How to lose a loyal customer
Have you ever watched on incredulously as prospective new customers or members are offered massive incentives to sign up to an organisation that you have been a long-time “loyal” customer of, while you get offered nothing to renew your relationship?
Annoying isn’t it?
It is often reported that it can cost anything from 5 to 10 times what it costs to keep a customer to win a new customer. So why is it that organisations continually over invest in winning new customers and under invest in nurturing existing customers and understanding exactly what it is that makes them loyal?
When they “win” new customers, through inducements and bribes, how do they know they’ll stay loyal? Do they care? Surely the true test of customer acquisition is how long they remain a customer, not whether accept an incentive.
I remember being on a study tour across the US and Canada many years ago that included visits to such places as Reader’s Digest HQ in Pleasantville (have you ever heard a better name?) New York and National Geographic HQ in Washington DC.
It was sitting in a presentation from the executives at National Geographic that I decided to become a customer, donor, member and fan of National Geographic. Why? I was inspired!
There was a senior executive at National Geographic whose name I think was Dale who told us the history of National Geographic and capped it off with his own personal journey to being a leader at National Geographic. He’d worked in politics and been an advisor to President Ronald Regan and worked at the highest levels of US government – a pretty impressive cv.
He recalled telling his grandfather that he had left politics to work at National Geographic with some trepidation as he was sure his grandfather would be disappointed in him. His grandfather had always been so proud that he worked for the President of the United States. On hearing Dale’s news his grandfather said to him that he could not think of any higher honour than to serve his country working for the President of the United States of America, except working for National Geographic.
It was a powerful story. Then when I listened to all the amazing achievements in exploration, science and discovery that National Geographic had sponsored or led since its foundation in 1888, it was impossible not to be inspired. I was converted there and then.
Each month the National Geographic magazine would be delivered to my home and occasionally I would find the time to read it. If I didn’t get to read an issue, I was ok with that – I was contributing to something much greater – exploration and discovery and the betterment of humankind.
As each year’s renewal letter rolled in for payment, I dutifully completed my re-subscription, pledging my loyalty to this incredible institution. I was sure they valued my contribution and considered me an important member of their community. But did they?
I’d been a member for well over five years and was thumbing my way through a magazine while sitting on a plane going somewhere, when I stumbled across a special offer that National Geographic was offering to all new sign ups. A choice of a National Geographic polar fleece or a printed world map. Now I’d only just renewed my “membership” and had been offered diddly-squat for my many years of loyal patronage and there was no incentive to sign up again. I wondered, “Why are the newbies getting an offer that wasn’t available to me?”
So, I tore out the add from the magazine and decided that I needed to let National Geographic know that I was feeling a little under-appreciated.
With a little bit of research, I was able to find out who the head of marketing was, and I sent them a letter telling them how disappointed I was that new members were being rewarded for signing up, while my loyalty wasn’t being rewarded at all – in fact it was being taken for granted. I asked the question “Why is it that you value new customers more than your loyal customers?”
I received a nice letter back from the head of marketing thanking me for my letter, agreeing that it was wrong that loyal customers were not being acknowledged and rewarded. He concluded by asking me what size polar fleece I would I like, or would I prefer the world map. It was great to get a humble and positive response and I felt somewhat vindicated for complaining and happy to be acknowledged. (I went for the polar fleece btw).
At this point I felt valued again, but on reflection, I realised I wasn’t really being valued – I was being pacified. If I hadn’t complained, I would have heard nothing, and received nothing.
The weird thing is, I didn’t need or want a reward to support National Geographic – I really wanted to support them. But it looked like my support was being used to offer shiny trinkets to attract new members and not supporting their charter of exploration and discovery. That wasn't why I signed up and I was annoyed.
They didn’t know me.
They didn’t understand why I was a member.
They didn’t show me they valued me.
I felt that they had broken their brand promise to me.
