Why You? Find Your Emotional Discriminator to Create REAL Loyalty

Loyalty marketers spend the bulk of our time trying to satisfy customers and create real loyalty.  The kind of loyalty that goes beyond discounts and deals.

One way to do this is to understand what business you are in.  Seems pretty simple, but it’s not.  Notice that I didn’t say “industry.”  I said “business.”

Let’s begin with a quick story.  This is from Mark McCormack’s classic book, What They Don’t Teach You at Harvard Business School (Bantam, 1986).

A guy asked the Chairman of Rolex, Andre Heiniger, “So, how’s the watch business?” Heiniger said, “I have no idea”. The guy said, “What are you talkin’ about? You’re the chairman of Rolex.” Heiniger responded: “Rolex is not in the watch business. Rolex is in the LUXURY business.”

Mr. Heiniger knew that his customers did not buy watches.  They bought status.

While most marketers understand this, the problem is that many think it applies to only a select group of brands or industries.  In fact, it’s true of every business.  Here’s a marketing rule to remember:

What you sell and what you deliver are not the same.

Think about your company.  It does not matter whether it’s a service business or a product business.  When someone asks you what business you’re in, you tell them what you deliver.  You tell them, “I’m a lawyer,” or “We’re in the food business”.  And you’re right…in a way.  Those are the services and products you deliver.  It’s also easily understood by most people.

What you actually sell is something more basic.  The truth is that people buy emotions.  Now, you may have noticed that the period before this sentence is bolded.  That was not a typo.  It was for emphasis.  So in case that slipped by, let’s try it again.

People buy emotions…PERIOD

Customer loyalty is about continually delivering on the emotional benefit you’re selling.  It’s really not much more complicated than that.  It’s not easy to pinpoint and it’s definitely not easy to accomplish, but the concept is pretty straightforward.

Look up emotional buying triggers and you will find the same few words over and over in most of the articles:  Love, fear, greed, pride, guilt, envy, altruism, vanity.  These are all valid and correct.  But loyalty is about discriminators for your company, not your category.  People buy luxury for an image of success, but why do they choose Rolex?

To really take advantage of emotional marketing, we need to go beyond the triggers and identify the emotional discriminators that your company provides.  If you have them, can define them, and continually perform to them, real loyalty is sure to follow.

Beyond price, what do you offer that your competitors cannot match?  If your customers buy your category based on altruism, why do they choose you over the many other altruistic choices they have?

Southwest Airlines (SWA) understands their emotional discriminator very well, and that’s the connection between employee and customer that creates the comfort and satisfaction that consistently ranks them near the top of national customer satisfaction polls*.  Many people choose SWA time and again because of the emotional connection their employees foster.  They simply make flying more enjoyable.  So SWA makes employee satisfaction their #1 priority.  Their success is reflected in the 90+% employee retention rate and their high customer satisfaction ratings.

Rolex continues to succeed because they make a high quality products, but also because they relentlessly guard their brand and their emotional discriminators.  Rolex is a well-known brand.  The company continues to advertise in luxurious settings and endorses the top athletes and celebrities.  When someone wears a Rolex, most people immediately recognize the brand.  Customers understand this and that gives Rolex an emotional discriminator over, say, Bvlgari, Hoblot, or Piaget.  Buy a Rolex and most people you meet will recognize your success.

At The JAY Group, we understood that we sell peace of mind, but needed to find our emotional discriminator.  Our research told us that we stood out because we let our clients be the heroes.  Bingo!  Now we know our emotional discriminator and it’s embedded in everything we do.

To help improve loyalty, first determine the emotional triggers for your category.  Note that these may be different for unique customer segments.  Not everyone buys from you for the same reason.  Then figure out your emotional discriminators.  Think about your customers/clients.  Do they depend on you?   Do you provide something they are not getting elsewhere?  Remember, the most important question you can ask your customers is why they choose you over their competitors.  Analyze those answers.  Read between the lines.  Your emotional discriminator is in there, and your success depends on it.

– Jay Weinberg

* Source: J.D. Power 2014 North America Airline Satisfaction Study (http://www.jdpower.com/ja/node/4611)

Create loyal customers by solving your competitors’ problems

Jay here.  At dinner recently, a friend talked about a service experience he had with his home theater system.  He ended the story by stating that he would “never buy anywhere else”.

