stay. Through their experiences on Airbnb, guests and hosts build real connections with real people from all over the globe.

Airbnb has taken the idea of renting rooms to a whole new level. Prior to booking your room, you can read customer reviews as well as read what the property owners say about past renters.

The arrival of Airbnb type services brings up the key fact about loyalty. Customers now rely more on information about hotels from other customers rather than from the hotel’s advertising.

There goes loyalty down the drain.

According to a recent study, there has been a drop in customer’s loyalty to hotel brands. Only 8 percent of those polled who stay in hotels said they always book at the same hotel chain. Two reasons for this mass defection might be that consumers can quickly find cheaper hotel prices and customer reviews on websites such as Trip Advisor, Kayak, Travelocity, and Trivago. Who wouldn’t want to pay less for the same or better quality hotel room? Remember today’s customer demands high quality at reasonable prices.

Customers are on high-alert, searching for the best value for their money. Kiss loyalty goodbye.

Now back to the beleaguered airlines. The market research firm Colloquy found “54 percent of U.S. airline loyalty-program members
are ‘unhappy’ with their reward options”. And, 48 percent say they’ve been “frustrated” by the reward redemption process.

Let’s look at the chronology of my story.

  • First, I defected from United to Southwest.
  • After that, I used up my hotel points.
  • Then, I applied my credit card points to pay for hotels or airfares.
  • Finally, I switched to using Airbnb properties and paying for it with points from my credit card. 
When I began to rely on other people’s reviews, I became more and more aware of the impact other customers had on my purchasing decisions.

 The customer’s needs were no longer driven by loyalty, but by quality and value.

 So, how are you going to build a culture of loyalty with your customers?

 

Giving Advice vs. Listening

Food For Thought:

People love to give advice. When someone gives you advice, the advice they give is generally more about what they need rather than what you need.

Recently, I sent a secure email to my doctor’s office asking for a call back so I could discuss the details about whether I need to get a new prescription since my current prescription’s refills ran out. After three days, I did not hear back from anyone from the doctor’s office. So, I called the office and demanded to talk to the administrator of the practice.

When I told the administrator about my frustration, she listened to my entire story and then profusely apologized. She then asked me about what was the best way to reach me. I said email. She said that she would put a note on in my electronic medical record reminding staff members to email me non-medical information.

At the end of this conversation, I felt listened to and had more confidence in the practice’s ability to respond to me.

Let’s try something:

  1. Briefly, write down a dissatisfaction or frustration of a customer/client. Either use a real example or make one up.
  1. Next, write down three open-ended questions you might ask that dissatisfied customer. Do not ask a question that requires a “yes” or “no” answer. These questions should focus on what customer needs were not met.

Asking questions:

  • Takes the pressure off of you to immediately solve the problem or give advice
  • Gives you time to think rather than react
  • Lets the customer know you are interested in him/her

Here are the three steps to help your enhance your business relationship with a dissatisfied customer:.

  1. Listen to the complaint
  2. Emphasize with customer’s frustration
  3. Ask how you can meet their needs

I hope you do not have any dissatisfied customers. If you do, be prepared to listen, emphasize and ask a question. Read about becoming a good listener vs. giving advice in Critical Connections.

Listening is a positive act. You have to put yourself out to do it.

-David Hockney