Saturday, October 24, 2009

Confusion Reigns

In my opinion there is no consistency in our market regarding customer loyalty, customer satisfaction and customer dissatisfaction. For example, I have on my desk a blog regarding hyper-loyalty, an article about creating customer loyalty, and article which focuses on customer dissatisfaction. The problem is they do not connect.

For example, Bill Self in his blog "Thinkinglikeacustomer" of October 21st he discusses the concept of hyper-loyalty. He points out some companies whose customers are "beyond loyal." These customers appear to have a passion for converting others to become "members" of a particular business. One business he uses as an example is In-N-Out Burger. When asked how this passion is created Mr. Self suggests that the secret to creating his passion goes much deeper than customer satisfaction. Stacy Perman notes in her book "In-N-Out Burger" that "the chain's regulars assumed the responsibility of bringing in a constant stream of new devotees, an act generally referred to as "the conversion." It had the feel of bestowing membership into a club that seemed at once exclusive and egalitarian."

As a side note, when I am teaching queuing theory I have my class measure the queuing performance of some business. Often the various teams in the class will focus on fast food companies. In-N-Out Burger also has the longest wait time; however, when I ask how many students go to In-N-Out Burger, there is rarely a time when there is a student who does not go to In-N-Out. In fact, the students fit the description of being "hyper-loyal."

Mr. Self continues by suggesting the hyper-loyalty comes by winning the hearts and minds of the market. He notes that when done properly it creates contagion and people will have an unconditional love for the services because they trust you. In other words, hyper-loyalty is the way to focus customer-centered efforts. What this translates into is that your customers believe you are the best and will keep getting better.

My concern is that not every product and/or service is capable of creating hyper-loyalty. Certainly, it can be developed with high ticket products and services such as automobiles (Lexus and Porche come to mind). Certain airlines seem to be close to being hyper-loyal (such as Singapore Airlines). One aspect of "hyper-loyalty" is that they do not appear to be operating loyalty programs. This implies that loyalty programs are not required to build hyper-loyalty. One could conclude that hyper-loyalty has a higher customer retention percentage than the current market loyalty programs.

I believe this is an interestin concept! I would like to see some more research on companies that have hyper-loyal customers. One aspect that hasnot been addressed is the cost to the company of implementing a program that could lead to hyper-loyalty. As a secondary question is how long it takes to achieve customer relationships that become zealous for the products and/or services.

I would like to appeal to the consultants in the market to look into hyper-loyalty and see if this phenomenon can be replicated. This is one of those great ideas that may become a Black Swan. In the meantime the question is do we stick to the loyalty programs that seem to be working or do we re-direct the loyalty program efforts to building hyper-loyalty? Until then confusion reigns.

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