I recently spoke at the 8th Loyalty Summit in Mumbai which focused mainly on the theme of customer loyalty. My presentation was about the clear links between employee engagement and customer loyalty, and how managers are central to building customer loyalty. Preparing for the conference caused me to reflect on my own experiences of customer loyalty. Were there any particular organisations that I was loyal to as a customer? And, if so, why?
I recalled my first experience of a loyalty program. I remember sitting in a stifling hot Australian classroom as an eight year old, enduring a representative from a bank espousing the benefits of saving and compound interest. It would be fair to say that the bank probably hadn't chosen their best speaker for the task, and the room of children were starting to lose interest. It was at that point that the man from the bank revealed a secret weapon. If we signed up for a savings account, we would receive a money box. Now, as an eight year old a money box is about as exciting as life gets. The loyalty program worked, and I signed up for an account.
Now that could have been the end of the story, but some 34 years later I'm still a customer with the same bank. In fact I do all my banking with that same bank, including for the business and some insurance as well. It's fair to say that the bank recouped the cost of their money box gift many times over. In fact, I found a similar money box in the bedroom of my nine year old son - the strategy hasn't changed!
But am I a loyal customer? On the surface I am. I've been with the bank for a long time. I use a range of products and services. I use these services almost daily. But, to be honest, I feel more 'trapped' than 'loyal'. It has just been too hard to change banks, and the bank hasn't annoyed me enough to force me to change. That doesn't really sound like loyalty.
I contrasted that with my loyalty to a watch brand - Longines. For a period of time I took to eBay with a singular focus - to buy circa 1950 Longines watches from overseas and resell them locally on eBay. The idea was that I'd add a better description and photos, and make a bit of a profit. Clearly not enough profit to retire, but a bit of fun nonetheless. The challenge was to find out more about the watches I bought to add a more complete description.
Well, I thought, why not try the Longines website. So I simply used the 'contact us' link to ask what they could tell me about a particular watch based on its serial number. I honestly didn't expect any response - perhaps a 'thanks for your query, but we can't help you'. But within a few hours a response came back from a guy named Russell. It turns out that Russell worked for Longines in Switzerland and also quite liked the watches they produced across the 1950s. He had gone into the paper archives (I'm picturing the warehouse from Raiders of the Lost Ark), tracked down the paperwork and emailed me the production date, the sale date and even the name and address of the store that originally sold the watch. Pretty impressive record keeping, but even more impressive service. Over the next year or so Russell and I swapped details of watches, requiring him to take frequent trips into the paper archives. As a result, I would describe myself as a loyal customer of Longines.
So what was it that made me loyal to Longines but not to my bank? Well, Russell was customer-focused. But importantly that customer-focus came from a genuine passion for the business and its products. He genuinely wanted to help me out, even though his company wasn't making a cent from my trading of second-hand watches. He was a passionate advocate for his business, and clearly engaged with his work. I trusted Russell. He provided good advice rather than trying to flog me a new watch.
And the research supports this - loyal customers are produced where there is trust, great service, and engaged employees. The trust element is crucial - that's the difference your sales and customer service staff can make. But we also know that sales and customer service staff are typically amongst the least engaged with their work. Our challenge as leaders is to serve these frontline staff well - to ensure they are engaged with their work, aligned with the direction of the business, and committed to customers. That comes back to managers - they're the ones in the box seat to create an environment where trust and engagement flourish.
It turns out that Russell did have a great manager - a manager who presumably trusted that his trips down into the paper archives were worthwhile in furthering customer loyalty. Perhaps if there was a Russell at my bank they would have been able to gain true loyalty from me as a customer. The impact of a person like that trumps any reward points they might throw my way.
So what about your organisation? Are your customers loyal or trapped? Do your managers inspire your frontline staff to further customer loyalty by building trust? Helping managers to understand the links between management styles, employee engagement and customer loyalty might be just what they need. Every business could do with another Russell.