Now this is one of those statements that makes a loyalty marketer perk up.  So I probed deeper and looked for the driving reasons that any company can use to improve loyalty.  Here’s the story…

About 10 years ago, my friend had purchased a home theater system at a larger retailer in the Chicago area.  That company subsequently went out of business.  He bought more components at a high end subsidiary of a big box retailer.  Let’s call them “Maverick”.  Everything was fine.

One day he found that he had problems with his TV.  He called Maverick and explained his issue.  He got “the runaround”.  We’ve all experienced it.  No one took “ownership” of his issue and no one made him feel confident in their advice.  It was days before he could get anyone competent on the phone.  They suggested he replace the TV because it was ten years old.  The back and forth went on for weeks.

My friend finally asked to have a technician come out to look at it, and they wanted to charge $150 for the visit and scheduling was not convenient.  He had enough.  So he called another local electronics retailer, Abt Electronics.  They are a family-owned one location business that is very popular in the Chicago area.  Abt answered the phone quickly and listened to his issue.  My friend can’t remember if they asked whether he had purchased the items at Abt, but felt that it didn’t matter to them.  They simply wanted to solve his problem.

After trying to solve it over the phone, Abt sent out two very qualified home theater technicians.  The visit charge was much lower than the $150 Maverick wanted to charge.  They poked around and found a wire that had come loose behind the TV.   Boom.  Done.  Problem solved.

Now, we have all heard and experienced these stories and I won’t waste your time telling you what you already know about how Maverick can improve.  I’m interested in loyalty and how specific strategies and practices can attract and retain customers.  Here’s what this story reinforces about customer loyalty:

  1. Customer service is an investment, not a cost. Most companies look at post-sale service as a necessary evil.  Smart companies understand it’s an opportunity.  What better way to be the hero?  Loyalty marketers know the old saying that “a customer is more likely to remain loyal after you fix a problem than if they did not have a problem at all.”  However, servicing prospects who bought from competitors – even if it means an hour on the phone and no revenue – may be even more valuable.  Not only do you create REAL loyalty, but you steal a customer from your competition.  Plus, you create positive word of mouth impressions.
  2. Transparency sells. For most products and just about all services, the biggest fear consumers have is that they are getting ripped off.  (Sorry, I know that’s a broad term, but it’s the best I could come up with.)  If you want someone to like you (i.e. convert and remain loyal), be honest and show that you have nothing to hide.  My friend described the experience with Abt as being “very clean”.  He said they spoke clearly and in words he understood.  They explained things.  They were patient and asked questions that made sense.  They showed through their actions that they were trying to help him.
  3. Align your interests. One of the best ways a service person can alleviate the “rip off” fear is to show the customer that your interests are aligned.  In the story above, Maverick quickly suggested my friend buy a new TV.  If that’s what my friend wanted, he would have called sales, not service.  He wanted his current TV to work.  He felt the interests of Maverick were different.  They wanted him to either buy something or go away.  Abt didn’t want to sell him anything.  They wanted to solve his problem.  They understood that if they were aligned with him on this service interest, he would align with them for future purchases.
  4. Be consistent. The three observations above must be ingrained in the culture of an organization.  For these to have any affect, they need to be universal, not part of the genetic makeup of a few enlightened employees.  Training is paramount.  This philosophy needs to be conscious and embraced throughout the company.  And be patient.  Like all forms of real loyalty, this strategy take time to pay off.  But it will.
  5. Hire right. No further explanation needed.  Seriously, you just need to have the right people.  You will know one when you see one.  When you do, get out the cloning tools.

So…the next time someone calls you for help with a product or service they didn’t purchase from you, what are you going to do?

Jay Weinberg (jay@thejaygroup.com)

For more info about customer loyalty, check out our resource center.

FYI…Abt’s Yelp page:  http://www.yelp.com/biz/abt-electronics-glenview-3

Millennialoyalty

Guess who’s starting to make some serious money?  Well, at least they are starting to SPEND some serious money.  The Millennial generation.  Those born between the early 1980’s and early 2000’s are starting to reflect their parents’ values and spending as much, if not more, than they are making.

So what does this mean for loyalty?  While it seems to be an overall boon for businesses the jury on customer loyalty is still out.

