Business Advice

Testing the boundaries of customer loyalty

Michel Hogan /

People talk about customer loyalty in terms akin to the Holy Grail; something all businesses seek, but few genuinely manage to find.

In general, I believe customers want to be loyal. Unless you have a strong masochistic streak, continually searching out new places and comparing value for things you want to buy is exhausting.

Still, customer loyalty remains elusive to find and can erode over time, and the past few weeks have presented examples of both.

First, an example of elusive customer loyalty.

It was time to get on the phone with Optus and renegotiate our mobile phone contract. We chose them over 10 years ago and mostly feel well treated, so we’ve stuck around. Then a conversation with a sales-slash-customer service representative revealed a particularly twisted incentive going on.

It’s a given that a business wants to attract new customers. There is also a ton of rhetoric around customer loyalty – how to get it and keep it. However, one sure fire way to lose it is to prioritise new customers over someone who has stuck with you.

So imagine our annoyance upon discovering that, as part of their contract, new customers can get better deals on phone rebates than existing customers on phone rebates.

When new customers get better offers than long-time customers, a company has entered a destructive loop. Sure they’ll likely lure new customers, but is it really worth it for the churn on the existing ones annoyed in the process?

Numerous phone calls later, we’re still waiting to hear if our loyalty is worth Optus matching the new customer offer. Sadly the paucity of telco choice means most will swallow the slight and stick with the company. And while that’s a yolk of a different kind, it’s not customer loyalty.

To learn more about how loyalty begins inside your organisation click here.

Onto eroding customer loyalty.

Geo-blocking sales by online sites is a growing trend. The most recent example is Amazon’s decision to block Australia from purchasing from US and UK sites. The move, designed to force traffic to the local site, was made because of GST rules and stands among a host of other less high-profile examples.

I ran head first (or should I say feet first) into the issue when I tried to do something I’d done a dozen times before — buy a pair of shoes from Toms Shoes in the US, best known for their pioneering one-for-one approach.

I love Toms and in a recent promotional email a snazzy pair of sneakers caught my eye. Imagine my surprise, then frustration: buying them from the US site was no longer an option. It seems that now Amazon has an Australian site, I am no longer eligible to purchase from the US. I must have missed the email announcement.

So I flipped to the Australian store only to find fewer choices and no sign of the shoes I had tried to buy. I don’t know what deal or agreement forced the move; I’d just like to buy that pair of sneakers. And it’s not as if selling shoes directly in Australia is a new thing for them; for years, select retailers have carried a limited range (which is why I’ve always bought online via the US site).

So the losers are loyal customers who have happily crossed borders, born the exchange rate and paid for international shipping to purchase what they couldn’t get in Australia. However, the real losers are the beneficiaries of Toms’ one-to-one program, because now I’ll buy some sneakers elsewhere.

The moral of the story here is reward customer loyalty. Not with some points program, but by genuinely valuing your existing customers and taking them into consideration with each decision you make as a business. Think about how you would feel if you suddenly discovered new customers were getting a better offer than you. Alternatively, if you could no longer buy the products you’d always enjoyed because of their expansion into your country (oh the irony).

Loyalty is built upon a foundation of trust and respect – it’s a relationship. So, if you want genuine and lasting customer loyalty, don’t treat your customers like a transaction.

See you next week.

NOW READ: Is Amazon’s Australian ban a game-changer?

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Michel Hogan

Michel Hogan is an independent brand thinker and adviser dedicated to helping you make promises you can keep and keep the promises you make — with a strong, resilient organisation and brand as the result. You can find Michel at michelhogan.com.

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