Friday, January 29, 2010

Loyalty in a promiscuous world!

When I was young (how distant that seems) we had one scooter in India, the Bajaj Chetak. One waited seven years to get a scooter (and one was branded as fortunate by one’s envious neighbors if it was allotted) and sold it seven years later for the price at which one bought it for! You waited 4 years to get a white Premier Padmini and promptly booked ones next one so that one could get it 4 years later! Thankfully times have changed for the consumer and one has over 700 models of cars to choose from. If one wants to buy a pressure cooker today in India one can choose from 250 brands. Yes today as I have choice, I find that I am hardly loyal. Many of today’s consumers seem to exhibit the roving eye of a Shane Warne of yesteryear or Tiger Woods of today. Is there a truly loyal customer? One wonders. Instead of needless conjecture let us look at what brands and companies are doing and let’s figure out whether it is working.

The myth of the loyalty program

Airlines, retail chains, credit card companies, hotels…. all of these have loyalty programs that are run with varied degrees of success. They remember our birthdays, our anniversaries; remind us when we have not visited the store for some time… I was the first citizen of India’s first retail chain. I shall not name it as it is widely recognized as a leading light in marketing practices! So much for our judgment! But let me cut to the chase. My name is Sridhar Ramanujam which even I recognize is a mouthful. There is little that we can do about our names unfortunately, unless we are in politics and believe in numerology. But I am digressing. Perhaps as a consequence of the strangeness of my name I have received over 70 mailers addressed to Sridhar Raitanujam! Each one of these mailers would make me wince! As one of my less sympathetic friends said “they probably know you love curd (raita) that is why they are referring to you as Raitanujam”. Small comfort! Marketing is all about execution, not lofty statements and the least a consumer wants is for the company to spell his or her name right! Though in the same breath I must compliment Jet Airways (my former favorite) for sending me a mailer with an intriguing caption that read “Now we see you, Now we don’t” referring to the fact that I had not been using the airline for a few months. (Of course I say former favourite because Jet is systematically messing up its brand, with its Jet Konnect, but that is not the brief for this piece). The biggest problem with all these loyalty programs is that they have limited success and quickly disintegrate into distribution or expectation of freebies thereby diluting the brand’s equity. What is the difference between one brand’s loyalty program and another’s? With everyone bending over backwards to offer the same, loyalty programs have become a bare minimum, or a hygiene factor and hardly a differentiator.

It is all about the “Wow” factor

Sometimes it is not a bad idea to revisit the basics. One of the most abused words in marketing is ‘customer delight’ where the customer is floored by something that she does not expect from the service provider. In fact she is so thrilled by the experience that she tells the whole world about her experience. Let me share an anecdote that I heard somewhere. A customer was trading his car for another car. He drives out of the dealer outlet in his brand new car and switches on the radio. To his delight the radio in his new car is programmed exactly in the same way his old radio was – the first channel being the weather, the second the news, the third rock music… Can you imagine the happy surprise that the customer must have experienced? The key thing to be remembered is that it is not done by some major company executive with a strong sense of service but by a committed mechanic who wanted to excel at what he was doing. The challenge of course is that in most organizations service excellence is the outcome of a few outstanding individuals and has not been institutionalised.

So what does this mean for companies and brands?

The customer is changing dramatically and her expectations are being fuelled not only by the increasing affluence but by her own spiraling aspirations.
Companies are spending too much time on building expectations and too little in delivering them.

How much time and effort is being spent on training employees to deliver the “wow” experience?

How many companies spend time on understanding the ‘life time value’ of customers and what are they doing to hang on to their customers for dear life?

As always all these questions are probably easier to ask than to answer but companies must realize that customers are the very source of their business. Let me end with a quote by Mike Clasper who said “I would label the consumer of 2025 in three ways: more demanding, wiser and more worried."

Are you ready to serve tomorrow’s demanding customer today?

Ramanujam Sridhar is the CEO of brand-comm and the author of ‘Googly. Branding on Indian turf.’

Image Source: Shaira Vincie


Ram said...

Your are very correct when you say that the wow effect is needed to make the consumer look up at you. And that is why marketing is such a dyanamic thing.
What is delivering a wow effect today may not be effective tommorow. A marketers has to all the time keep thinking on his feet and think of original ideas without aping his competitors to deliver that wow effect.
And that is precisely why there is a limitation to which you can learn marketing in B schools. Ultimately the ideas have to come from you and more often that not the best of ideas dont have any historic baggage. Actually history will only tell you what not to do. What you have to do you have to Invent! And there in lies the marketers skill.

Ramanujam Sridhar said...

Ram you are right, we do learn about the past from case studies but that can also restrict our thinking and push us into looking at the past for the solutions of the problems of today.
That probably explains why marketing success is so rare!