The Philosophy of Customer Loyalty in the Retail Space
Years ago, I informed my mentor #yd that I had been approached by his rival and frenemy.
There had been some bad blood and old history between the two and frankly, I didn’t want to complicate my life, so I politely declined offer.
Mr. YD's exact words were, “Mohammed, that was very decent of you. I appreciate what you did, but I would not have stopped you.”
In the years that followed, whenever we quarrelled, I would use this as a reminder of our allegiance to him—a clear demonstration of where our loyalties lay.
His response was always the same: “Mohammed, I appreciate the fact that you didn’t go to our competitors, but it was clear that your decision was born out of self-preservation as you knew the value of a bird in the hand.”
In hindsight, he was right.
We often do the "noble" thing and expect validation from others. Could it be that we actually acted for the validation and not the nobility? That the act was born out of sound business practice, and we passed it off as loyalty above and beyond the call of duty?
In the retail space, we frequently discuss customer retention, customer loyalty, and loyalty programs. In the late 1990s, I attended a conference where Amazon CEO Jeff Bezos delivered a keynote on customer loyalty. His opening remarks were, “If you want true loyalty, buy a dog.” Almost two decades later, I see the entire affair very differently.
What retailers refer to as client loyalty might actually be some manner of inertia or resistance to change. Shopping decisions might be determined more by habit than by actual loyalty.
For example, I fill up at a specific garage not because I prefer the product or am rewarding good service (which is important) or that the price is right. From my perspective, most garages offer a similar level of customer care. It's what I usually do, so I do it over and over. As long as I don’t have any nasty experiences at the garage, I will continue to stop there when I need to refuel. It would take some extraordinary offer from another garage to get me to alter my habit.
In the retail world, this means that the large majority of your customers will continue to come to you as long as you don’t give them grief or let them down. Your competitor can’t take them from you unless you drop the ball or they really go above and beyond. While there are always exceptions to generalisations, ours is not a world of specifics but one of overall numbers. These principles largely hold true for the most part.
Take my wife, for example. She goes to the local mall and buys specific items from Checkers and others from Woolworths. If either store were to upset her or consistently disappoint her, she might change her allegiances. The new big thing is online shopping with quick deliveries, which is the growth point today.
We earlier mentioned that as long as you don’t drop the ball or your competitor doesn’t exponentially raise the bar, you will be fine. Taking trade away from bricks-and-mortar stores to home delivery is way beyond the traditional roles that supermarkets have played over the years. The inertia we described applies to online stores as well. If Checkers 60 provides a consistent, dependable experience, they are assured of repeat business. Anyone wanting to break into this space will either have to pray that Checkers messes up (as PiknPay has) or offer something so much better that staying with Checkers would be foolish.
To use these insights to your advantage, you must ask the hard questions: Why should people continue to deal with you? How can you improve customer retention?
The answer is simple: Don’t mess up. Occasionally having problems is inevitable, but you will find your customers willing to give you some leeway as the trauma of leaving you represents too much effort. It's only when we don’t see, or appear to not care about, how badly we messed up that we are unable to appease the client.
Customers are often unreasonable. Like everyone else, they might just be having a bad day. When a regular customer goes on a rant in full Karen mode, one needs to take them aside and attempt to appease them. It's these tests that we need to pass to keep customers coming back.
The perfect customer is someone who comes to the store regularly, is courteous or quiet, knows what they came for, pays, and leaves. On the occasion that you are out of stock of the items they need or there is some manner of irritation, the perfect client is understanding and will cut you some slack. This perfect customer doesn’t have a meltdown or raise a fuss. When they are ignored because of their mild manner, they quietly go elsewhere. The one who calls for the manager and kicks up a huge loud fuss is often taken more seriously because nobody likes a confrontation, and you end up rewarding the wrong client.
You need to prioritise identifying customers you want to deal with and go the extra mile (or kilometre) for them because they are the kind of clients everyone wants. The Karens of the world need to be shown a better way.
With a Pavlovian approach, you will be able to influence clients subtly, ensuring they keep returning and smoothing over rough patches caused by occasional lapses in the supply chain. Familiarity often masks imperfections, as we know from the peeling paint in our own homes. Even those who are super critical become more tolerant when there is familiarity.
Regular clients will not even notice occasional lapses in standards if they feel at home and comfortable in your business. This has a huge impact on any rebranding you might be considering. Renovations and product placement changes are hugely traumatic to the psyche and must be avoided at all costs. When forced to move fixtures around, you need to be sensitive to clients' discomfort and provide additional support to help them acclimate to new layouts or product ranges.
Embracing change for the sake of change can erode the inertia that keeps customers coming back. The point is that they will keep returning to you despite what your competitor promises them. The truly "loyal" won't even explore other options unless you force them to. Customers will only leave when you drive them away. Your lack of empathy towards customer discomfort makes them feel ignored. Once they stray, the same inertia that kept them coming to you will work to keep them away.
M Parak
July 2024
#nts #blog
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