The Debate About Loyalty Continues

I didn’t expect that last week’s tip would stir up the interest it did. But it did. For those of you, who didn’t read last week’s tip; let me give you a brief synopsis. My contention is that loyalty, as we know it, is dying. There are many reasons why customers aren’t loyal and drift away. But even the customers that we consider to be loyal can be lost in an instant if we create an error or slip up. The true loyalty of staying with a store through thick or thin is becoming a rare commodity.

I gave the example of the spa company that I ordered a new cover from. We had 5 different delivery dates scheduled and each time the company didn’t show up. What made the matter worse was that we had to drive 1½ hours to be there to accept the delivery. Why would I be loyal to a company like that?

Well, I received some very interesting feedback from a number of readers. (Please keep up the feedback — it’s great!) The interesting thing about the feedback was that everyone who responded had almost the same reaction, which frankly is a point that I believe in and even teach. So with a little embarrassment, I tip my hat to my readers for reminding us that some of the closest customer relationships are born when things don’t go the way they are supposed to go or when we make a mistake.

People understand that we all make mistakes and will forgive us--especially when we first acknowledge the problem, take full blame for the mistake, are very apologetic, and offer some type of reward, allowance, or special benefit for our woes. An example is the restaurant that serves a bad meal and offers a free meal and gift certificate so that the customer will return. Customers will return to businesses that stand behind their product or service. And when we do this, we are actually building trust in the mind of the customer.

A mess up, error, or mistake is an opportunity to bond with your customer and show your sincerity and how important they are as a customer. So don’t run away from those situations. Celebrate them because you have an opportunity to get closer.

There is actually a theory that suggests evidence to this phenomenon. It is called the “Hero’s Journey.” It is a formula developed Joseph Campbell that is used in writing (most movie scripts are built around it) and makes sense out of the steps we take. The journey starts with a tragedy or situation that is wrong. First, the hero refuses to get involved. He finally gets involved, only to realize there is great danger (dealing with a disappointed, or let me say it “pissed off" customer, is great danger). The hero overcomes additional obstacles until the wrong is righted, everyone is happy, the villain loses, everyone loves the hero, and the hero is placed on an even higher pedestal. He has won their trust. (Sound familiar?)

We want the hero to appear. We hope our employees can be that hero. But when we demonstrate our sincerity and willingness to climb any mountain for our customers, they will forgive and will become loyal. So the next time you have to handle the irate customer, remember that you have the ability to become the hero.

As for my spa cover, we are still waiting for the cover and the hero to appear. This week they missed two more delivery promises but I also realized the owner is not aware of what is even happening. The employee seems to either be incompetent or is just covering up a bigger problem. Is there an opportunity for the hero to save the customer? Yes, but as each day goes by, the opportunity narrows that much more.

That is my last point. The longer a situation continues, the bigger the hero must be and the more you have to do to win that customer’s trust back. Correct it early or be prepared to be a super hero.

Thanks for the inspiration. You are the heroes.

Is Loyalty Alive Or Dead?

In almost every speech I make I say that loyalty is dead, but keeping the customer interested is in.

What I mean by that is due to the amount of competition, customers can easily be lured away from a business that they have patronized for years. Examples are the jeweler that learns that one of his oldest customers bought a $10,000 diamond bracelet while she was on an anniversary cruise in the islands. Or the local book store whose best customer buys an expensive book online from Amazon.com because she read the review online and said to herself, "Why not place the order?"

My point is that customers, regardless of how good they are, will just drift away if we don't do something to constantly keep their interest. As bad as that might be, it gets even worse. You have, or you think you have, a very loyal customer and you make a mistake with them. How long will they stay loyal?

Two things happened to me that made me write this tip. First, I was the opening keynote speaker at an economic summit in Colorado. Another speaker who followed me contradicted my assertion that loyalty was dead. He said it's alive and well. OK, so we disagreed. It's probably just his interpretation and he is entitled to his opinion, even though I have never had anyone really question my premise before.

I had almost forgotten the discussion of loyalty when my wife experienced something that destroyed the loyalty she had with a retailer. Two-and-a-half years ago we bought a spa for our home on Cape Cod. I met a wonderful spa dealer when I spoke at the Aqua Pool and Spa Show. He was not the closest dealer to where we lived but we did include them in our short list of potential dealers. We drove about 45 minutes to get to the store but we saw what we liked, the prices seemed competitive, and the people were wonderful. So we bought the spa from them.

We went on to have a very positive experience with the installation and training period and even continued to buy all of our supplies from them. I guess you'd call us loyal. So far, so good. This past winter was one of the roughest winters we've had in years; it tooks quite a toll on the spa cover. It started to sag in the middle. It wasn't anyone's fault other than Mother Nature's. So when we called the spa company to order another cover, we didn't ask for an allowance or reduction even though the cover hadn't even survived two winters. It happens and you can't blame the retailer or even the manufacturer. So we placed the order for the new cover, paid for it and my wife was told it would take 4-6 weeks for the delivery.

