Are Some Customers More Worthy of Loyalty Efforts Than Others?

In the world of business journalism, there is a lot of talk of customer loyalty today. There are tips regarding how to improve it, how to measure it, how to reward it and how to encourage workers to cultivate it. The problem is that customer loyalty works very different depending on the type of business, so a short article in Forbes is unlikely to help you turn your loyalty programs around very quickly.

For starters, you need to understand your customers. What is it they want? What do they respond well to? What do they respond negatively to? Armed with this knowledge and knowing what your options will cost you in dollars and manpower, where should you focus your efforts for maximum payoff? The type of business you run will have a lot to do with it, according to a recent article by Michael Schrage writing for Harvard Business Review.

“Nurturing customer loyalty requires a better understanding of its nature, and the nature of loyalty depends on the economics of the business: loyalty to automobiles and mobile phones is qualitatively and quantitatively different than loyalty to hotels and airlines,” he wrote.

So ask yourself: what does loyalty look like in our business? Are there some customers whose loyalty we want more than others? While “the customer is always right” mantra may not leave any room for selective loyalty, in truth, there ARE customers whose loyalty is worth more than others. Perhaps the payoff for offering intense loyalty-cultivation programs for fly-by-night bargain hunters isn’t worth the cost and your customer-facing employees’ time. It may be time to inform your contact center workers that certain customers are, in fact, more valuable than others and more likely to become loyal than others.

“True loyalty doesn’t just serve and preserve valuable customer relationships; it creates and inspires more valuable customers,” wrote Schrage. “Loyalty is a mutual investment, not just an exchange. That’s why improving the loyalty of bargain hunters rarely delivers sustainable value. Promotions acquiring customers who care more about momentary transactions than ongoing relationships is bad business. Retaining costly customers who stress out customer service staff usually proves a money-losing proposition.”

Should this be a blank check for your contact center agents to be rude to occasional customers? Of course not. But providing agents with the ability to understand what a customer who has the potential to become loyal looks like (compared to one who is only looking for the lowest price tag (News - Alert)) is a way to better distribute limited time and resources, and help them to understand where to really pull out the stops for customers.

It’s also important for them to know what makes loyal customers. It may not be the artificial bright, cheery attitude or the efforts to read the customer’s mind and anticipate his needs. It may be as simple as careful listening and a fast resolution with minimum effort on the customer’s part. In fact, customers often cite the ease of doing a transaction as the number one factor for a good customer experience. So rather than spending time crafting a sophisticated loyalty program that’s unlikely to work very well, work on ensuring your contact center is fully staffed, your workers are trained and armed with the knowledge and leeway necessary to get things done, and your customers aren’t getting put on hold or transferred unnecessarily. That’s likely to be enough to inspire loyalty. 

Edited by Stefania Viscusi