Is Customer Loyalty Dead?
While at the High Point Market, I sat down with a buyer whose store was in its third generation of ownership. The grandkids were in charge now, and the market climate they served had changed over the past two decades. No longer were they the only game in town. New players had entered the market in the form of larger-format national brands and regional, more gritty competitors.
This retailer tells me, “Customers are only shopping on price.” This comment left me with an interesting mindset dilemma. On the one hand, price is always a factor. We live in the subjective world of an ever-shifting definition of “value.” On the other hand, and as the cliché goes, price is only a factor in the absence of that same value we strive to pinpoint.
Taking a page or two from the playbook of category-dominant retail enterprises might be a great way to adopt some well-documented processes to defibrillate this dead loyalty of which we speak. It is a great way for a business in our tiny little retail sector to pull ahead of the pack. Perhaps even dominate as well. Challenging popular opinion is one thing. Swimming against the current of “ this is the way we’ve always done it” is often a bridge too far.
Here’s a tough question with a follow-up. Feel free to answer with your inside voice.
1. Do you deserve the loyalty of past customers?
2. Can you prove it?
I believe a person isn’t a customer but a close cousin to a “client.” Until they say so, if you conducted a transaction that met her expectations, all you accomplished was accommodate a need or a desire in an acceptable way. You sold something, congrats. If she comes back again of her own volition, she’s a customer. If she brings a friend, now you have something.
The good news is that this person who came back because something happened in your store or with your team that she liked is gold because you don’t have to market to her again. Her return is free, as are her purchases, which don’t have to bear the burden of the marketing dollars you spent to get her in the first time.
She referred herself, which means, she probably bought more stuff and spent more money. She may have even brought someone with her who experienced your store. Also, this customer will not bust your chops on minor annoyances because she considers you worthy of her business and wants you to do well. After all, she’s probably already referred you to her friends and neighbors.
Did your delivery driver leave a small scrape on the wall while moving a bulky item?
It’s not a big deal for a customer who likes you. She’ll probably let it go and have it touched up herself. However, a first-timer who rushes home early from soccer practice to accept the delivery may not go so easy on your call center or may delay your driver. Can you even assign a cost to this? No? But you know there is one.
There are many examples like this. We’ve all gotten angry or emotional at a company we wish we hadn’t done business with because of an enforced policy that affected us unfairly. It happens more and more each day in fees like:
- Redelivery fees
- Cancelation fees
- Change fees
- Restocking fees
Charges like this help the bottom line in the short term but crush the loyalty you may have had a chance of earning if the customer (a term we’ll use as a placeholder for now) felt like they were valued and appreciated. No one likes to be nickel and dimed, yet short-term accountancy almost demands it. Imagine eating a $100 redelivery charge and gaining a true customer who will raise the flag for your business because of how she was treated. Larger retailers spend over $100 to get customers to walk into their stores, so $100 is a wash. Of course, one person had already done business with you, and the other is a maybe at best. Which opportunity would you rather invest in?
What kind of charges or fees are ingrained in your organization that you would not be happy to pay yourself?
Studies show that US companies lose half their customers in 5 years. The rate for furniture could be higher because our customer journey is so fragmented, and there are many opportunities for operators to pass on poor information or set improper expectations.
Customer loyalty, like employer/employee loyalty, must be earned. Loyalty is not a given because you simply didn’t mess up. Loyalty is powerful. Loyalty is ride-or-die. Loyalty is best friends. Loyalty is 50% of marriages in the US. Loyalty is not to be taken lightly or assumed to exist when chances are it does not.
There comes a time when a shift needs to happen. Think back to how independent retailers used to value their customers, perhaps as far back as when the milkman would come into the home, put the milk in the fridge in the morning, and drop off a bill at the end of the week.
It’s the perfect time to shift back because Gen Z is entering the workforce with new values and expectations.
As a former legend in the business famously says, “Here’s the deal.” If you want to build or repair a brand, you do that by making sure your human assets believe that you care. Those assets include your people, your partners, and your customers. If they feel, by your words, actions, and policies, that you don’t care anymore about them than the government does, you’ve lost. It starts today. It means you need to get inside the mind of every head in your organization and speak their language. It means you LISTEN to them…. Even when it hurts. Especially when it hurts.
Covet the bad and the negativity. Be grateful if people will tell you what they think. If you think there’s a chance you’re a bully, chances are good it’s true. Open up to the possibility that great experiences lead to amazing customer loyalty and that loyalty will cost you very little in the aggregate. You should pay for a customer once and only once; if that first transaction doesn’t turn into a customer for life, shame on you.