It is incredible how different every generation is from its predecessor. Experience shapes behavior, and people have argued that the reason the millennial generation is spending more than they are making is because of the events that have taken part in their younger years. While some of these events were extremely catastrophic (9/11 and the “great recession”), others were beneficial, such as the innovation of the digital world & extreme social changes. Some sociologists argue that all of these events have imbedded the idea in millennials that “you never know what the future will bring”.  This sense of insecurity causes them to want to spend more money on themselves and believe that it’s OK to treat themselves whenever they want. Watching their parents exhibit this behavior certainly adds to this attitude.

MillennialsIt’s this attitude that causes millennials to want to experience new things. Older generations used to enjoy consistency – purchasing the same brands, eating at the same restaurants, or using the same services. Millennials have a contrasting point of view and want to experience new things, causing a lack of brand loyalty that businesses once had. The “double-whammy” of increased competition and a disposition that lacks loyalty has driven many companies to introduce rewards programs that help bolster customer loyalty. While this does help, it doesn’t necessarily build “true” loyalty. According to an article by Kate Kaye in Adage.com, 37% of millennials said they would not be loyal to a brand without a program.  Another statistic, from the “2014 Loyalty Report” from Bond Brand Loyalty, shows that 60% of millennials who are members of a loyalty program would switch the brands they buy, and two-thirds would change when and where they shop, if it meant getting more benefits.

Now, the question remains, how does a business create a sense of “real loyalty” with millennials?  One way of doing this is by implementing a feeling of kinship in your business. This ultimately starts by training your employees to be as friendly and caring to the customers as possible. But there are other ways to make the customers feel like they are special. Give them rewards even if they’re not part of your loyalty program, or if you don’t have a loyalty program. Keep it simple. Random acts of kindness stick with customers and they will tell their friends about your good deed as well.  Taking a small loss means nothing if it assures a customer will come back again.

Another way to reach them…mobile.  Millennials are the first mobile native generation and if you are not reachable in that medium, forget it.  All studies show that by 2020 mobile payments will be over 13 gazillion dollars, and the millennials are leading the way.  Offer them information, payments, and communications this way.  Oh, and email?  Forget about it.  This generation wants nothing to do with email.  Expect open and engagement rates to fall even further.

Millennials are a complicated generation to understand fiscally, or in any way for that matter. But gaining their loyalty could be what sets your business apart from your competitors and could be a big advantage in the future.

Check out our resource center for more tips at:   http://thejaygroup.com/resource-center.php

– Luke Pustay

Classic Marketing Rules – RFM

Can you answer this (simple?) question:  Who are your best customers?

If so, bravo!  We can follow up with the question “why?” a bit later.  However, it’s amazing how many marketers with repeat customer bases can’t answer that basic question.  And it’s a really important one!  By knowing the value of your customers you can better optimize your communications budget, target prospects who share the traits of your best customers, and vary your messaging to appeal to various segments.

If you need a quick and easy way to value your customers, try this “old school” rule:  RFM.  RFM is an acronym for Recency, Frequency, Monetary Value.  These are the components of a formula that direct marketers have used for decades to measure the value of each customer.  To keep it simple, try this exercise:

  • Recency: This is most recent purchase date. Rank each customer by their most recent purchase date and decile them “i.e. break them into ten equal groups from top to bottom. The 10% most recent buyers get 10 points. The next 10% get 9 points, and so forth.
  • Do the same as above for Frequency (the total number of purchases) and Monetary Value (the total amount of money they have spent with you).
  • Now, add up the scores for each customers and there you have it…your own RFM customer analysis!

Use this to determine who and how often to market to various customer segments.  Dig a little deeper and see why people have a high score.  You will notice that some are driven by high frequency and others by one or two large purchases.  How would you message to each of these customers?  Probably a bit differently.

In sports, coaches are always telling players to “remember the fundamentals.”  Well, business is no different.  Remember RFM, play around with variations, add your own enhancements, and the next time someone asks if you know who your best customers are, give them a big grin and answer: “Abso-****ing-lutely!”

Oh, and check out RFM and more classic rules by downloading “Get Old Schooled” in our Resource Center.

Real Loyalty vs. Deal Loyalty (part 3)

Note:  This is an encore post from our Loyalty Leaders blog.

Welcome back.  This is our third and last post on this topic.  We have discussed how real loyalty is earned and deal loyalty is bought.  We talked about some ways to improve real loyalty.  Now we’ll finish up by talking about one more way to improve real loyalty, a couple of personal examples, and two of our favorite resources.

