In pursuit of satisfaction

The reluctance of UK brand owners to listen to their customers or adopt a proactive approach to dealing with complaints is having a detrimental effect on consumer loyalty. Daney Parker reports

It should be at the heart of any business – giving customers what they want. Yet when customers complain, too often marketers fail to listen and learn. Not only do brands not hear what customers are saying, they sometimes seem to put obstacles in the way of giving feedback. But does it really matter? It could be argued that consumers can be wrong, as Henry Ford is supposed to have said: “If I had asked my customers what they wanted, they would have said a faster horse.”

Many businesses are not focused on getting feedback because their priorities lie elsewhere. Richard Hill, planning director at advertising agency Touch DDB, says: “The growth of the business through volume of new customers and cross-selling to existing customers is often the key focus. This means that at their core, businesses are not motivated to deal with customer retention.

Loss-leading offers
A typical example would be the battle for telecoms and broadband. Acquisition-driven businesses, which largely put a disproportionate amount of effort into bringing new customers in with loss-leading offers, cannot then afford to offer adequate fulfilment and support to customers once they arrive.”

As it is so much harder to get a new customer than to keep an existing one, if talking to consumers increases loyalty, it must be worthwhile. The list of top brands in the Marketing Week and BrandIndex Best Brand Performers 2008, which was published in May, suggests that good customer contact increases consumer loyalty, with Amazon and Google – relatively new brands that strive to find better ways to meet customer needs – taking the top slots. Mike Welsh, ceo of direct marketing agency Craik Jones Watson Mitchell Voelkel, believes that inviting feedback is crucial in order to do this, as brands that are serious about feedback are those that deliberately make it easy to give it.

Continuing dialogues
Giving the example of Tesco (ranked as 21st top brand in Best Brand Performers) as a company that succeeds in continuing dialogues, Welsh says: “Whenever Tesco gets a written complaint from a Clubcard holder, it would always thank them for taking the time to write in by given them a slug of Clubcard points.”

This contrasts with other brands such as Ryanair (seventh worst brand in Best Brand Performers) “Ryanair focuses on keeping costs as low as possible, and a big, expensive customer services operation doesn’t fit in with chief executive Michael O’Leary’s view of the world. His attitude is if you don’t like it, then don’t fly with us,” says Welsh.

Although today’s online tools make it easier than ever to receive feedback, many shopping sites make it difficult for the customer who wants to complain. As well as making it simpler for customers to give feedback, online surveys are worth considering too. Mark Patron, ceo at online behavioural marketing and analytics company redEye, says: “Online surveys (not intrusive pop-ups) are an obvious rich source of customer feedback. Also, using a good quality web analytics tool means you can track all customer behaviour and then act on it.”

Shopping basket
Patron points out how this can help at a crucial point of a customer’s visit to a site. “If someone abandons a shopping basket, for example, at the point when shipping charges are added to their order, a follow-up e-mail can be sent offering free delivery. This may seem like a no-brainer, but research we did recently showed that few e-commerce sites actually do this.”

Telemarketing offers plenty of opportunity to listen to customers, but this is often being wasted, according to Graham Ellor, planning director at direct marketing agency TDA. He says: “It’s long been recognised that call centres could provide valuable listening posts for organisations. In an ideal world, customer feedback would be used to inform structured responses as well as shape tailored strategies at a broader level. This is what true direct marketing is all about.”

A key time to make a customer feel listened to, whether on the phone, directly or in writing, is when dealing with a complaint. After all, a dissatisfied customer who is handled well could become more loyal than before. However, according to a recent online survey by reward specialists Michael C Fina, of the 630 consumers polled, 83% are dissatisfied with companies’ efforts to apologise. Shiela Sheldon, director of European operations at Michael C Fina, says this is a problem that is particularly British. “Our contacts around the world say that it is noticeable that British companies tend not to be proactive in compensating customers for service discrepancies. In the US, on the other hand, staff at all levels are usually very quick to offer customers a token of apology without being prompted.”

Saying sorry might be one way of building loyalty, but ideally the way apologies and compensation are offered should be part of a well thought-out loyalty programme. However, it seems that engendering loyalty is always going to be a struggle for small companies. A study of the patterns of brand choices by London South Bank University suggests that consumers make purchases in consistent ways that transcend brands, countries and products.

For example, although the main difference between big brands and small brands is the size of their customer bases, loyalty varies little between them, except it is consistently slightly higher for big brands. This pattern means that a small brand suffers twice – it has fewer customers who are slightly less loyal.

Larger brands
Small brands might have to work harder to keep customers, but John Scriven, director at Ehrenberg Centre for Research in Marketing at London South Bank University, believes that many of the larger brands are taking the wrong approach to loyalty.

Using the example of grocery brands, he says: “The way marketers talk implies that they are trying to get all the consumers of their brand to have it as their favoured choice, and that they consider that a realistic target.” But brands have many more occasional buyers than frequent ones. The frequent ones account for a larger proportion of the sales with 20% of buyers accounting for about 50% of sales for most brands. But the other 50% comes from the 80% who are lighter buyers.

As Scriven says: “You can’t convert all these people to being heavy buyers, you have to live with the task of bringing them back to the brand infrequently, as well as keeping your heavy buyers engaged.”