We waited and then called to see if the cover had arrived. Sure enough it had just come in and my wife scheduled a time to have it delivered. The delivery was going to be a week later but we preferred to be there for the delivery. Because I was on the road, my wife had to drive the nearly two hours to Cape Cod our primary residence. After arriving she waited for 5 hours, but no one showed or called. She called the dealer to find out what happened and they admitted there had been a lack of communication with the delivery company.

The delivery was rescheduled for the following week. She then drove home. Since she was promised delivery for the following Friday, she drove down the following Thursday afternoon. Again, no delivery. This time, the delivery company told her that they had said Saturday, NOT Friday, and my wife had made the mistake. OK, we were miffed but still loyal. At least until Saturday came and went without a delivery or even a phone call. When she called the spa company, they were surprised that the delivery had not been made and said that they would have to follow it up next week with the delivery company since they could not get in touch with them over the weekend.

I'm not loyal anymore. I want my money back. We were lied to. STOP! Let's put this in perspective. Am I ending a near-perfect relationship because of a delivery problem? YES, you bet I am! And I bet you would too. Why? Because there are plenty of other companies that sell the same product. I don't need the aggravation. But it was only two delivery days. Sorry, you lost my interest in your company and I don't care about your excuses. You terminated my loyalty as effectively as if you'd out-and-out asked me not to do business with you anymore.

If a customer is going to be loyal, does it mean through thick and thin? Good times and bad? Ah, there's the source of misunderstanding for many retailers. Customers simply aren't all that loyal even during the good times. When you throw in a little adversity, they're history. You have to keep working to keep your customers. Make an effort. Why were we calling the pool company to find out where the delivery people were? Shouldn't it be the other way 'round? If the dealer had called to check on progress, communicated with us, and intervened to ensure that the delivery commitment was kept, it would have made all the difference. But it's too late now.

We're all just one bad experience away from losing a loyal customer. So, we can keep on doing things the way we've always done, and watch our loyal customers drift away to businesses that treat them the way they'd like to be treated. Or we can accept the fact that loyalty is a highly perishable commodity and do things differently.Maintaining loyalty, like keeping a marriage strong or tending to a valued friendship, requires constant nurturing and TLC. Otherwise loyalty dies. Keep your customers interested, informed and coddled. It works to build a business.

Can A Refund Differentiate A Business?

A reader recently shared a story with me, partly because she knew I would be interested and partly because she had to tell the world. She bought a sweater set in Talbot’s, an upscale ladies’ specialty store. She had initially bought it for a trip but did wear it once before the trip. She loved it! It felt good, it was flattering, and the bonus was she got multiple compliments when she wore it that one time.

She packed up her new favorite sweater for her trip and off she went. When she arrived at her destination and unpacked, she realized that something in her suitcase had leaked all over her sweater. With a closer investigation she determined that her hairspray that was the culprit. She brought the set to the dry cleaners in the hopes of saving her prized possession.

The shell of the sweater was fine but unfortunately the outer sweater came back from the cleaners with multiple dark spots. The dry cleaner had warned her that hair spray has a tendency of leaving spots and sympathized with the results.

She was upset with herself for not putting the hairspray in a plastic bag but she loved the outfit. So she took her set back to Talbot’s — NOT for a refund, because after all it was her fault. She just wanted to replace the damaged outer part in the same color that matched the shell. Unfortunately, the store no longer had the outer part, but the sales associates realizing how disappointed the customer was, went on a mission to find the set. She succeeded and had the full set shipped to her store.

The customer was delighted but also expected that from Talbot’s. She was a good customer of that store although she had never seen that sales associate before. She explained it is just the way they do things there. If that sales associate had done less than that she would have been disappointed. What happened next was the differentiator. The associate took the original item back and started to give the customer a refund. The customer stopped her by saying that it wasn’t Talbot’s fault for her leaky hair spray can. But the associate insisted that the store issue a refund for the original set, as if to ease the pain of her misfortune.

This reader was so impressed by the behavior she hasn’t stopped talking about this experience. She even insisted that when I write this piece to make sure I mention Talbot’s by name. Here is the question — did Talbot’s have to give back the money? No, absolutely not. Should the sales associate have issued the refund? Does Talbot’s really have a policy of giving money back in that situation?

It doesn’t make any difference what your answer is because the bottom line is Talbot’s differentiated itself by doing something most stores wouldn’t do. This customer, who already shopped Talbot’s regularly, became a disciple after that experience. She has told the world and shared the experience with me, knowing that I would publish her story. Her analysis of the experience was that it showed that Talbot’s cared more about her as a customer than making a single sale.

I don’t know if I agree with her assessment on caring but I might be wrong. However, the one thing they do understand better than most is the lifetime value of the customer which is worth more than any single purchase. The other lesson from this experience is that it is a classic differentiating issue. Do something that most retailers wouldn’t do. Something that’s not an accepted procedure. Many stores would go the extra mile to track down merchandise for a customer. Although that’s nice, it doesn’t generate the word of mouth buzz, the WOW or the differentiator that the refund did. Yes, I know there will be people who will take advantage of a store’s liberal policy but if you focus on the cheaters, the needs of your customers will never be met.

