This phenomenal post by Charles H Green provides a sobering insight into the issue of customer loyalty. This is something that constantly exercises the kinds of professionals who are worried they’re clients will jump ship to the guy down the road who is offering a cheaper service. Charles opines:
A Rumanian expat in the 70s explained to me the difference between the Russian KGB and the Rumanian Secret Police: “The Rumanians think they can corrupt you with sex, blackmail and money. The Russians are more experienced; they just cut to the chase and lead with money—it trumps the others.â€
That’s true for anything that can be commoditized. It is conversely true of anything that’s valuable as Charles’ illustration implies.
Of greater importance though is the connection he makes between customer and employee loyalty. Quoting from Fred Reichheld who is arguably one of the best thinkers on customer relationship management:
We found we could not progress beyond a superficial treatment of customer loyalty without delving into employee loyalty. We found there was a cause and effect relationship between the two; that it was impossible to maintain a loyal customer base without a base of loyal employees; and that the best employees prefer to work for companies that deliver the kind of superior value that builds customer loyalty.
We then found that our concern with employee loyalty entangled us in the thorny issue of investor loyalty, because it is very hard to earn the loyalty of employees if the owners of the business are short-sighted and unreliable.
Finally, predictably, we found that investor loyalty was heavily dependent on customer and employee loyalty, and we understood that we were dealing not with tactical issues but with a strategic system.
What’s interesting to me is that at LeWeb 3, JP Rangaswami noted that current estimates suggest the average person will have 7 jobs in their lifetime but the trend is moving to having 7 job simultaneously for some categories of worker. If this is true then following Fred’s logic, you might expect the dynamics of customer loyalty to change.
I’ve not seen a lot of evidence that client churn is any worse than it has been in the past. I am seeing new entrants treating the process of qualification as a stepping stone to something else. The net effect is that the average age of practitioners is getting older. With that comes the natural difficulty in recognizing the need for change. After all, if you’re coasting towards retirement then why do you care?
That depends on how you see the future. In this context it’s worth looking at AVN’s predictions plus the comments that go with it to get a sense of what could be happening.
Where does the ‘tart’ reference come in? Check what Charles has to say about credit cards. And we all know about the freebies there – don’t we? As an aside, never be kidded by zero rates. Remember that traders pay the credit company providers too. That means what you don’t pay, they do, which gets passed on through higher prices.
