The 4 Fundamental Attributes of Customer Loyalty, Part 2

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This is the second in a four-part series on modern approaches to improving customer loyalty through customer engagement.

Lots of CRM vendors talk about personalization, but their idea of how to do it leaves much to be desired. They address personalization very late, using a just-in-time approach to accessing customer data to support a sales or service encounter in the moment.

This certainly is important, and it achieves the goal of personalizing the encounter by producing a catalog of data points, including the customer's history, demographics, and other relevant information that a customer-facing employee can use. With it, the employee or automated process can make intelligent decisions in the moment and offer, among other things, next best actions or offers. So there's a lot to like with this form of personalization.

Still, why wait until you're in the moment of truth to personalize? This kind of personalization implies, or should imply, another form that's further upstream from the moment and that might provide greater benefits. In my last two books, I've written a lot about moments of truth. Briefly, they should be predictable, and every business ought to know what they are. Typically, customers experience moments of truth at times when they want or need something from a vendor that the vendor should be able to provide.

Moments of truth are driven by reasonable expectations that are based on marketing, brand promises, or the nature of a product or service. For example, there is an expectation of ease of use for most electronics today. That's a vague idea, but it's based on the vendor's responsibility to research customer attitudes and habits, to start with, and then to design solutions to meet the expectations that arise from them.

When a vendor takes on understanding moments of truth and succeeds, the results can be powerful. One of my favorite examples is Starbucks' loyalty program, mediated by its mobile app. Starbucks started by trying to figure out how it could enhance its customers' store experience. It discovered that at busy times, customers had to wait in two lines -- one line for ordering and another for pickup -- and that waiting could detract from the overall experience.

Eliminating the wait time became one of the drivers for a mobile app that lets people order and pay from their phones, even while en route to the store. Upon arrival, the customer simply has to pick up the order.

With its app, Starbucks gave customers the ability to customize or personalize their visit. The onus is now on the customer to personalize the experience, and there's little need to crunch massive amounts of data.

Proactive personalization doesn't require a mobile app, though many businesses have made great use of the smartphone as a platform. Another great example of personalization is Hilton Hotels' HHonors app. Customers can use it to make a reservation, see a map of the property and select a room, order services, and even turn their phone into a room key. It's similar to Starbucks in that Hilton puts control of many aspects of the experience in the palm of the customer's hand.

Personalization can mean many things. It's not always about data -- or certainly not just data. It implies relationships. For this reason, community can have a big impact on how a vendor approaches customers. Based on my research, it is hard to come across a situation when a vendor maintained tight control of the information customers could access and fostered good relationships.

In most cases, personalization involves giving up that control in favor of giving customers the ability to control their destinies. It involves an amount of trust, but I can't think of a situation in which trusting customers isn't a good idea.

A final case in point is SOL Republic. It makes headphones, but the founders decided to excel at relationships, and their business model treats their products as part of a music-oriented lifestyle. In fact, "SOL" stands for "soundtrack of life."

With a very low-tech approach, this company encourages its customers to interact in a community to share ideas about music, new groups and experiences. Its customers are phenomenally loyal to each other and to the brand, and you can't get a more personalized experience than a one-to-one interaction with a kindred soul.

The point of proactive personalization is that it gives some of the personalization power to customers, which enables vendors to maintain a kind of loose-tight hold on them. It's the same relationship a baseball player has with a bat -- holding on tight but in a relaxed way that enables the player to make a split-second decision on whether to swing or hold up. In today's markets, with churn rampant in so many sectors, this can take a bit of courage for the vendor, but it demonstrates trust in the customer, and most often that trust is rewarded.

Denis Pombriant is a well-known CRM industry researcher, strategist, writer and speaker. His new book, You Can't Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. He can be reached at [email protected]

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