Total CX

Loyalty versus Cost Savings

Although I’ve always been an advocate for remaining loyal to your merchants who do right by you and earn that loyalty, I can’t ignore the siren’s call of saving money, especially on a regular basis.

 

Karen Yau at my local CVS has come to my rescue many times, providing great advice about over the counter remedies for ailments as well as dealing with persnickety regulations and exceptions with insurance providers. She takes good care of me!

 

Then there is Roza (whose Russian last name I can’t remember) who works the register in the Pharmacy, and who always remembers who I am and makes sure to have a personal moment with me. I like going to the CVS; I always feel special.

 

However, I have just switched insurance providers. And the Pharmacy-by-Mail option will save me a third of the cost of my regular prescriptions every three months (three months of pills for the price of two). I’ve used online pharmacies before, and they have worked fine. But, with my former insurance provider, only certain medications were subject to any discount, dealing with the online site wasn’t easy, and it was just so much easier to go through Karen and CVS.

 

The new insurance provider is very clear about the savings, the site is easy to navigate, and it is very tempting to take the money and enjoy. But what of loyalty? Initially, I felt badly that I would be taking business away from Karen. I would miss seeing her (albeit briefly) every month. However, I determined that CVS is unlikely to offer the same discount structure that the online pharmacy can provide. I was ready to succumb to the lure of saved money.

 

But then, before I made the switch, I had another prescription-related problem. Karen wasn’t working that day, but pharmacy technician Shawn Wolf spent the time to contact my doctor as well as the insurance company and straighten everything out. He kept checking in with me, keeping me informed of the status, and made sure that I was satisfied with the result.

 

I know I can’t get that kind of service online, so Karen, Shawn, and Roza will keep seeing me and fulfilling my prescription needs.

 

So this is a thank you to a great provider. This time, I’m choosing loyalty and customer experience over financial gain.

Balancing a Great Experience with Lifetime Customer Value

I had a great customer experience recently with an online backup and storage company, Carbonite (www.carbonite.com). I’ve been looking for an inexpensive online backup site for my home computer, and Carbonite is very reasonably priced (cheap, in fact) at $55 per year. And the service offered the basic capabilities I wanted--automatic backup, only backing up deltas, easy retrieval, etc. Plus, they offer a 15-day free trial.

I decided to try it. But I hit a glitch trying to download the app. I had to close my browser, and I went back to the Web site. There was a button for support via live chat, so I hit the button.

Shirley was the support rep who helped me out. I won’t go into the details, but she stayed in the chat with me for 42 minutes, due to some technical problems with my system, until I was up and running and all my questions (such as, how do I back up only selected files, etc.) were answered. There was no sales pitch or impatience (at least in the tone of the chat).

 

So I left the chat with a warm, cozy feeling towards Shirley and Carbonite. I filled in a feedback form commending her service and persistence. And I was ready to blog a nice post--which would probably have ended here.

An Unexpected Customer Experience with the Registry of Motor Vehicles

Tomorrow is my birthday. Yay me. Not only am I getting older, but I had to renew my driver's license this year. Like any experienced driver, I was dreading the task. The thought of trying to find a place to park near my local registry (in downtown Boston), standing in long lines, dealing with overworked and under-enthused registry employees, and then having my picture taken was very depressing. I vaguely remembered a friend saying that she renewed her license on the phone, so I thought I’d give that a try.

I went online to find the number, googling "renew drivers license Massachusetts," and the very first result was "RMV - Renew your License." Bullseye!

The link not only led to information on how to renew my license online, but directly to the page where I could begin the process. There were some questions to answer on the page:

Enticed by Discounts; Impressed by Customer Experience

A few weeks ago, I believed I was about to prove the point I had made in earlier blog posts on loyalty programs that discounts and coupons merely encourage customers to "game" the system and try to get something for little or nothing. It doesn’t lead to true loyalty.

A local (greater Boston area) sports bar/restaurant chain, the Halfway Café, seems to be suffering from the lack of disposable income on the part of customers, because it is advertising heavily and offering significant specials and discounts. The most recent was the entire menu for half price on a Monday and Tuesday. Heck, I thought, half price on not particularly expensive pub food sounds like a great deal. I’m in.

 

Although I had been to the Halfway Café a few years ago, I am not a regular customer, so the discount offer did entice me back, but I firmly believed that I was just in it for cheap grub.

 

Well, when a friend of mine and I got there at 5:00 p.m. (we figured we’d avoid the dinner rush), we quickly discovered that a lot of people had the same thought, and we faced a half-hour wait. We decided the half-price offer was worth the wait, and we found a corner where we could hang out and wait.

