Arts Marketing

The Customer Loyalty Lifecycle!

We’ve all heard of the business life cycle, however today I wanted to introduce you to a different type of life cycle, i.e. the customer loyalty life cycle.  When managing a business it is imperative to know what sort of a life cycle the business is likely to go through, and hence we can make appropriate strategies.  Similarly, when wanting to manage loyalty, it is important to understand what type of a life cycle a loyal customer is likely to go through, so that we can make appropriate plans.

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Customer satisfaction doesn’t cut it anymore

There is much talk about satisfying customers.  In fact nearly any marketing text you pick up, and the main definition of marketing is ‘satisfying’ customers.  Researchers, managers, experts in the past have said that satisfaction can lead to loyalty, profitability, customer retention, etc.  However, this is now changing.  I believe we need to do a major rethink on this topic.  Customers are no longer satisfied with being satisfied!!!

What is satisfaction?  Well satisfaction is essentially meeting the customers expectations.  If you promise to deliver a document by 1 pm, and you do it at 1pm, the customer will be satisfied.  If you’re late, then that results in the dissatisfaction.  However, if you are considerably early, then that results in a higher degree, which can also be called delight.

The problem with satisfaction is that competition has increased.  There are many companies out there offering similar products and services.  With the globalization of the economies, the number of new companies entering markets from countries like China or UAE are increasing.  Similarly western companies are expanding into these countries.  Hence, overall we have an increased level of competition.  Each company is trying to excel and beat competition.  Furthermore, the customers are much more aware of their surroundings today, than 10 years ago.  The internet, and more specifically Social Media, has really revolutionized the way how we communicate and how information flows.  Customers can find out about a sale, or promotion, or the latest features of a product even before any of these are launched.

Research now says that there is no guarantee that satisfied customers will become loyal (any level of loyalty).  So what does that mean for companies?  Companies now need to go beyond satisfying their customers if they want to get them to come back.  Hence strategic management needs to rethink their goals and objectives.  I think companies should now aim for delight, instead of satisfaction.  Companies that can make their corporate culture around this idea will be winners.  Delighted customers are ones that are most likely to not only come back to you, but also achieve higher levels of loyalty.  Moreover, these guys will be telling not tens, but hundreds or even thousands of their pals (through social media) about what a fantastic company you have.

In the short-term, it may mean an increase in costs.  However these are far out weighed by the benefits they bring in.  A number of companies that I’ve worked with that have adopted this philosophy have seen their revenues and profits increase over time.  Moreover, they have also seen their marketing budgets decrease, since word of mouth brings in more customers than any other form for them.  Interestingly this is true for both B2B as well as B2C companies.  Moreover, it works for all sizes of firms, from SMEs to Multinationals.

What do you think about this?  Do you see an problems or issues in implementing this strategy?  What other benefits could companies get by doing this?  I would love to hear your views.

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Creating memorable experiences!

First, apologies to those who posted comments, and they’ve only just come up on the blog.  There were quiet a few spam comments, which I had to go through before I found the real ones.  To make things faster, you can register and then post.  Second, the visitors have crossed 2100, with over 20,000 hits.  I now have visitors from all continents, and 50 different countries.  The top visitors continue to be from the UK, USA, The Netherlands, Canada, and the rest of Europe.  Although visitors from the Middle East are catching up.  Will post the full list later in the week.

Memorable experiences, what are they?

Last week I discussed emotional loyalty.  This topic generated much discussion.  Several Linked in groups had this as the number one topic of discussion.  One of the key factors in developing this was memorable experiences.  I thought it would be good to talk about this topic, as it came up numerous times in various discussions.

So what are memorable experiences?  A memorable experience is something which is out of the ordinary.  Something special, or unexpected.  Often we can link this to delight or a pleasant surprise.  When we talked to customers who appeared to be almost identical on paper, one main factor that distinguished the category of loyalty they belonged to was the fact that most emotionally attached customers felt that they had had memorable experiences with the firm, where as those who were only attitudinally loyal had none!

