Building and Retaining Customer Loyalty. It’s the Small Things that Matter.

Allstate Thank You

It takes a million bricks to build a dam but just one loose brick to destroy it. The same principle applies to building and retaining customer loyalty.

It is not the big things that cause the bricks to loosen. Everyone gets the big things right. It is the small things that create the biggest negative impact. The one little brick that weakens the entire wall. When companies execute “relationship/loyalty marketing” programs without understanding the negative impact of some of their tactics, they create the condition that has the potential to destroy valuable customer relationships.

In this Insight Economy™, our customers have the advantage over brands. They have a tremendous amount of choice, the switching costs are negligible, they have information access over an open and transparent ecosystem, and new innovations and experiences cause them to reset expectations on a continuous basis. Brands have to work harder (not just TRY harder) to retain loyalty of their core and most important customers.

This is not a new idea and you would think companies understand this. Unfortunately, it isn’t so. Ironically, the larger and more sophisticated companies are the ones that miss the mark.

Let me illustrate this with a couple of personal examples. Last week, I received what seemed like a personal card in the mail (picture attached). When I opened it I found a note from Thomas Wilson, the Chairman, President and CEO of Allstate. His note thanked me for being an Allstate customer for 25 years. It was a nice gesture but it backfired. Here’s why. One, it was a printed form note with a printed signature. OK, I get it. The guy runs a really big company so doesn’t have time to write all his customers a personal note. But, if he’s trying to communicate that he really appreciates my loyalty, he could at least sign the note. Second, and more important reason is that the day after I received Tom’s card, I received the 6-month renewal premium for my family’s auto insurance. My rate increased. Nope, we haven’t had any claims during the past period… so, what gives?

I believe that I have paid over $50,000 to Allstate during the 25 years as their customer. And, I’ve had lower than average claims. What do I get for being an ideal customer? A form letter and another increased premium.

Contrast this to another “thank you” card I received last Friday from Mr. Dick Encino, the CEO of 2nd Wind Exercise Equipment. A week prior, I bought a new elliptical from their Aurora store to replace the one I currently have in my home gym. This new elliptical hasn’t yet been delivered so imagine my surprise when I got this note (attached). It was hand-written and thanked me for my business and wished me better health. He also included his business card with an implicit offer… “feel free to reach out to me if you have any issues.”

2ndWind Thank You

Which company would you feel better about doing business with? Exactly!

I reached out to a State Farm agent this weekend to discuss what my options are if I were to switch my business over to them. I am waiting for their quote. I might even contact Progressive’s Flo and connect with the Geiko Gecko to understand their offers. I’m also planning to upgrade my exercise bike with a new one from 2nd Wind… but only after the elliptical is delivered and installed… I want to ensure that my entire experience is positive before I exhibit more loyalty to them.

What is the moral of this? The only way to build and retain loyalty is to make sure that you do the small things better than the big ones. Make sure each brick is strong. Here are five simple actions you must take.

1. Treat your customer like you would your wife: Mr. Wilson, how would she react to the Allstate experience? Would she continue her custom with you?

2. Be authentic in your actions: If you’re sending a personal note. Make it personal. It could save you thousands and make your best customers your strongest advocates.

3. Address the appropriate issue: Dick did. He is making himself available. I feel good because if I have issues with product performance or service, I know the top honcho will help resolve it for me.

4. Make your messages meaningful: Dick wished me better health. He did it personally by sending a hand-written note.

5. Connect the dots: Make sure that other company activities don’t create dissonance and destroy the value of a positive contact. Allstate should have combined my next premium notice with my safe driving bonus and have Mr. Wilson send me a personal card with the safe driving bonus check and a possible discount, maybe 25%, on my current premium for my 25 years of patronage.

Following these five steps would have obviated Allstate’s risk of losing one of their best customers. Most likely, I would have increased my business with them. Companies need to understand that in this Insight Economy™, they can’t afford to allow a single loose brick.

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