Steve Yastrow, over on the Tom Peters' site, asks if a bribe can lead to loyalty and whether 'loyalty programs' can deliver loyalty.

Well, Duh, as the Yanks like to say (I prefer 'D'ohhh' a la Homer Simpson, but not quite the same meaning is it). Anyone who's been paying attention for the past few years - and apparently that's not a lot of people - could have told you these basic marketing rules:

1. Sales promotions are designed to create a short-term sales spike or smooth out seasonal dips in sales. They are a short-term, tactical tool.

2. In response to the perceived need for 'customer loyalty', sales promotions suddenly got dressed up in new clothes. Give the programme a card for customers to put in their wallet, stretch the timescale out so it lasts, say, all year round. Call it a loyalty programme and what have you got? Well, to borrow from a political debate in the US at the moment, you've got a pig with lipstick on.

I wrote an article for Marketing Week a couple of years ago pointing out that most of the loyalty promotion, card-based programmes and schemes are just sales promotional tools in disguise and can't/won't ever deliver customer loyalty.

Steve puts his finger on it when he says that most so-called loyalty schemes encourage repeat purchases, and that's not the same as loyalty. It's still just a transactional relationship. And a transactional relationship isn't really a relationship at all.

On the other hand, just to be Devil's advocate, here...If you can keep millions of customers coming back for repeat purchases through ongoing discounts that lead them from one transactional encounter to another (as Tesco does with its Clubcard, probably the nearest thing to a genuine 'loyalty' programme there is among the card-based schemes), who cares if it's real loyalty or not? The end-result is the same.

Suddenly that pig's not looking so unattractive after all.

Labels: loyalty, marketing, sales promotion, tranactional relationships

Steve jetley, a customer of Lloyds TSB bank, was unhappy with his bank. So, he set his online banking password as "Lloyds is pants" ('pants' is UK slang for 'useless').

A mischievous employee altered it to "no we are not".

So, Jetley tried an alternative - "Barclays is better". The bank refused it.

Jetley then tried "censorship". The bank refused to allow that, too, saying it was too many letters.

The rebel customer compromised with a six letter word which implied the bank was cr*p.

Lloyds then said there are new rules that say numbers have to be used, so the word was unacceptable.

Don't you think that someone - either the customer or the bank - should have said "Thank you and goodbye: you/I am no longer a customer" before the farce unravelled to this stage?

It wouldn't have been as amusing, though, I suppose.

The serious learning points:
1. Unhappy customers become saboteurs.
2. Baiting them doesn't help.
3. Finding out why they are unhappy makes more sense.
4. If the relationship has completely broken down and you can't fix it for them, say goodbye.

Southwest Airlines CEO Herb Kelleher was passed a complaining note from a serial complaining customer, with the words "This one's for you" or something like that written on it. The note explained why the passenger would never fly with Southwest again. The things she wanted them to do so that she would fly with them again were outside Southwest's low-cost strategy. It took the then CEO one minute to pass back a hand-written note to send to the customer: "Dear Mrs. Crabapple. We will miss you. Love, Herb."

Source: The bank customer story was in the Times of London last week. The Kelleher anecdote is from Kevin and Jackie Frieberg's book Nuts!

Labels: customer complaint, Herb Kelleher, Southwest Airlines, unhappy customer