Krishnan Menon titles himself as one of the world’s leading experts on consumer marketing. He serves as Chairman and Chief Executive Officer of Phenomenon, an idea-generation company. He’s worked on marketing the iMac and iPod. He’s helped with Williams-Sonoma’s wedding registry and Pottery Barn’s online store. He worked with the Lord of Rings Trilogy, and Santana’s comeback album, Supernatural. He’s led teams for Xerox’s sponsorship of the Olympic Games, and Home Depot’s foray into eCommerce. He’s worked on loyalty initiatives for Charles Schwab, and helped with the launch and marketing of Jet Blue. In short, he’s got a bit of a resume.

 

For few years, he was producing a blog on marketing called Brutal Clarity which, as Krishnan put it, was “an ephemera of marketing.” His July 8, 2004 post (yes, we’re going a bit back in time) covered the concept of customer loyalty.

 

In that post he digs into the concept of transactional loyalty (a term he claims ownership of).

 

 

As Krishnan sees it, the key to loyalty—which is the driving of future purchase behavior—is to create a relationship with the consumer that extends the consumer’s unique perception of the brand’s value to him or her. He agrees that customers will grab anything you give them. It just doesn’t build loyalty. They will continually re-assess their purchase decisions in your category until your loyalty initiative provides them with the emotional context that’s necessary to build true loyalty.

 

I find this point to be bluntly reaffirmed with the airline industry today and their lack of customer retention.

 

I don’t think there’s a major airline out there that doesn’t have some kind of a credit card/miles/reward program to bring you back to their specific company for airline travel. And if you stick with a particular formula it is possible to get a few free tickets. I’ve done so with both United and Southwest.

 

Unfortunately, with the oil price spike, the airlines are now gouging any fee they can to raise revenue, including increasing fares. And those mileage reward programs are now becoming a liability. There is a very high risk that the airlines will devalue them further or dump them entirely, not wanting to give away anymore free seats.

 

The result is written on the wall: I’ve cashed out my remaining miles and I’m going with the lowest airline bidder. And just about every other airline customer out there is doing the same. The old rewards program has no value to me anymore, knowing what’s coming, and so I have no loyalty to United Airlines anymore. United has given up on any attempt to keep customers and is only concerned with cash up front. So much for a long-term business strategy. But that only sets them up for a brutal price war in which no one is a winner. In fact three airlines already threw in the towel and called it quits.

 

Higher cost of travel - 1 point, Customer Retention - 0.

One of the many things parents of young toddlers get to do in the summer time is sign their kids up for swimming lessons. Most of the introduction classes are basically to just get the kids used to the water, floating, climbing out of the pull, and jumping in without fear (you would think the last part was natural given all the other trouble toddlers get into, but for some reason the fear factor finally kicks in momentarily). The lessons usually go for two weeks, a couple days a week, and parents pay a fee for the service of a swim trainer to provide 30-minute classes to a group. At the end of the two weeks the parents get a neat little certificate with a photo of them and their child in the pool, and memories of water in the nose, splashing, and general wetness. No Mark Spitzer Olympic hopefuls though are produced from the first class sessions, however.

 

What did catch my attention was that the trainer waited two weeks until the very last class until the children were just starting to get the hang of their lesson goal (i.e. float, flap, kick their legs) when the sales pitch came. “You know, she’s really getting the hang of it! We have an intermediate toddler class that you can sign up for today and she can continue right where she leaves off today with swimming!” It’s the last minute catch. In stores and in verbal purchases you see the same pitch, “By the way, would like protection coverage with that?” “We have a membership plan that gives you future benefits and discounts for supplies.” “If you act right now, we can throw in these accessories for your product…”

 

Each of these pitches are a momentary customer retention for a secondary sale. And secondary sales are big business. They most common in the tech industry at retail level with protection and warranty services in addition to the product’s own warranty. And the goal is to 1) hold onto the customer for future business, 2) secure a secondary purchase and additional revenue, and 3) make sure the customer creates an indirect loyalty to the product or service and has to come back for more. All of this is fine in fair business.

