Shiny Objects and Stupid Practices Won’t Make You a Customer Loyalty Leader

Imagine coming across a car that grabs your attention – in particular you are taken with the handling and performance of the car.  So you take a look at this car and identify the features that contribute to or help shape the performance of this car.  Having done so, you set about adding those features – bigger tyres, different exhaust system, different engine – to your car. How likely is it that you car will generate the kind of performance that you are after?  How likely is it that your car won’t even start and if it does the performance will be less than it was before you added the ‘shiny objects’?

Given that so few of us would be this stupid in the domain of cars why is it that so many are this stupid when it comes to the organisational domain?  Why is it that so many organisational people take ‘shiny objects’ or ‘best practices’ and start adding them to their organisation in the expectation that they will replicate the success of high performing organisations?

Can you take this cherry picking approach to Customer Experience and customer loyalty? Can you just tack on a veneer of Customer Experience to your organisation and thus cultivate customer loyalty? Can you tack some Customer Experience ‘shiny objects’ (almost always these involve technology) and ‘best practices’, here and there in your organisation, and reap the benefits that come with a loyal customer base?  No!

I want to take you back to 1993 and the wise word of Frederick Reichheld:

Building a highly loyal customer base cannot be done as an add-on. It must be integral to a company’s basic business strategy. Loyalty leaders like MBNA are successful because they have designed their entire business systems around customer loyalty. They recognize that customer loyalty is earned by consistently delivering superior value ….. Designing and managing this self-reinforcing system is the key to achieving outstanding customer loyalty.

When a company consistently delivers superior value and wins customer loyalty, market share and revenues go up, and the cost of acquiring and serving customers goes down. Although the additional profits allow the company to invest in new activities that enhance value and increase the appeal to customers, strengthening loyalty generally is not a matter of simply cutting prices or adding product features. The better economics mean the company can pay workers better, which sets off a whole chain of events. Increased pay boosts employee morale and commitment; as employees stay longer, their productivity rises and training costs fall; employees’ overall job satisfaction, combined with their knowledge and experience, leads to better service to customers; customers are then more inclined to stay loyal to the company; and as the best customers and employees become part of the loyalty- based system, competitors are inevitably left to survive with less desirable customers and less talented employees.

The customer loyalty riddle (part I)

Customer loyalty: a riddle without a solution?

As far as I can tell guru’s have been promising nirvana – revenue growth, profit growth, higher profit margins, sustainable competitive advantage – through customer loyalty.  I remember that this was the holy grail when I started working with Siebel and later moved to The Peppers & Rogers Group back in 1999/2000.

That was 10+ years ago and it would appear that little progress has been made by the majority of companies in doing better at cultivating genuine customer loyalty and improving customer retention. Yet over that time all kind of ‘solutions’ have been attempted and billions have been spent on these ‘solutions’.

Which company has cultivated that much desired loyalty through CRM?  For a little while Tesco appeared to be the poster child for analytically driven CRM through its ClubCard loyalty scheme.  Now it looks like we may have been too hasty: Tesco market share is now the lowest it has been since 2005 and the company, in January, issued its first profit warning in decades. Put differently, if the success of Tesco was attributed to the analytically driven CRM then consistency suggests we should also attribute Tesco’s current failure (profit warning, market share drop..) to analytically driven CRM.

It would appear that customer loyalty is a riddle, if that is so then what is the key to this riddle?  Before I share my point of view with you, allow me to tell you a story that is also a puzzle.  Dive into it, you will enjoy it and you will get value out of it even – paradox makes you think, go beyond the obvious, and opens you mind.

How to divide the camels?

Do you know anything about Sufism? No, that is OK, you only need to know that a Sufi is a special sort of human being – a being that has penetrated into existence and tends to talk ‘indirectly and paradoxically’ so as to by pass the mind which is thrives on logic – think of him as a zen master.  Here is the story:

There was once a Sufi who wanted to make sure that is disciples would, after his death, find the right teacher of the Way for them.

He therefore, after the obligatory bequests laid down by law, left his disciples 17 camels with this order:

‘You will divide the camels among the three of you in the following proportions: the oldest shall have half, the middle in age one third, and the youngest shall have one ninth.’

As soon as he was dead and the will was read, the disciples were at first amazed at such an inefficient disposition of their Master’s assets.  Some said, ‘Let us own the camels communally’, other sought advice and then said, ‘We have been told to make the nearest possible division’, others were told by a judge to sell the camels and divide the money; and yet others held that the will was null and void because its provisions could not be executed. 

Then they fell to thinking that there might be some hidden wisdom in the Master’s bequest, so they made inquiries as to who could solve insoluble problems. 

Everyone they tried failed….”

What is your answer, your solution to this riddle?  Have a go at solving this riddle – you will get value out of it if you allow yourself to get value out of it.

Let’s continue with the story – dividing camels – and get to the solution

“Everyone they tried failed until they arrived at the door of man called Ali.  He said:

‘This is your solution.  I will add one camel (of mine) to the number thus making 18 camels.  Out of the 18 camels you will give half – 9 camels – to the oldest disciple.  The second of you will get one third of the total, which is 6 camels.  The youngest of you will get one ninth, which is 2 camels.  That makes 17 camels which your master left you to divide amongst yourselves.  One camel – my camel – will be left over and you will return that camel to me.’

This is how the disciples found the teacher for them.”

My thoughts on this story, this riddle

– The conventional approaches to solving the riddle did not work, none of them solved the riddle, because the riddle was designed to go beyond the conventional;

– Because the conventional approaches did not work then the ‘conventional gurus’ stated that riddle was absurd and should be ignored or that conventional approaches be used e.g. sell the camels and divide the money in the allotted portions that is always the case, the conventional cannot look beyond convention as they neither have the heart nor the mind for the looking beyond;

– Notice the characteristic of the solution, it has a unique quality:  It has to be put into the game, it is used in the game and at the end of the day it can be taken out of the game whole and complete – it does not lose anything of itself by giving itself.

Final question or two for you

What does this story provoke in you when it comes to customer loyalty?  What avenues does it open up for you that were not present before?  What do you think is the solution to the customer loyalty riddle?  Do you even think there is a solution?

I will share one perspective with you in my next post.  I wish you well and my thanks (to you) for listening to my speaking.