The prestige of my National Geographic membership was tarnished, and I no longer felt like a valuable contributor to exploration and discovery – I just felt like a magazine subscriber. I’m sure it is no surprise to learn that I let my renewal lapse. The magic was gone.
It reminds me of the old sales joke that has been around for decades about a man who dies and on arrival at the Pearly Gates, St. Peter greets him and because he has lived a good life tells him that he is welcome in Heaven.
St. Peter provides a tour of a serene and tranquil place that is clean, calm, and quiet – a place for contemplation, meditation, and reflection. The man thinks to himself, it’s nice, but it looked a little boring, so he asks St Peter, “What is Hell like?” St. Peter tells the man he is free to choose between Heaven and Hell if he wishes and allows him to check out Hell so he can make his decision.
When the man gets to Hell, it seems like everyone is having an awesome time. Satan greets him like a long, lost friend and invites him in to join the party. There are people drinking, dancing, and enjoying an indulgent and decadent lifestyle – it looks way more fun than Heaven.
After his tour of Hell, the man goes back to St. Peter and says, “I’m sorry, but I’ve decided to spend the rest of eternity in Hell. I think it’s more my style.” So, the next day, St. Peter reluctantly bids him well and off he goes to Hell.
When he gets back to Hell, it’s nothing like it was during his tour. People are on fire with their flesh burning. There is screaming and suffering and there are no parties. It is Hell.
The new arrival says to Satan, “There must be some mistake. This isn’t what Hell was like when I visited yesterday.”
Satan laughs and says, “Ahhh, yes. But yesterday you were prospect. Now you’re a customer!”
Over the years I have noticed the same pattern of behaviour from all types of organisations. And when I’m the “loyal” customer or member being under appreciated, I leave. And if I do stay; it’s not out of loyalty - it’s because I don’t have a better option.
Winning new customers and members can be tough. Keeping them can be tough too – but it doesn’t have to be.
It needs to be asked, that if the only reason someone joined up as a new customer or member is because of a special offer of a bucket of frequent flyer points, a massive discount or even a polar fleece, how will you keep them? The brand promise you promote to win them, has to be strong enough to keep them.
When a customer or member connects with your brand for a reason that is important to them, you have a chance of keeping them and winning their loyalty. How?
Understanding what it is about your brand, and having a relationship with your brand, that makes them feel good about themselves.
Giving them something they cannot get from another brand by reinforcing the things that they value from your brand in the products and services you provide and showing you know them by the way you communicate with them.
As Deb Gabor explains in Irrational Loyalty, your brand needs to make them the hero in their own story. You want them to identify with your brand and make it part of their identity. You want them to be proud to be associated with your brand.
You can’t achieve this by throwing discounts, points, presents and polar fleeces at them. You can only achieve meaningful engagement and brand affinity by understanding them and connecting with them on the things that matter most to them. Once someone makes a brand part of who they are, it is very hard for them to remove it. It becomes part of the way they describe and promote who they are and what is important to them.
Here’s a few questions to ponder. First, dive in to your customer or member database and search for those long-term customers who come back every year without fail, and then consider:
Who are they?
Why are they a member?
What is it about your brand that keeps them coming back?
What can you learn from them that can help you engage other members better?
What does the data tell you about them that makes them different from the members who are less loyal or have left you?
And a really telling question…
When was the last time you thanked them for their loyalty and showed them you appreciated them without trying to sell them something?
You might be surprised at what you learn.
You might find out you don’t have the data you need to understand your members and need to start collecting more data and insights (I'd get cracking on this one straight away!)
You might find out some things about your brand and why it is important to your members that you didn’t know.
You might discover that you aren't really engaging with your members at all, but communicating at them, not with them.
And it just might change the way you see your brand, your members and how you measure and reward loyalty.
So next time you are planning that expensive super powered acquisition campaign, consider whether there might be a few people out there that you want to thank for being loyal first.
#loyalty #customerengagement #customervalue #customerloyalty
Photo by Brett Jordan from Pexels