Here’s a surefire way to get people coming back and becoming advocates:

Surprise and Delight

Consumers love comfort and reliability.  They will be loyal if you provide those.  However, people also like to be positively surprised with something special.  They remember unique experiences.  Gifts are nice, but what’s even more powerful are experiences that go beyond the expected.  This could be engaging with a patron’s child and making her smile or providing a special-effort service without charge.  This is where training and hiring is so important.  Front-line customer-facing employees can make or break customer loyalty.  The good ones recognize opportunities to surprise and delight, and they perform – despite the fact that tracking loyalty back to their efforts is not easy.

Think about the corporate culture of Southwest Airlines.  They are built to make travel fun and their whole culture revolves around that objective.  They most likely even have a forum built for employees to share jokes, tips, and other ways to engage with and delight customers.  In a thankless industry they have built incredible real loyalty.

Speaking of Southwest Airlines, they are one of our personal favorites.  We’re located in downtown Chicago, so we have the luxury of choice for carriers and even airports.  Beyond the perception that Southwest has a better on-time track record, we are REALLY loyalty to them.  They fly from Midway, which is usually a more convenient and manageable airport.  And they really do make it more fun.  We can tell the difference when we fly other carriers.  When we need to book travel, the first place we go is Southwest.com.  We usually don’t even compare prices.

Another company who gets our REAL love is 48hourprint.com.  They provide online printing services for small businesses.  We use them for ourselves and sometimes our clients.  There are many, many players in that space.  But 48hourprint provide a consistent, quality product, and they are a pleasure to do business with.  They answer the phone, send little gifts periodically, and they do something that seems so rare these days.  They call us back promptly.

When we need quick, short-run print services, we go to 48hourprint.com.  No three bids, no price shopping.  We’re proud to say we’re loyal.

So, what are some of the businesses you REALLY love and why?  How can you integrate some of those reasons into your business and career?  The odds are that when you think about these businesses and why you love them, their marketing strategies and tactics will not not be the reasons.  As marketers, the best ways we can influence real loyalty are to be honest and brand consistent with our messaging, and provide the insight and ideas for management to help them stay the course for true customer loyalty.

Finally, here are a couple of books that deal with the topic of Real Loyalty (although not blatantly).  These are great resources for helping companies break the discounting habit.

Blue Ocean Strategy – W. Chan Kim and Renée Mauborgne

From their website:

  • Blue Ocean Strategy is the simultaneous pursuit of differentiation and low cost.
  • The aim of Blue Ocean Strategy is not to out-perform the competition in the existing industry, but to create new market space or a blue ocean, thereby making the competition irrelevant.

www.blueoceanstrategy.com

Beyond Price – Mary Kay Plantes and Robert Finfrock

Beyond Price will teach readers how to innovate their business models to escape the gravity of commoditization and price-driven competition

http://www.plantescompany.com/business-model-innovation-books-beyond-price/

– Jay Weinberg

Real Loyalty vs. Deal Loyalty (part 2)

Note: This is an encore post from our Loyalty Leaders blog.

Welcome back.  In the first part of this post we defined “deal”  loyalty as bought and “real”€ loyalty as earned.  In our opinion, there’s a simple reason why we see so much deal loyalty out there and precious little real loyalty.  Real loyalty is HARD.  It takes a great deal of commitment, patience, and effort.  Just like consumers, businesses find it much easier to just write a check than to exert real physical effort.

OK, so maybe that’s an extreme analogy, but in reality we are faced with intense competition and lightning-quick commoditization of our products and services.  It’s an impatient world we live in these days.  The path to creating sustainable customer loyalty often seems daunting.  Management is looking for quick results, and discounts provide them.

A colleague and friend is going through a difficult situation right now.  He runs marketing for a national retail company with about 100 stores, mostly based in suburban malls.  For the past few years, as competition heated up on both the brick & mortar and digital fronts, they reacted by discounting.  Their bottom line has really suffered (shocker!), and their President decided prior to Holiday season to cut back considerably on discounts.  Our friend has only been there for about 18 months, so he was thrown into the middle of this debacle and, to his credit, pushed back on the President’s strategy.  Of course, their Holiday business tanked and things haven’t look any better since.

This was because they didn’t answer the following question honestly and thoroughly:  Without discounts, what do we have to offer?

Let’s hope they have enough cash and patience to get through this difficult period.  Hopefully the reality of the situation will alert the organization to the fact that they need to create real customer loyalty or it’s “off the wagon” and back to the discounting drug.

