VW, Banks, and the Real Customer Loyalty

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Since my book was published (have I mentioned I’ve written a book?) one chapter has been the cause of around 90% of the comments I’ve received – The Myth of Customer Loyalty.

Another time, I’ll write a post summarising the counterarguments. But for today, I recently had a couple of experiences that made me think about the customer loyalty that should exist – that of organisations being loyal to their customers.

Last weekend I bought a new car, and it was a genuinely excellent experience. Friendly, welcoming, and accommodating of my two children who decided to run in and out of every vehicle and eventually lock themselves in the boot of a VW Golf (2023 model).

More than that, the price was good – genuinely good, not ‘salesperson good’ – with a recognition that ‘this is the fourth car you’ve bought from us, and we really appreciate your loyalty. We know you have other choices.’

Compare and contrast with a letter from my bank a couple of months ago, politely informing me that they’d been having a think, and had decided to reduce my overdraft.

I’ve had that overdraft for twenty years and, with a fairly good credit score, wanted to understand why.

As you’d expect, I phoned. And was told 

‘Well, we can do it, it’s in the Terms and Conditions’.

(Early in my career, someone told me that if you ever find yourself referring to the Terms and Conditions, you’re probably not doing the right thing for the customer).

So I complained, and this time got a longer reply saying that they were reducing my overdraft because I didn’t use it.

This is a great example of looking at a product in a functional, rather than emotional way.

They’re right! I do barely use it. It’s the overdraft on my ‘bills’ account so, all being well, every month my salary goes in, and my bills go out, and all the maths adds up.

But emotionally, I use it every month. I use it to give me certainty and reassurance, that should there be a delay in my salary going in, or in a bill going out, that everything will get paid and there wouldn’t be any knock-on effect.

Sadly, they didn’t agree with my argument, and reduced it stayed.

Guess what happened? The next month, my salary was delayed by a day, bills went out, and chaos ensued. Suddenly my carefully crafted-credit score was at risk of taking a battering, so some frantic money movement – including taking money out of my ISA which can’t be put back in – was needed to cover the 24-hour shortfall.

The situation got worse – but, admittedly, funnier – when a week later I received another letter saying they were reducing the overdraft on my other account for the same reason. Then, in quick succession, two more letters saying both overdrafts were going to be removed entirely.

Finally, a few days after that, the pièce de résistance – a letter and email offering me a loan of £25,000.

Having worked in a bank, I understand what’s going on here. Banks must keep enough capital to cover any potential lending, so me having two big ‘unused’ overdrafts means they have to hold more money, and that’s not ideal for them as a business.

But, having been a customer for over twenty years (and supposedly with a relationship-managed service), there’s was no discussion, no conversation, no feeling of involvement from me on the best way to manage my money. If there had of been, I would have been happy to reduce them a bit or take one and keep the other. Instead, a series of arbitrary letters and cold ‘we’re doing it because we can and we want to’ replies leave me feeling entirely disconnected, and for the first time starting to look elsewhere.

This is where customer loyalty should exist: organisations recognising that customers have choices and being grateful for – not taking for granted – the fact that those customers have chosen to stay.

Without that, their customers might well start the car and drive off elsewhere.

Thanks for reading this article, I really hope you enjoyed it. You can subscribe to my monthly newsletter below, and find me in tweet form @johnjsills, in picture form on Instagram @CX_Stories, or in work mode at The Foundation

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