Hats off to Talbot’s and the sales associate for making a mundane experience memorable and for giving a great example of what differentiating is really all about.

Are You Ready To Blog?

Stop the world I want to get off! Do you ever feel like that? Don’t worry, you’re not alone. Technology is moving so fast that sometimes we just shut down to the newest, latest idea. When the idea becomes popular and other people like me are using it, then we say “Oh, I’ll learn about it.”

Last week US News and World Report wrote a cover story about how blogs were in the process of changing our lives. I read the article, and I guess it made me feel that is was then my responsibility to learn what all the commotion is about. How can a blog affect my small business and my readers?

I must admit I wasn’t thrilled because I am a bit technologically deficient. But I dutifully did my research and even created my own blog (you're reading one of my blog articles right now).

The first question I had was what is a blog, really? (And by the way I’m still trying to figure out if blog should be capitalized.) I have read some very involved definitions such as Knowledge Management Tool, or Content Manager or Community Creator, or The Tool for Smart Marketers. In fact, a blog can be all of these. But to simplify it, a blog is a special type of website that can be created in minutes, that costs nothing to create, that can look like a diary but allows other people to contribute.

My next question is how long have they been around? It all started in the beginning of 1999. In 2002 Google bought one of the leading blog pioneers, Blogger.com, and a year later they had over a million subscribers to their free service. Now there are an estimated 20 million people using blogs daily.

During last year’s presidential campaign blogs became very popular; many of us actually went to these blogs just thinking it was a regular website. The term blog stands for a “web log”.

Let me tell you about some of the applications for blogs and why blogs make so much sense for the independent business person. One of the main reasons people do business with us is because we know what we are talking about. Sorry, I just don’t trust the high school kid selling me a digital camera at Wal-Mart. Of course he or she might be good, but for me they’ll never have the credibility of the seasoned camera expert at a good specialty camera store.

A blog allows you to share your knowledge in short little tidbits. You can share news about what’s happening, new trends, opinions, in fact anything you think your customers and clients might be interested in.

You don’t have to pay anything; you can even publish pictures, or a journal or diary about your last buying trip. But where a blog differs from a regular website is that it allows your customers to talk back to you. Often the customers’ comments can be more powerful and motivate readers more than your own comments. Not to mention that the dialog that you and your customers create can lead to some very lively and mutually productive conversation. Even to increased sales and profits.

Every week I get quite a few comments about my weekly tips that people e-mail to me. My thought is that now you post them on my blog so that everyone can read them. That way everyone participates in creating a genuine retail marketing community. As one of my marketing guru friends said, you can think of it as a smart, interactive mailing list. Wouldn’t it be nice to know your customers’ tastes, desires and merchandise opinions before you buy rather than after you’ve spent the money?

I recommend this site — www.blogger.com You can do quite a bit of your own research into blogging here. I’m no expert— heck, I just got started. By the way, eventually I plan to share all of my Weekly Retail Marketing Tips here in this blog.

As the saying goes, The Future Is Now — and you know what, it turns out not be so scary after all. Thank goodness the folks at blogger.com actually know how to make things “User Friendly.” Thanks to them, and our mutual desire to keep our conversation alive and lively, I’ll be blogging you!

Don’t forget to let us know if you create a blog. Tell everyone about it right here ... just click on the "comments" tag at the bottom of this post and share your thoughts!

“Could You Sell Bagels In Saudi Arabia?”

This is not a joke. I was actually asked that question last week when I was doing a program in London for Saudi Arabian businessmen who employed me to do a crash course in retail for an investment group.

Yes, I was taken back at first. But the more I thought about it — how much different is that from a Vietnamese Restaurant in the States or a fancy coffee bar that sells $4.00 cups of coffee in rural America?

Shame on me! I need to reread some of my own writings. It is a brilliant idea! Why? Because if the majority of any business comes from word of mouth advertising, then creating a buzz is what it is all about. If you want word of mouth advertising, give them something to talk about. Bagels in Saudi Arabia will certainly get people talking. There is a natural curiosity. (By the way there are no bagel shops in Saudi.)

The key is to take advantage of that intrinsic curiosity and that inherent buzz that will come with such an endeavor. Do you think the media might pick up the story? Of course they will! It will come under the category of “would you believe what’s opening in downtown Riyadh?” Another Starbuck’s in San Francisco won’t even raise the eyebrow of a junior reporter with the promise of free coffee. Yet if someone were to ask you which business to invest in, most of us would opt for the Starbuck’s. However, if both succeed, which one has the potential of being a bigger success?

My most favorite presentation is on “Ways to Differentiate a Business”. My very first point is to be first at something. Xerox was first, Apple was first, and so was FedEx. People laughed at those ideas because they were just a little too different. Push the envelope, be different, don’t listen to the naysayers, take advantage of all these people talking about you, create a quality experience, and laugh your way to the bank.

I have to go now — I have a Saudi Bagel Shop to help. Eventually we could be Bagels over Baghdad. That sounds like a tough sell, or is it?