This is an unedited version of an article which appeared in the March 2018 edition of Market Leader, the strategic marketing journal for business leaders, and is reproduced with their permission. To subscribe, visit www.warc.com/bookstore.

I loved my local taxi firm.

Low prices, lots of cars, and really easy to book. Sure, the car was often ‘just round the corner’, and it was a bit annoying that I had to call if I wanted to pay by card, but overall they were great, and I used them all the time.

Then Uber came along, with its one-tap ordering, cashless payment, and actual map of where your actual car actually was. So I switched. Immediately. Years of using the same taxi firm meant nothing to me when this new service appeared on my phone screen.

And that’s because customer loyalty is a myth. All that really matters is usefulness, or, more specifically, staying more useful than the alternative.

Myth of Customer Loyalty

The last 20 years has provided mounting evidence to this point of view, as loved institutions such as Woolworths, Blockbuster, and BHS, as well as the entire newspaper industry, have found their customers anything but loyal. As shiny, new, more useful alternatives appeared on the digital horizon, customers sprinted towards the light, only stopping to swap memories of their mis-spent youth in the pick-and-mix aisle.

This usefulness comes in many forms. For some customers, it’s a more useful price, with the rise in aggregator sites helping to show at-a-glance something that would have previously taken weeks to find out. For others, ease, with anything that requires leaving the sofa an insult to customer experience.

It could even be status. Why do people queue for days outside the Apple store? Not because of the useful price, or the useful product which Samsung had years ago, but because of the useful status, marking them out as Someone That Buys New Apple Things, and is therefore a) rich b) trendy c) very much in control of their time management.

Companies may also try to prove their usefulness through ‘rewards’, often delivered through a card-based mechanism. But these cards are not, as their name tries to suggest, anything to do with ‘loyalty’. If they were, it’s unlikely customers would have the audacity to stand in front of the cashier at Costa whilst removing their Starbucks, Café Nero, and Coffee #1 cards in order to find the right one to stamp.

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Of course, it wasn’t always this way. Loyalty is a particularly person-to-person thing, driven by association with other humans, a feeling that links two or more people together. And customer experience used to be more like that too, with bank managers who knew your name, shop owners who knew your usual, and doctors who’d known you since birth.

But as the experience has become more faceless, so ‘loyalty’ has become more transient, with a better, more useful proposition just a tap away (and the ability to find out about that offer only needing a few more taps, or a well-worded question to Alexa).

This doesn’t mean that companies are doomed to a totally transactional future, though. It’s become a frequent sight at lower-league football grounds to see long-time fans collecting money to try and rescue their club from collapse – something that I don’t recall seeing outside the boarded-up windows of Woolworths HQ a decade ago.

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That’s because these relationships are built on something far deeper than the weekly shopping or a monthly direct debit. They’re built on a shared sense of purpose, a care for the community, or a view on what values are important to live by. So perhaps the only way to really achieve customer loyalty is for companies to know why they matter, what they stand for, and be able and unashamed to tell the world about it. It’s why I’m unlikely to change my energy supplier, Ecotricity, anytime soon.

As for my taxi company, after a few months under pressure from Uber, they decided to release their own app. Instant booking, automatic card payments, and a map to show exactly which corner their car was round. Oh, and you could pre-book too, without a penalty for cancellation, something more useful than Uber.

So of course, I immediately switched back again.

Customer loyalty is a myth. Staying useful is what matters. As the poster in a window at a soon-to-be-closed Jessops put it, ‘Thank you to our loyal customers. To everyone else, thanks for shopping at Amazon.com.’

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Thank you for reading this article, I really hope you enjoyed it. If you did, I’d love you to subscribe to my blog at johnjsills.com/subscribe to get new thoughts sent to you on an infrequent basis, and find me on twitter @johnJsills

Posted by johnJsills

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