SBHD: When customer loyalty is taken to the limit home shopping is the result, where consumers get what they want, when they want it – and often before they even realise they want it.
UntiI came across David Limbrick, head of marketing at BEM Market Research Consultants, it looked as if the only UK companies not interested in customer loyalty were funeral parlours. But even undertakers are getting in on the act. It turns out that BEM has been approached by a number of funeral directors all “dying” to know how to keep their customers happy.
It appears no-one is safe from customer loyalty schemes – even in the grave. But just how much is the British customer likely to put up with? It is all very well promising the customer more relevant products and services, but to find out what they want, consumers have to be stripped naked and every lifestyle change and purchase recorded and analysed.
Customer ownership is the raison d’etre. Unless every interaction between the customer and the brand enhances the brand, the programme is no more than a promotion. Indeed, there has been a lot of criticism of so-called loyalty schemes which are really no more than a linked series of sales promotions. And, argue the detractors, these promotions may actually increase disloyalty.
But if existing programmes are bad for our health, what will turn us into loyal and loving customers? The short answer is home shopping. According to those who know, consumers will be wooed and won over by being encouraged to stay at home with every need satisfied by the flick of a switch. Marcus Evans, managing director of the Ogilvy Loyalty Centre, says: “Home shopping is the leading edge of customer loyalty and that is where the future lies. Why should the consumer ever have to leave home to get anything? And the more information you have the more you will know what to sell to an individual and when.
“I can envisage a time when commerce and retail will become home shopping sectors. And the Internet will let you do this.”
Chris Jacobs, managing director of loyalty scheme specialist Project Assyst, agrees that home shopping is the way ahead and says it is possible that the high street shop could disappear altogether. “With new virtual reality systems, people will almost believe they can touch the products at home.”
The driving principle behind this will be the ability to target individuals in their homes and, based on personal information that suppliers are increasingly able to glean and hold on consumers, offer them exactly what they want, when they want it – or better still, before they want it.
“The real benefit of loyalty schemes is knowing enough about your customers to pre-empt their needs and offer it to them before they think about it,” Jacobs says. “The future is not going to be about getting the best deal, but about supplying consumers’ needs, which is not necessarily based on price. The people who will win this game are those who know their customers sufficiently well to know what their customers want before they do.”
Evans calls this progress of customer loyalty “customer delight”. He says: “Loyalty is delivering what the customer expects – you are only doing as much as you should. Customer delight exceeds the customer’s expectations. And then you move to customer ecstasy, where delivery exceeds their wildest dreams,” he says.
On a more serious note, Evans believes customer satisfaction is never going to be enough. “The markets are over-served and growth is negligible in the UK. That is why customers are indiscriminate in their shopping,” he says.
But this desire to move on, according to BEM’s Limbrick, will begin to fade. “It’s a bit like a divorce. People who have had one divorce are more likely to divorce a second time, but there comes a point where they get fed up with moving on and want to stick with what they have.
“It’s the same with consumers. Eventually they will tire of moving about and reach a stage where they hit on the right relationship. They will then cut their losses and stick with that relationship.
“Also, if they have had many relationships in the past, they will realise that they are much of a muchness and there is no point in going through the whole enrolment and `getting to know you’ phase.”
Ultimately, Evans says, the customer wants an easier life and price is only part of that. “There are other, emotional reasons why people buy a product or service. If people’s choices were only based on price, no-one would ever buy a Jaguar,” he says. “Companies will have to segment their customer files and resource those areas which are most profitable.”
And this is where the future of customer loyalty begins to take on an ominous tone. If the aim is to lure and keep only those customers who are valuable to you, then it follows that there will be groups of people whom you don’t want as customers.
Banks have been known to make life difficult for customers that they think are not worth the time and trouble. It is likely that a form of supplier promiscuity could emerge. Limbrick captures the essence of this when he says companies are now thinking along the lines of “don’t ask what you can do for your customer, but what your customer can do for you”.
Says Limbrick: “Sadly, I can see a situation developing where companies will be so sophisticated in their segmentation that they will know exactly who they don’t want to recruit. Imagine each person or segment having an independent heartbeat or transactional relationship profile. When that drops below 60 beats a minute, it triggers a response from the company who will phone you to find out if there is a problem. It’s like going below the lowest control limit. If you are always below that limit, it won’t be worth having a relationship with you.”
This means that the same groups of people will probably never be on any loyalty programme hit list and, if this is the way of the future, be doubly penalised for not being quite the right socio-economic profile.
It is probably easier to view life as Marcus Evans does. “It’s all about cuddles and carrots – knowing what the customer feels and what the customer eats. Loyalty programmes should be about throwing your arms around the consumer and saying, `we want you.'”
`It’s all about cuddles and carrots… loyalty programmes should be about throwing your arms around the consumer and saying “we want you”.’