 

Almost immediately, a waitperson came over with a bowl of popcorn and encouraged us to order drinks while we waiting. We anticipated a long wait for said drinks, but the bartenders served those of us standing quickly and with great good humor. So, with the hunger rumblings eased, and a drink in hand, we enjoyed our wait by people watching. After a shorter-than-anticipated wait, our name was called, and we were shown to a booth.

 

The dining room was packed. I expected that wait staff to be overwhelmed and grumpy, but they were, in fact, pleasant, helpful, and quite speedy given the volume. In addition to trying to drum up new business, the half-price event also introduced a new menu (about a quarter of the dishes were new and at very reasonable prices). Our waitress obviously had tasted all the new items and was happy, and excited, to tell us which were her favorites.

 

Food was delivered quickly and was quite tasty--admittedly, it was good pub food rather than great restaurant fare, but a complete chicken dinner for $5 (with discount) can’t be beat. The dining room was humming as was the waiting area, which now had almost an hour wait, but we never felt rushed or ignored.

 

When we left, the hostess asked if we enjoyed our dinner and said that she hoped to see us again soon. I said that we would return the next day to take advantage again of the discount. She seemed delighted and told us that if we came between 2 and 4:30, we shouldn’t have any wait. So I did, on my own. The hostess recognized me and laughed when I arrived at 4 p.m. the next day. As promised, I was seated immediately in a booth that fit four people. I ordered two meals so I could take one home as leftovers. The waitress thought that was a great idea, and spent some time asking me what I had ordered the day before and how I had enjoyed it. By the time I left, there was, again, a wait for seating, yet I was never encouraged to vacate my booth in favor of a party of four.

 

As a result of two (or, rather, three with leftovers) tasty dishes and the excellent customer experience, I have now put the Halfway Café as one of my go-to dinner spots, even at full price.

 

So, I guess I have to modify my views on discounts not being a great way to achieve customer loyalty. Discounts can be a great enticement for new or renewed business. Then, if it is combined with a great and personable customer experience, it can, indeed, lead to profitable longtime customer relationships.

When You have Problems, Let Your Customers be Part of the Solution

About eight years ago, when we were still publishing hardcopy newsletters, I wrote an editorial contrasting the customer experience I had flying two different airlines in the midst of a snowy winter’s trip. Basically, my United flight from Vancouver was delayed, making me very concerned that I’d miss my connection in Denver, which was to bring me to Atlanta. No one from the airline would tell us what the problem was (Weather? Equipment? Poltergeists?), and we were pretty much chastised for even asking. When we finally arrived in Denver, the connecting flight had also been delayed, so I was able to run to a different terminal and (barely) board before take off. And I was actually yelled at for being so late! When I asked an attendant why he thought we hadn’t told what was going on, he said that probably the airline didn’t want to give wrong information, and it was better to keep us in the dark.

Contrast that with the Delta flight from Atlanta to Boston (home). It was delayed, but we were informed that there was a snow storm on the route between the two cities. We received updates about every 10 minutes. When we finally boarded, the captain came on, and in a friendly tone told us that, if we all settled in quickly, we would be able to get into the long line of aircraft waiting to take off sooner. We did as he asked, and after a few minutes of taxiing, he thanked us for our cooperation and let us know that we were seventh in line for take off. If we hadn’t been so cooperative, we would have been much further back in line.

Arm your Front-Line Troops!

You know who they are--your direct sales force, your call center representatives, your online support chat agents--the people who "talk" directly to customers when there is a problem. Most of the time, these people are well-trained, well-spoken, and well-intentioned. They are usually truly sympathetic--even empathetic. But they often work either with their hands tied up in red tape or with too little information to truly address the customers’ problems.

 

My most recent experience occurred this week, when my Internet access, telephone access, and cable TV (oh, the horror) went down. I get all these services from the same provider, and short outages are not unheard-of. But this time, the outage was of sufficient duration that the battery backup on my telephone modem was spent, and I was hopelessly alone without a lifeline.

 

I went to my car to call Comcast, my provider--you see, my cell phone doesn’t work very well from within my home (tower positions and all). After going through the labyrinth of automated voice responses, I was informed that there was an outage in my area and that it was being worked on by technicians. Because of looming deadlines, including having to look up how to get to a meeting several hours later, I decided I needed a bit more information than that.

