The Loyalty Leap

Compete On Value

"If we believe that companies will not be able to continue to use cost cutting as their key to profitability, then we are on the cusp of a new era - an era in which marketers can reclaim their influence throughout the organization."- The Loyalty Leap, page 29

For those who haven’t read The Discipline of Market Leaders, allow me to summarize the gist: Authors Treacy and Wiersema propose that you can focus on dominating one of three categories in running a successful business – Operational Efficiency (eg. Walmart), Innovation (eg. Apple), Customer Experience (eg. Zappos). But the book was written in 1997.

In The Loyalty Leap, Bryan Pearson suggests that – particularly for younger businesses – Operational Efficiency is no longer a competitive advantage, but rather your ticket into the show. When customers can price you against your competitors with a couple quick Google searches, you had better be providing something of value beyond “We’re cheap”. As Seth Godin hammered home in Linchpin, there will always be someone cheaper. You can either race to the bottom on price or carve out a healthy niche by focusing on providing something exceptional to your customers. And that healthy niche comes from one of the other two categories: Innovation or Customer Service.

But is it really a choice between the two? The tired example of Apple as an innovative company is strong in promoting the financial value of innovation. But then again, Apple has also done a tremendous job with their “Genius Bar” – a customer service centre on steroids.

Pearson argues (and I agree) that while we all, always, need to be looking for ways to improve, it’s really Customer Service that defines highly successful companies these days. The subtle shift for me, as a guy who runs an online business, was to move my attention from acquisition (finding and adding new customers) to retention and loyalty (making exceptionally happy the people that are already here). Pearson talks about this as a required shift for marketers and, while I agree that this may be a new focus for many marketers, this is a required area of focus for all business leaders.

Let’s look at a couple ways to enhance your customer service…

What Kind Of Loyalty Are You Developing?

"An exceptional loyalty program is one that moves well beyond the simple act of rewarding purchase activity to one where the customer is engaged in an explicit relationship, where there are rewards for behaviors that benefit both parties."- The Loyalty Leap, page 80

At several points throughout The Loyalty Leap, Pearson reminds us of “Three Rs of loyalty”: Rewards, Recognition, and Relevance. A simple points program that provides people with rewards for use is a start, but does little to build real loyalty. (Real loyalty, by the way, is when a customer comes across a cheaper alternative but sticks with you anyway, because of the relationship you’ve established; because of the value you provide to their life beyond saving a couple bucks.) People crave recognition for their good behavior. Are you giving it to them? Are you going deeper than simple rewards?

Building Relevance

"There are four behavior-based approaches to creating relevance - spatial, temporal, individual, and cultural."- The Loyalty Leap, page 11

In an interview with Dan Pink last year, Dan said something that really stuck with me. He said that many websites, news sources and sales people are “Content Rich and Context Poor.” (Wish I could take credit for coining that expression.) In essence, Dan was saying that we are blasted by information every day, but so little of it is specific to us, and our needs. I’m not talking about whether an email was addressed to you or not, I’m talking about the content itself, and how relevant that content is to me – the recipient – at this particular point in my day/year/life. In a world overrun by content, we’re filtering for context.

In The Loyalty Leap, Pearson further explains that context (aka “relevance”) can be looked at in four categories:

Context Category #1: Spatial – Quite literally, can I take advantage of this where I am? (Think geo-targeted text messages when you walk by a store.)

Context Category #2: Temporal – Is this message hitting me at the right stage of my life? My week? (Send me an ad for a new car when I graduate college, not when I’m registering for first year.)

Context Category #3: Individual – Totally targeted to me. I tweet “I just found out we’re pregnant!” and you send me an ad for FIRST TIME DAD: The Stuff You Really Need to Know. Nice. (You know I read, you know I’m expecting – targeted.)

Context Category #4: Cultural – Take into account my social group, my religion, my upbringing, etc. Be relevant to me based on my values and interests. Show me that we’re on the same page.

In every marketing message you send, it’s important to consider which of the “Relevance Categories” you’re covering. As a general rule of thumb? The more the merrier. Connect with me in a way that shows me you know who I am… and that you’re interested in providing me with real value.