Feels Kinda Loyal, Doesn't He?

I just got back from India where I keynoted this loyalty conference but THAT story will be over at my ZDNET blog, thus forcing you, once again, (in an opt-inny sort of way), to read both blogs. Part of my diabolical plan to take over the blogosphere - to no good end I assure you. Only because I have no idea what a good end would be to the takeover of the blogosphere. What I want to do here is talk about something else that was sparked by the trip and by the fact that I was at a conference on loyalty speaking about advocacy - and realized after a series of particular circumstances that despite all the talk about the emotional ties when it comes to loyalty and customers, that loyalty is viewed and judgments are made on the basis of scales and left brained thinking rather than the whole-brained thinking that needs to go on to judge what a customer truly seems to be saying and doing and desiring. In fact, the scalar versions of loyalty marketing can be damaging because of the thinking of loyalty marketers. Let me outline two sets of instances.

Instance Set #1 - United Airlines

1. This year, due to my auto accident of last summer, which I'm sure many of you remember - because I don't - much - I didn't fly as much and as a result of that, I've dropped from Premier Executive flier status to Premier status on United. I only flew 36,000 miles (or thereabouts) instead of the requisite 50,000.
2. In the first month of 2009, I've flown 22,000 miles on United.
3. My Premier Executive Status runs out at the end of February 2009.
4. I've been Premier Executive for a few years already.

Instance Set #2 - Loyalty Marketing Conference Mumbai/Bombay, India

1. When I spoke in the morning on Loyalty and Advocacy (see the embedded presentation here) and I started by asking a series of questions I often ask when I do this kind of discussion. The truncated version goes like this:
   • Who here can tell me of someone or something that they are in love with?
   • Who here can tell me something or someone they love but are not in love with?
   • Who here can tell me something they like a lot, but don't love and are not in love with?
2. Typically, most of the audience can distinguish between these emotional states very, very clearly.
3. One panelist in the next panel, in the course of answering someone else's question, slightly scornfully said that they had never "heard of a scale of in love, love and so on." (a bit paraphrased but not much)
4. I responded in my afternoon CRM 2.0 2 hour workshop that that wasn't a scale.

The Connection Between #1 and #2 (not that one and two, pottymouth!)

Its starting to become increasingly clear that some of the approaches that I'm seeing out in the marketplace toward loyalty programs are failing precisely because they fail to recognize the actual human being that is being targeted and instead translate that human being into a series of metrics, scales, and demographic segments. While they may be able to "identify" a loyal customer based on some set of customer behaviors, they have little means of figuring out how to recognize advocates - because human attitudes are at play when making that determination.

Think about it this way. Despite what is going to seem to be a pretty damned self-aggrandizing suggestion, I'm going to tell you what United should be doing in my case - or cases like mine.

First, though, what do I seem to be in United's eyes? Judging from my transactions with the airline, I look friggin' loyal as hell. I have hundreds of thousands of miles in the air. My travel is both domestic and international. I take 20 plus trips in a typical year on United. When I'm not flying United directly, I fly Star Alliance partners that I book through United. What they don't know is that I also ask my clients to fly me United.

Truth is, I think United sucks.

But on the surface of it, using their "metrics" I'm a loyal customer who needs no particular coddling.

But actually, I'm actually a member of the club of "intertia loyalty"- meaning the cost of switching to another carrier is too high for me to make that switch - even though I don't like United.

If you operate as those loyalty marketers who think that "in love" is a scale, then I am metrically committed to United - my behavior proves that. But if they attempted to figure out my attitude, not my behavior - they would find that because I don't like United, my downgrade to Premier, in conjunction with the lack of upgrading success - making me think my miles are nearly worthless - reduces my intolerance of switching and I'm considerably closer to leaving than I ever have been.

What Should United Do?

Think about this solution. My Premier Executive status is good through February 2009. By December 31, 2008, the cutoff date for the 50K miles needed for Premier Executive, I had flown 36,000 miles and, get this one, 22,000 miles booked to be flown in late January, early Feb 2009. That totals roughly 58,000 miles in flown and booked before the expiration date of February 2009.

Them's the facts. What I would have then done is sent out a note asking me, is there any reason why your mileage fell off so much given the last several years of traveling with us? I would have mentioned the accident. Then as United's VP of Customer Experience (there have been several of them in the last few years), I would have looked at the miles flown and booked and said, "hey, let's keep this guy a Premier Executive because of his extenuating circumstances - especially since he'll have flown more than required" and they would have cemented me - taken me a step beyond that inertia. Instead, I got a note before the end of last year saying something to the effect of - "hey, You're short by about 15,000 miles needed to keep your Premier Executive status. We'd like to give you the chance so you can purchase the miles for $2300.00."

I swear.

All that means is that I have nothing but further contempt for United, given the mercenary way they treated me.

Sigh - that would be a 1.3 on a scale of 5.0.

Comments

[Martin Schneider]

Paul - I liked this example and the version you gave on it at SugarCon...in some presentations I've given over the years I have often distinguished between three factors that tend to be meshed together with no regard for their difference in the IT world: loyalty, satisfaction and market share.

All to often lock-in strategies and general market bully tactics have led to a virtual oligarchy in the main areas I covered (BI, CRM, ERP).

These few vendors tended to possess huge shares of market, and subsequently high loyalty, but usually very LOW satisfaction levels. Over time (I have seen a typical 10-15 year arc) many of these companies started to fade (Siebel being a great example) because they simply didn't listen to their customers (or do well to find new ones in a changing environment).

The internet, however, is a great equivocator. And the level playing field it presents hopefully will create winners that effectively balance their market share (or ability to stay afloat) by also paying significant attention to the EMOTIONAL and Voluntary types of loyalty instead of lock-in loyalty or inertia loyalty - which of course breeds high satisfaction and higher margins.

[Matthew Watts]

Paul, I enjoyed this example at your speech today for Dalton State College. One of the things I am trying to do for my business is to make it apparent to the customer that I want to be a resource for them, not just someone they pay.

[Madhu]

I had a very different experience with Marriot when i relocated out of US. I was a Platinum with them for 3 years and then work took me out of US to Europe and Asia. For those 2 years i retained my status and was useful on the occasional trip back home. Now after 9 years in India, my status is still active as Platinum. Looks like they are probably doing something right.

[Hari Saravanan]

Paul, Your "United" experience is a classic example of retaining customer through Loyalty. Hope someone from their customer support reads this :)