How to create memorable experiences

So what did the organizations do to create these memorable experiences?  Sometimes you don’t have to do much.  One customer was very happy when her flight was upgraded because she was flying on her birthday.  Another said that the hotel left flowers, and a bottle of champagne for the couple on their anniversary.  Amazon used to give out vouchers to people who purchased from them!  Most of the cases of memorable experiences or delight resulted from small acts such as these.  The interesting thing is that these customers remember them, even if this took place years ago.  Moreover, after having such an experience, their perception of service changed.  Most thought perceived the ‘normal’ level of service as very good.  Hence, one act changed the way how the customer looks at the company’s brand, and its services from a totally different perspective.

There were other ways of creating memorable experiences.  One of the most important of these is great service recovery.  Often those customers that were not emotionally attached had things like this to say, ‘we complained, but nothing happened’ or ‘yeah they did give us compensation but it wasn’t worth it.’  Usually the compensation was too little, too late, or did not exist at all.  On the other hand, the emotionally attached had received great service recovery, which was much more than what the customer expected.  For instance, one customer’s food was not done right.  The restaurant apologized right away, replacing the meal with the right one, gave the person a huge discount and then told him that the next time he would get 50% off his bill!  It is acts such as these which result in the memorable experience for the customer.  Some of the main factors are to acknowledge the mistake as quickly as possible, apologize to the customer, and then compensate the customer for the bad product / service, making sure that the level of compensation is more than the loss.

Another interesting method of creating delight or memorable experiences is by delivering a consistently good quality of product or service.  For instance, many Sony customers felt delight with the products, simply because the products always were up to the level of quality that was expected of them.  In this case, the company was not offering a surprise, or something extra, just delivering on the quality they promised.  Overtime, the customers start to feel good about the product or the service, and this results in an overall memorable experience.

All of this does not mean that after one memorable experience, you can disappoint the customer.  The high level of quality needs to continue to the emotional attachment bond to get stronger.  There are many aspects to this discussion, such as employee empowerment, corporate culture, etc.  Unfortunatley I don’t have time to discuss these right now.  However, I would like to find out what you think of delight or memorable experiences, as well as service recovery.  Have you had such experiences.  Or what does your organization do to create these.  If you don’t then why aren’t you?

Pakistan Floods

Last week I posted a small note on the flooding in the country.  Its good to see that a number of people clicked on those links.  Just a reminder, now the area covered is the size of Italy, or the United Kingdom!  Over 20 million are now affected.

Awards in customer experience

I will be the chair of Judges on the UK Customer Experience Awards 2010 (  The nominations for this year are closed, but you can come and attend the event.  Click on the link to get more info.  I am also on the Chair of Judges for the UK Theme Park and Visitor Attraction Awards 2011 (  The nominations for this particular one are still open, with only 35 days left.

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True customer loyalty, what is it, and does it really exist?

One of my main areas of research and my passion is customer loyalty.  After spending 5 years and spending nearly £350,000 I have produced research which is quiet exciting.  I researched, studied and/or worked with numerous firms including Apple, Emirates Airlines, Thomson Travel, Serena Hotels & Resorts, Singapore Airlines, Harley-Davidson, Ikea, Zara, Walt Disney, Caterpillar Financial Services, and a dozen other companies I sought out to find what really is a truly loyal customer, and to see how we can cultivate these customers in our firms.

True Loyalty

True loyalty, is one where the customer remains loyal to the company in all circumstances.  The customer never seeks out alternatives or uses competing brands, is willing to forgive mistakes, and will even pay more money to be with the same brand/firm.  When we look at the real world, these types of ‘customers’  do exist, in places such as sports or music fans, and people that donate to charities.  For example, people don’t stop supporting the Red Sox or Manchester United, just because they lose a game or don’t win the championship.  Similarly, people don’t buy a particular type of music, because its on sale, or because you get more loyalty points for it!  True loyalty exists in these types of areas.  This type of loyalty can also be referred to as emotional attachment, or emotional loyalty.  However these types of businesses are not characteristic of the other ‘normal’ types of businesses.  Moreover, since these customers are not really rational thinkers (since they are willing to pay more money to be with the same firm) the question is do they exist in the B2B domain?

The good news for marketers is that these types of customers do exist in all of the firms that I studied / worked with (even in the B2B domain).  The not so good news was that none of the firms seemed to have a clue about how to identify them!  If you don’t know how to identify them then how can you manage them?  For this blog, I just wanted to help you identify the different types of loyal customers.