It is obviously vital to keep existing customers loyal, but this must not be at the detriment of other marketing initiatives.

Scriven believes that the touchstones of marketing activity should always be “physical and mental availability”. Physical availability means simply being there, and being noticeable, while the definition of mental availability is being thought of by your target audience as a product they might use.

Any colour
Once a brand is on customers’ radar, the right loyalty initiatives help to keep them coming back. Listening to customers can never do any harm. Just because Henry Ford did not always believe in pandering to his customers, it is wrong to always assume that a brand owner knows best. After all, Ford was also famous for saying: “Any customer can have a car painted any colour that he wants so long as it is black.”

But as any car park proves, customers like choice, and are prepared to pay for it. vResearching reasons for loyalty Loyalty is as much about what your customers do, as how they feel. The best bet is therefore to use a measure which encompasses both behaviour and attitudes. In our experience, this will be a better predictor of whether or not a customer will defect than single measures such as trust.

The two questions to ask first are what is it about my brand in terms of its image and reputation that sets it apart from the competition? And what factors help it to resonate with my existing and potential customers? Many feel that the emotional dimension is paramount in creating a strong brand and some brands – such as Apple, Google, BMW and The Economist – achieve an iconic status in customers’ minds. These brands not only fulfil a functional need, but reaffirm an individual’s sense of their own values and identity. However, the emotional pendulum can also swing the other way. Just think of Marks & Spencer a couple of years ago, BSB (the failed competitor to Sky TV) and Virgin Cola.

The common theme is that they all experienced an emotional (and in some cases rational) disconnection from their target audience. BSB was second into the market and offered nothing distinctive, Virgin Cola briefly benefited from the halo effect of the mother brand but soon became lost, and M&S committed the greatest of all sins – it was perceived to be taking its customers for granted.By Milorad Ajder, head of reputation, and Alex Bollen, loyalty research director at Ipsos MoriCustomer satisfaction, complaints and loyalty: the evidence According to the latest Annual Service in Britain Survey, there are fewer consumers complaining for the third successive year. The 2008 report shows a fall in the number of consumers complaining at all for the third successive year, down to 70% from 86% in 2005. The only industries to see the number of complaints rise this year were airlines and holiday companies.

The total volume of complaints has fallen more dramatically, but this statistic tells only part of the story. Evidence suggests that customers no longer think formal complaints are worth it and have discovered more effective ways of registering disquiet. Half agree that customer service standards in general in Britain are declining. As a result, half also think they need to complain more about service.

Half the population say they would rather take their business elsewhere than complain, and a similar proportion say they wanted to complain but didn’t because it involved too much effort.

These findings suggest the first sound of discontent a company hears is customer footsteps as they walk away.

Social networking sites and other online feedback growth reflect the way complaining has moved from lonely frustration to a sharing phenomenon in recent years. This healthy democratisation of feedback is bound to worry failing organisations.

The survey also tracks the biggest frustrations with customer service. This year, poor treatment while on the telephone was the highest ranked issue. Being left endlessly on hold remains the top gripe, followed by being passed around and around voice-activated systems and coping with incompetent telephone staff. As a result, Service in Britain tells us that while a large number of companies successfully migrate customer servicing online, they under-invest in telephone resourcing.

Methodology: The annual Service in Britain survey, now in its fourth year, tracks service and value satisfaction, complaint incidence and loyalty for most UK sectors. The survey polls 1,000 UK adults online, with the National Consumer Council providing annual input and support. It is conducted by Andrew Smith Research (Andrew also chairs the Independent Consultants Group), with fieldwork from online panel company Research Now.

LOYALTY CASE STUDIES Stephen Dunk,commercial director, Travelzoo (Europe) With 12 million subscribers in 12 markets from China to the UK, Travelzoo has one of the largest and fastest growing audiences in the world. In the UK, Travelzoo has 1 million subscribers who click an average of 320,000 times every week on offers from 900 travel companies.

To attract and maintain relationships, we promise subscribers that we will never recommend a product or service that we would not buy ourselves. Even if the largest travel company in the world offered us 1m to promote a crummy offer, we would not do it because we know we will rapidly lose our audience. Further, we never share or sell the information about subscribers and we will never send them e-mails that subscribers have not asked for. We also promise to test offers before we recommend them, we check if the price we publish is real, if the offer is available and if the booking engine works. By delivering our promises and sticking to the facts, we have created a huge amount of goodwill.

Rob McDonald, director of customer loyalty for the UK, Europe, Middle East, Africa, Hilton We believe our customer loyalty programme (Hilton HHonors) should be customer driven, flexible and rewarding. In previous years, members told us that they were frustrated by reward schemes that had blackout dates, which prevented them from redeeming points for free nights. As a result, we launched a new no blackout dates policy early this year. This means that any time a standard room is available, members can redeem their points for it. This policy has been incredibly well received, contributing to nearly a 25% rise in point redemptions over the last year.

A guest reward programme needs to be consistent, simple and provide maximum benefits. Since the programme was launched in 1987, it has enrolled more than 25 million members.

v Stephen Dunk and Mike Ashton, senior vice-president of marketing at Hilton, will be speaking at the Customer Retention Summit, September 9 and 10, www.crmconference.co.uk

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