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July 2, 2006
Customer Loyalty Deserves the Royal Treatment
by Sridhar Ramanathan
Why is it that businesses so often take for granted their most loyal, repeat customers? I had a real taste of it this week when I switched my cellular service from Sprint to T-Mobile. I was a loyal Sprint wireless customer for six years spending in total $6,120 and expected to spend another $5,000 at least over the next five years. With all the enticing phone promotions going on, I thought it was time to replace my aging phones. When I called Sprint to see if they could give me a couple free phones in return for a two-year contract renewal, I was surprised at the resistance I got, and was put off by the hard sell on services I didn’t even want. I was treated like a “churn” customer, one who switches back and forth at the drop of a few pennies and a hot promotion. But I wasn’t one of these. I tried walking into a Sprint store hoping I’d get better treatment but was disappointed again.
So when I strolled into the T-Mobile store, I was pleased with the excellent service and attentiveness to a brand new customer. I had two bright sleek phones, a better plan, and a smile on my face as I walked out of the store in less than an hour. How is it that Sprint would allow a loyal customer like me to get away? I think it’s complacency, ingratitude, and a belief that customers are “churners” who can’t be trusted. Maybe T-Mobile will do the same after I’m on my fifth year with them but somehow I don’t think so.
So my questions to you as a marketer are:
- What are you doing to treat your loyal customers like royalty?
- Do you even know who they are?
- When was the last time you thanked them for choosing to do business with you year after year?
- When was the last time you checked their satisfaction level and what you could do to deliver more value to them?
- When was the last time you asked them for their opinions on new products and services?
I wish marketers worried about (and spent as much money on) customer retention as much as they did about customer acquisition. I’m certain that could make a big difference to the bottom and top lines.
Posted July 2, 2006 | Permalink
Posted to Marketing Management
Comments
Valid rant!
I also wanted to point you to this insightful article on measuring customer satisfaction and customer loyalty by Frederick F. Reichheld of Bain for the Harvard Business Review, titled "The One Number You Need to Grow": http://www.bain.com/bainweb/publications/publications_detail.asp?id=15302&menu_url=publications_results.asp
He presses a case for customer referrals, "net promoters" being the best indicator of loyalty and satisfaction.
Posted by: Manjula Selvarajah | July 9, 2006 10:20 AM
Sridhar, This is such a valid concept in this day and age of increasing competition and globalization. Companies are failing to realize that they have to transition from the traditional approach of assuming distinct roles of client and company and providing fixed products and services to one where the client has involvement at every step of the way, co-creates the experience of providing the product/service to make the process meaningful to them at the end. Customers are more informed and better connected to a wealth of information and are increasingly voicing their desire to democratize the process of value creation that will shape the nature of the products/services they pay for. Sprint doesn't realize that they lost a valued customer, one that would have been happy to stay, had the experience been different.
Posted by: Priya Tabaddor | July 14, 2006 6:08 AM
I love the questions that you pose to organizations about how much they know about their customers and their preferences, inclinations…people like you who ask such thought-provoking questions help till the soil for folks like me who have a passion around helping organizations gather such information!
Posted by: Jennifer Berkley | July 24, 2007 7:44 AM
Unfortunately, your tale rings true for far too many industries. I have loyaly subscribe to a magazine for five years and recently received a notice to renew for another year at $29.95. Just for curiosity, I looked online and found that I could start a new subscription there for $19.95, as well as receive two (2) free gifts. When I wrote the magazine (twice) inquiring why a new customer was so much more valuable to them than an existing customer, I never received an answer. Hell, I would have been happy with $19.95 and no free gifts. The result...I let the subscription expire. And get this, just last week the magazine sent me its "last effort to keep me" which was a one year subscription for $10.00. Go figure!
Good luck with T-Mobile as well. They show no evidence of taking care of exisiting customers and recently took 14 working days to respond to my email requests regarding my service with them. I hope you have better luck. I think you'll find them much more eager and attentive to win your business rather than working to keep it.
Posted by: Brian Offenberger | July 3, 2006 12:06 PM