Martin Hayward, former director of strategy and futures at Dunnhumby explains how loyalty is diminishing.
I’ve mentioned my bank in previous posts – I’ve been with them for 30 years, joining as I headed off to university, and probably with a free student railcard or book token thrown in.
Statistically that puts me pretty close to the top of the pile of loyalty measures as defined by behaviour, but emotionally I’m in a very different place.
I don’t like my bank and I don’t think they’re very good, but I haven’t switched. There are two reasons for this. Firstly I’m not sure that the competition are much better, judging by the huge amount of media coverage of their mis-selling and frequent ineptitude. Secondly however, I have in the back of my mind a feeling that it will one day be useful to me to have been so loyal. If I do ever fall on hard times, the voice in the back of my head tells me that my loyalty will be rewarded and they’ll cut me some slack when I need it.
Of course, the other side of my head knows that this will never happen because the banking machine is built upon selling new products to new customers, I have no relationship with my ever changing ‘relationship manager’ and the risk algorithms that lie behind business decisions don’t value the cutting of slack.
It’s madness of me to stay with them, but I grew up in a world when loyalty was the norm. The accepted wisdom was that one was loyal to the company one worked for, loyal to one’s spouse and loyal to the companies one did business with. (In many industries there wasn’t a choice anyway- gas was bought from the gas board and electricity from the electricity board..).
For consumers growing up today, the environment couldn’t be more different. Jobs are certainly not for life, marriage and divorce rates are at all time highs, and crucially, for the world of marketing, switching between companies to get the best deal is part of everyday life. Electricity from M&S, a new mobile contract every 12 months and a constant stream of targeted offers to tempt us to switch our insurance, TV provider, grocer and so on.
The impact of this dramatic shift in attitudes towards loyalty must not be underestimated as the next generations of consumers begin to flex their purchasing power.
The ‘loyalty’ that so many organisations, including my bank, currently rely and perhaps misguidedly congratulate themselves on, is slowly going to be overwhelmed by a far more promiscuous customer base who feel lower levels of allegiance, and little guilt in switching.
Those in charge of measuring and building customer loyalty need to be very aware of the generational differences ahead. The focus for marketing and loyalty schemes should be on working out how to connect with this new generation of more fickle consumers, looking for ways to build trust and emotional engagement to overcome a deal-driven mentality. Those that can’t, may well find themselves locked into a never ending, and increasingly costly, revolving door of chasing and then losing customers at a frantic rate.
There isn’t long left before the inherently fickle outnumber the inherently loyal. Our job as marketers is more than ever to provide the reasons for consumers to value longevity, and to reward them accordingly.
If you don’t agree that loyalty is diminishing then please post your comments.
Why not take this opportunity to read more Customer Champion posts.