 

Where customers get annoyed is when the secondary selling gets aggressive or borders on fraudulent. You usually see examples of this with switch and bait scenarios, or fly-by-night operations. And unfortunately, these black sheep give all other secondary sales and related customer retention a bad name.

 

Personally I like the idea of getting more swim lessons for my kids. And I like the service I got enough to return to the same swim trainers we started with. But secondary sales need to be coupled with good primary product quality and service to begin with to be really successful at customer retention. Otherwise they become as offensive as half-rotten food creating indigestion, not customer retention.

Sometimes things are best said by the folks that said them. This is the case with our next review which focused on Eric Fraterman’s retention blog, and ironically we decided the words of Pierre Husebus on customer retention should be distributed in their original format just as Eric did as well for his blog:

 

Eric Fraterman: I just read one of those blogs that made me think: I fully agree and I could not have said it better. This blog hits a lot of nails on the respective heads. So, I would like to relay it and mention that this post was by Pierre Hulsebus of the EHTC Technology Solutions CRM Team.

 

These are the 8.75 Key Recommendations:

1. Build a Diverse Team: Customer experience initiatives teams are often comprised of people who are responsible for customers across the organization. We suggest a diverse group from sales, marketing, customer care, administration, and management.

 

2. Design Processes from the Customer’s Viewpoint: Mapping the customer experience requires your team to walk in the customer’s shoes for a while. The exercise will reveal the difficulties that customers have working with you. Build a touchpoint map that lists the touchpoint, customer importance rating, and customer satisfaction rating for each one. 

 

3. Actually Listen to the Customer: Feedback is a better indication of faulty processes and procedures than surveys. The challenge is not how to solicit feedback, but actually listening and taking action on the suggestions. Confronting internal process managers with raw customer feedback can be very painful. However, when the changes are deployed as the customer suggests, this needs to be communicated to employees and the customers who offered the feedback. Customer communication is a two-way street. They need to hear back from you that you heard them and that you worked to improve their experience.

 

4. Get Up Close and Personal: Personalization is complex, and complexity can mean increased costs for the company. But increasingly, customers are expecting an Amazon.com experience. Organizations mastering offerings and services tailored to customers’ expectations are beating their competition by almost every measure. Reward customer loyalty with personal attention and friendly, helpful, and caring employees. 

 

5. Build Institutional Memory: Ensure that information gleaned from a customer at one interaction is not forgotten later on. Customers hate repeating their stories. From their perspective, they think we all work together and know everything about them because they just told the last person at our company the same information. So they get irritated when the next touchpoint in their journey does not know what happened before. 

 

6. No Sacred Cows Allowed: Extending hours, or giving web access to order history are typical first steps, but organizational improvements often take courage, innovation, and risk. The team should be transparent and clear, open-minded and inclusive. Basically, everything should be on the table and nothing should be so sacred that it cannot afford to be changed. This is where a committee structure can often be detrimental to success, as a committee will often skip over process improvements that are too hard, even though the reward may be very high. Failure needs to be allowed, and risk need to be taken.

 

7. Get An Attitude Adjustment: I have stated often that the lowest paid employees in a company have the highest effect on a customer’s perception of value. Training employees to how to behave with customers on the phone, in person, or in writing will make a good experience better. It is personal “one on one” interaction that defines the core customer experience. 

 

8. Eat The Whole Enchilada: Taking charge of the experience from end to end is not an easy task. Expect resistance and barriers from people. Many of the managers that are stake holders in their specific processes fail to realize that their process, although important to company policy, may be negatively affecting the customer. You will find these the most difficult issues to deal with. 

 

8.5 Pull Up A Chair, You Are Going To Be Here A While: You may want to change team members every six months but this process will never be complete; it is a journey not a destination. The process is a continuous quality improvement, unless you never expect your customer’s needs or wants to change. This process of improving the experience will keep going moving as long as customers needs and wants change. 

 

8.75 Embrace the Ambiguous: Solutions to effective customer improvements are locked up in the heart of your customers. What improvement is going have the good ROI, or please customers enough to stay longer, or spend more money with you is often a mix of common sense, innovation, and failures. There are a lot of “Best Practices” that consultants are can bring to the table. The ones that work best vary from project to project.

 

 

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