 

I pressed "0" enough times that I was finally put through to a CSR. This young man was very pleasant and truly wanted to help me. But all he knew initially was that there "was an outage in my area and that was being worked on by technicians." I already knew that! What I wanted to know was estimated time of repair. Did it pay for me to go to the public library to get free wi-fi for the rest of the day? Should I sit tight and know that my communication with the outside world would be back momentarily? Should I crawl into a fetal position and yearn for a less techno-addicted era?

 

My nice CSM put me on hold and went looking for more info. He was able to tell me that "a node was out," and that most of the time, this was fixed in two to four hours. That was good to know, but I still had questions. "Has anyone from the field service team reported in?" and "Is it a simple problem or something out of the ordinary?" The CSR had no idea.

Loyalty Requires a Relationship

I started to think about what vendors I truly am loyal to, and it’s a short list:

• My auto mechanic
• My hairdresser
• My primary-care doctor

And, while price might play some part—my hairdresser is less expensive than many competitors, but more so than others; my auto mechanic fixes minor problems, like a flat tire, for free for me, but charges me standard prices on major repairs—it is the relationship that I value. None of these have rewards cards or loyalty programs. I’m not given a darn thing if I refer someone to them, except a thank you. But I’m not planning to go elsewhere because each of these providers—Jimmy at Hynes Auto, Mark at Ozma Hair Design, and Dr. Richard Brodie of Brookline Medical—makes me feel special as the individual that I am and is good at what they do.

So, when you are thinking about loyalty, don’t get caught up in the immediate satisfaction of seeing an uptick in sales based on reward discounts. Your customers value personal relationships and being treated well.

Fostering True Loyalty

Customers for Life

One of my colleagues said that using a rewards program to get "a customer for life" is just bull! Customers are human, subject to enticements from others, the seduction of promised rewards, and have a short attention span—it’s easy to get bored when you frequent the same stores, restaurants, hotel chains, etc. Variety is the spice of life in most situations. So even if you are happy with your provider, you often find a reason to try someone else.

Customer Retention versus Customer Acquisition 

One very annoying aspect of discounts and rewards is penalizing loyal customers in favor of new customers. In her article "Lollipop Loyalty," posted on DestinationCRM.com in January 2008, Jessica Tsai relayed a story told to her by Phil Sugar, CEO of the loyalty and rewards platform Smart Button, that truly epitomizes this phenomenon:

Why Rewards Programs Don’t Really Foster Loyalty

Although we all love discounts and rewards, a rewards program doesn’t necessarily foster
repeat business. Here are some reasons why:

SHOP ONLINE AND YOU’RE AUTOMATICALLY "REGISTERED." In the past, loyalty programs required explicit sign up in order to get these discounts and rewards. However, in today’s economy, and with the price transparency that customers now have via the Internet, consumers are offered discounts and freebies just for opening an email. When you make a purchase online, the etailer site has access to a lot of vital information—most conveniently, your email address. Discount offers and other rewards can easily be sent to anyone who ever purchased anything on the site. I get a real kick out of sites that I shopped at once, several years ago, that send me emails that start, "As a loyal customer…" Loyalty is not a single or even occasional purchases; loyalty is demonstrated by repeat business and a relationship with the brand.

LOW PRICES ARE COMMODITY ITEMS. When your rewards program is based on offering discounts on merchandise, you are basically entering into pricing wars. I know that I have received a discount offer for a particular item, and then I have Googled the Web to see if I can find a better price. If the site with the coupon offers the best price (and you have to include the shipping price), I buy it there. If I can find it cheaper, I go elsewhere. This isn’t loyalty; this is bargain shopping.

Preferred Customer Programs--Make Me Feel Special For being Your Customer

Unlike rewards programs, which I discussed in my last two posts, preferred customer programs are not about pricing, but rather are about receiving better treatment than the rest of the world. We all love being pampered, and are often willing to pay a premium for this special consideration. In the Preferred Customer Program scenario, common moments of truth, many of which are the same as for rewards programs, include the following:

IT’S TOO DIFFICULT TO UNDERSTAND HOW TO ACHIEVE PREFERRED STATUS AND TO SIGN UP. Just like rewards programs, it is important that customers understand exactly what is required for becoming a preferred customer—what, for example, constitutes the difference between achieving gold and platinum status. These differentiations should be simple (e.g., spend $500 and become a gold customer; spend $800 and become a platinum customer).

As for signing up, ideally, customers would be notified when they are eligible for preferred customer status, rather than having to "apply" and prove themselves worthy. Or it can happen automatically. I really enjoyed, for example, when American Airlines notified me that I had achieved Executive Platinum status and had already signed me up for all the benefits.