Behavioral Loyalty

The first type of loyal, which I would guess about 99.99% of the firms go after are what I call the behavioral loyal customers.  A company merely looks at the behavior of the customer (i.e. is the customer coming back to us).  While it may be useful to measure repeat business, it is not the best method.  Most loyalty schemes target these customers.  However, as I found, people may return for a number of reasons, other than loyalty.  For instance, if a supermarket is close to where I work, I would go there.  If I were to move, I would switch to another one.  Another reason is the cost.  I go to the cheapest supermarket.  If a different brand offers something cheaper I go there.  Similarly for loyalty schemes, I may be loyal to a company because it offers the most points, but if a different company were to offer more points, I would switch.  Hence, this is not the best measure of loyalty.  However, in a typical company the majority of the customers belong to this category.

Attitudinal Loyalty

One step up from this is to look at the attitudes of customers (attitudinal loyalty), in addition to repeat purchases.  Do they WANT to come to our firm?  People who return to a company and also like this are in this category.  These customers are better since they like you or your brand, and are not stuck with you.  These customers will spend more, buy a greater range of products and services, and spread positive word of mouth (recommendation).  However, I’ve found even these customers have limitations.  If you offer bad service, or have a higher price, these customers will switch.  Moreover, most of these customers will look for alternatives or competing brands/products.  So even if they like you they may think of trying out others.  Again, these customers don’t represent true loyalty.  However they are better than the behaviorally loyal customers.  These customers represent a smaller percentage of customers than behaviorally loyal ones.

Emotional Loyalty

The emotionally loyal customers are the best.  These are the customers who don’t just like the brand/company they love it!  These customers feel that the product / service that you offer is so great, it is not worth the risk to look at anyone else.  They do not search for alternatives, and also block out competition’s messages.  Moreover, these customers do between 80-100% of their total shopping (in a category) with the brand they love.  These customers not only tell others about the brand they love, they will go out of their way to tell people!  These customers will also forgive service failures, something the others will never do.  Finally, these guys are willing to pay up to 20% extra to continue to receive the same product/service from the firm!  These customers are the most profitable.  Unfortunately these customers constitute a very small percentage of our customers.

The goal for a company should be to:

1) identify their customers in the appropriate segments

2) to build a program that will cater to the different needs for each of these segments

3) to try to get most of the customers to shift from the lower levels of loyalty to the higher ones

I believe that companies should alter their loyalty programs to fit into these categories of loyalties.

This is all the time I have for now, but I will be posting more on this topic in the future.  If you would like help in any of this, feel free to get in touch.

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A dance company redefines customer experiences

Last week I went to experience arts from a whole new perspective.  I was so impressed that I thought I would blog about it, and share with the world.  Para-Active is a small dance/arts company based in London.  They perform various works of art with a focus on Brazilian & African dances.  While I’ve seen different performances across the globe, what made this one different was the fact that the audience does not sit and watch the show as an observer.  Instead, the audience becomes a part of the the show itself, and hence taking us to a whole new level of experience (from observational to active participation).

As a marketing consultant with the company, I was invited to experience a dress rehearsal for “Hotel Medea” a performance that the company is currently doing at the LIFT festival in London (  The show itself has an interesting format, where it starts on the banks of the O2 arena.  Participants are taken via boat to the performance area, and from there the show begins.  As soon as the participants land actors start engaging with the audience, by asking questions about their expectations, etc.  As the show begins, performers come out in creative costumes, depicting a marketplace setting.  At this point the audience is encouraged to walk through and interact with the ‘sellers’ in this marketplace.  The evening progresses with the marriage of Jason and Medea.  During this time again visitors are encouraged to join in the dancing and the singing in the various parts of the show.

At the end of the first part of the show, I interacted with some of the other participants.  Like me, they were all in an awe, and amazed at what they had just experienced.  The only thing one person could say was, “WOW,” and that really sums up the experience.  If you are a fan of the arts, or are in charge of customer experience at your firm, then I would recommend that you must go and see this performance.  What this little firm has done is simply amazing.  There are many lessons for CE Managers to be learned from this.

This firm has been able to take experience to the next level.  They did not just go up a notch, instead they shifted the whole ball game.  From a CE perspective, we also need to search for that next level.  Settling for good enough will not create that wow effect!

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