Directly right up my nose

SBHD: That buyers are satisfied with your product does not mean they consciously wish to have a `relationship’ with you – and marketers who think otherwise risk alienating the very people they are trying so hard to get close to.

Customer retention is one of the most influential ideas in modern marketing. The realisation that tiny reductions in the rate of defection to rival brands can have disproportionate effects on profitability has done wonders to concentrate marketers’ minds, leading them down the now familiar road of customer loyalty, the quest for deeper, longer relationships with customers, an obsession with customer satisfaction, and so on.

Among those most admired for their work in this area is First Direct, the telephone bank which has revolutionised not only cost and distribution structures, but also banking’s image and the nature of its relationship with its clients. I am one of its many “advocate” customers. But that doesn’t stop me from wondering whether, as a marketing concept, it has an Achilles heel.

Consider two petty gripes from an otherwise satisfied customer. First, a classic: about once a month I get a mailshot from First Direct trying to cross-sell a loan to me. I don’t mind mailshots. I don’t even mind mistargeted mail-shots. But what really irritates me is records that get stuck, and First Direct marketers seem incapable of learning. After 20 or so attempts it still hasn’t dawned on them that I’m not interested in their loan offers (I am, at present, a saver, not a borrower). Now, every new piece of junk mail winds me up something rotten.

Second gripe: a few months ago I received one of those “get to know you better” customer questionnaires. I felt the questions it asked were cheeky, presumptuous and intrusive. I was genuinely offended.

Ah but, I can hear you say, that’s the beauty of First Direct. You simply get on the blower and tell them. I am sure I could. But the point is: I can’t be bothered. I simply don’t want that sort of relationship with the bank, and its attempts to draw me into one are not welcome.

Of course, I know what First Direct marketers are up to. They’re trying to merge sales and service into a seamless marketing operation that can deepen a simple banking relationship into a fully-fledged financial services cross-selling operation.

However, as a humble consumer I react against this assumption. Just because some friendly operative chats with me in the comfort of my own home does not mean we have a “relationship”. It means I have made a cynical calculation about the sort of service I want.

This little story is the product of endemic and damaging confusion about the connections between retention, satisfaction, loyalty and relationships. And it will continue as long as marketers fail to realise that relationship marketing requires a totally new form of brand differentiation on the basis of new types of consumer segmentation.

The first question to ask is how many consumers want a “relationship” in the first place? The answer is, if Brann/Henley Centre research on the subject is correct, is not many. It shows that most consumers do not perceive themselves to be in relationships with companies, and don’t want to be either. They reserve the words loyalty and relationship for friends, while their trust in companies and other institutions (which have their own agenda) continues to fall.

Brann’s Chris Gater points out that customer retention is not the same as loyalty: consumers may purchase again and again out of habit, convenience or because they perceive the product or service to be the best on offer. They can be totally satisfied but still switch at the drop of a hat.

Yet, as soon as marketers start using words like loyalty and relationship, they seem to imbue them with personal meanings that just do not apply. For example, most of us would instinctively place ourselves somewhere on the diagonal line in the chart above: a few close friends, and a wider circle of acquaintances. But consumers roam all over the chart to the top left hand corner, a one-to-one, interactive but distant relationship with a bank, to the bottom right hand corner, an emotional but often remote commitment to a wide range of role models (say, pop stars or actors), ideas, pressure groups and so on.

What this suggests is that segmenting consumers by the sort of relationship they want with the brand is vital. For example, if Chris Little (the marketer behind BarclayCall, Barclays’ response to First Direct) is right, by forcing customers to open new accounts, First Direct has boxed itself into an attitudinal corner, attracting “extreme remoters” like me. These are precisely the type of people who are resistant to the sort of relationships Simpson wants.

As marketers’ understanding of the sort of relationships consumers want with their brands grows, further research will throw up new types of brand differentiation, based on whether the consumer wants to be remote, involved, what sort of communications he or she wants, when, how often and so on.

Relationship branding would extend right the way back into the brand’s architecture, what it offers, and how. First Direct has started down that road. But it – and marketing generally – has a way to go yet.