So, what can companies do to create real customer loyalty?  The good news is that there are proven strategies and every industry can find ways to improve.

Here are a few ideas.  There are plenty more, and we’ll explore them in later posts.

Product Improvements – This is the simplest.  Think of all the game-changer product improvements that have catapulted companies beyond their competition.  By continuously innovating, customers will remain loyal and gladly pay a premium.

Service Improvements – Whether you are a professional services firm, a middleman, an OEM, or whatever, odds are that service is a big part of your business.  Customers for years have rated client/customer service as the number one reason for defection.  Great service can overcome deficiencies in product, but only to a point.  We’ve all heard that correcting a problem makes a customer more loyal than if they didn’t have a problem in the first place.  That does not mean we shouldn’t worry about products, but it does showcase the power of exemplary customer service.

What can you do to improve your service?  Are there proactive things you can do to improve loyalty?  He’s an example.  We worked with a major retailer that was looking to improve real customer loyalty.  We analyzed their customer service data and found the products and customer segments that generated the most complaints (relative to all products).  We then implemented a proactive service call just to follow-up after a purchase and make sure everything was OK.  That call cost about $2.  After one year, those customers spent $10 more than the panel-matched control group.  I’d take that ROI all day long.

Move Up the Chain – If your business is truly driven by price then real loyalty is going to be very difficult.  The only solution is to reinvent the business.  Maybe there is a way to expand your offerings to provide the services that specify and purchase your products.  If you are working through middlemen, can you reinvent your business to deal directly with customers?  Don’t be afraid to compete with distributors.  It may be a matter of survival.

Be the Only – Marketing consultant Al Reis famously advised that if you’re not number one in your category, create another category.  Can you go beyond that and find something that is completely unique to your business?  Take the competition right out of the equation.  Provide your customers something to which they will be truly loyal.  But make sure it’s real.  Customers cannot be fooled for very long and once they figure out that you’re not the only, they’ll be gone forever.

Let’s continue this discussion in the next post.  That will be the last of the series.  Promise.

– Jay Weinberg

Real Loyalty vs. Deal Loyalty (part 1)

Note: This is an “encore” post from our Loyalty Leaders blog…

Let’s discuss something fundamental to customer loyalty. When you break it down to the basic of basics, customers are loyal to your brand either because you pay them for it or despite the fact that you don’t. Let’s call the former “deal loyalty” and the latter “real loyalty”.

By the way, “deal loyalty vs. real loyalty” is not an original tag. I heard it back in the late 90′s during a DMA keynote by Larry Light, CEO of Arciture, LLC. Larry went on to become global CMO of McDonald’s and helped turn the brand around. That phrase has stuck with me ever since.

Where were we? Oh yes. Real loyalty. There are precious few businesses that can maintain customers despite price pressure. The reason is that real loyalty is very hard! It goes beyond what we marketers call “customer experience”. Real loyalty comes about by having a true commitment to providing value that goes beyond price. The only exception is being the low price leader in your category. And unless you’re Wal-Mart, which you’re not, being the low price leader is probably not where you want to be.

Real loyalty takes patience, money, and strong leadership. But most of all it takes strategic thinking and having a strong sense of your customer base. Customers will remain loyal if they are provided something unique. Uniqueness is usually found in products and services. And remember, we can rant and rave all we want about how our products are unique or superior, but what counts is how consumers perceive us – and very often it’s not as superior as we think.

The key to achieving real loyalty is to understand that customers buy emotions. Period. Whether you’re a product company or a service company, remember to separate what you are selling (peace of mind, safety, status, opportunity, comfort, etc.) and what you are delivering (a strategic marketing plan, a bicycle, a web site, an ice cream cone). When you realize what it really is that people are buying from you, then you can start to work on how to gather real loyalty.

The fact is, as marketers, we practice deal loyalty. We may support real loyalty if it’s lucky enough to be embedded in the organization, but the reality is that real loyalty is not in the realm of marketing. Where we get stuck is that we sometimes send the message of real loyalty, when in fact the company does not deliver on it. The foundation for real loyalty needs to permeate the entire organization, which is why it’s so difficult to achieve. It’s about merchandising, operations, and the corporate culture.

OK. Enough typing. We’ll continue this discussion next time. I’ll also provide some personal examples of companies to which I am “really” loyal.

– Jay Weinberg