What Drives Loyalty in Retail?
My local video store (Tommy K's) recently closed the branch near my house. After a few attempts to rent at the Blockbuster down the street, I decided that I would rather drive 15 minutes into the next town and rent from the Tommy K's there. The foregin/indie film selection is much better, they have new releases when Blockbuster runs out, and the staff is very knowledgeable and friendly. For me, loyalty isn't just about price or convenience when I want to watch movies.
In today's 1to1 Weekly lead story, Peppers & Rogers Group and Carlson Marketing released research around retailer-customer relationships. They consider relationships with retailers to be strong when the ongoing exchange between a company and a customer has the ability to grow and endure, and to resist any damaging forces that might destroy it. Strong relationships are characterized by trust, commitment, and mutuality and alignment, a two-way dialog that meets mutual expectations of the company and customer. As a consumer, what do you think is most important for a retailer to build relationship strength and loyalty?
I agree that retailers are an integral part of the customer experience lifecycle and that's because they are a more convinient and approachable by the customer.
As a consumer my loyalty will be goverened by two things primarily the quality of the product and after sales service.Though the prior has a limited role to optmize for a retailer the second part is very critical.To elaborate there are four essentials that will bind a retailer to it's customers:
1. Less Bureaucratic approach during warranty period of the product,as in should seamlessly process the customer request without much waiting.
2. Reasonable service charge post warranty.
3. Accessibility & Resolution real time via, phone ,chat,mail ,sms which will serve customers "anytime anywhere".
4. Ownership of the Customer by knowing them personally in terms of their needs and proposing upgrades of the product on a regular basis.
Winning a loyalty isn't simply a numbers' game about redeeming the points and other funny animating calculus. The Carlson's study says just that. Their survey shows that the odds of remaining a customer for those sitting on top of their relationships with retailers is less than 1:2. Well, it's a shaky proposition. It's like throwing the coin - 50:50. Every retailer wanting to see their customer the next year should have some sort of the healthy core appeal like at Hallmark - the diversity of postcards and by-products, for every occasion. Or take the Wal-Mart case where someone feels like on sale every day. There, customization and relevance come as part of the daily routine package, which is well maintained. Do the likes need a complementary loyalty program? Probably. But, first they need to do some cost-benefit analysis testing on a pilot case. How much will it cost to roll it out and maintain over time? Will it be organic enough or just a placeholder? If it becomes the latter, the effect would be quite opposite as the survey points. Does it make sense to focus on creating "loyalty fanatics"? Hardly. Fanatism in any form is a dangerous thing. It's the point where you loose the balance. Fanatics usually trade places and don't stay long-term. The relevantly navigated loyalty program on a large scale is an expensive thing. But when crafted and done nicely while being organic, it may act like a multiplier to a retailer's core line. So, to me, a retailer with a well-placed buy-product formula adding some well-executed beneficial personal message in any form whether it's an organic loyalty program or off-the-sleeve hot gift certificate is sure a winner.
How to win my loyalty:
1. Give me a good product at a good price
2. The product has to perform as advertised
3. If something is wrong with the product, make it right
4. If a customer disputes your charges, give them the benefit of the doubt the first time.
Two true stories:
Why I will never buy anyother product from Best Buy.
I bought a digital VCR for Christmas one year using the Best Buy Credit Card. I used the card for the 10% savings with the intention of paying everything off with one or two months. Since I was doing well financially, shortly after the first of the year I made a payment to Best Buy that totaled about 25% of the purchase price.
I received my first statement in the mail shortly thereafter, but had thought that since I had already made a payment to my account I was good to go.
When I received my next month's statement there was a $29 late fee on the statement. Not only that, the minimum payment due on the statement was only $15.
I contacted Best Buy and informed them of my displeasure, explained my circumstance, could prove that I had made a payment between purchase and when the first payment came due, and they refused to credit my account the late fee. I talked to the customer service representative, the customer service rep's supervisor, and service reps supervisor's supervisor.
I paid off the account while on the phone and informed the manager that I would never set foot in a Best Buy again. Prior to this encounter, I had purchsed several thousand dollars in merchandise from Best Buy and in the three years since this happened, I refuse to even set foot in one of their stores. I don't care what they offer, I won't buy from them.
I felt that if they were more concerned with collecting a late fee I felt was unjustified, then they could have the $29 late fee and not my repeat business. I'll simply go elsewhere, even if I have to pay a higher price for the same product. Oversight on my part, probably. Unusual circumstance, definitely. I had history of purchases and had never been late on a payment and always abided by the terms of whatever agreement put into place at the time of purchase. I felt I had made a good faith effort to meet the terms of our agreement in this instance. It was their unwillingness to see things from my point of view.
Why I always look for a Chrysler product first when looking for a car.
I had a used van I had recently purchased. While traveling from South Carolina to Michigan, the van broke down on an overpass in Charlotte, North Carolina. The local Chrysler dealership went above and beyond in not only staying late in the evening after normal store hours to get me back on the road, but were simply friendly. We were on the road the same evening.
On the same trip, we had a similar problem. I went to the nearest dealer, showed them my receipt, they replaced the part for free and provided me a list of things I should probably take care of as time and resources permitted. They backed up their warrantee no questions ask. Different dealer in a different state.
A year later it acted up again, this time in South Carolina. No questions asked. They made it right. Different dealer, different state.
I bought a new car from a Dodge dealer in South Carolina and moved to Illinois. Small problem with the engine. They eventually had to replace the entire engine at the 35,500 mile point of the 36,000 mile warranty. No questions asked. Different dealer, different state.
You can say what you want about whether or not Chrysler is a quality product. I've worked enough on cars in my life to know that stuff happens. I've always gotten a good product at a price I was wiling to pay, and from my experience with Chrysler, if something goes wrong, they make it right. No questions asked. They earned my trust through action. They understand the value of repeat business.