Retailers fail to reward long-time customers at their own risk
Mike Giambattista, Editor in Chief
Through a special arrangement, presented here for discussion is a summary of a current article from The Wise Marketer, a website and newsletter serving the global loyalty industry.
With apologies for the broad-brush stroke being applied, tenured professors can see themselves as somewhat untouchable and can have a reputation for smugness and entitlement. That’s the downside of tenure.
The upside of tenure should, in theory, provide a context for a rewarded and mutually beneficial relationship between the tenure dispenser and the recipient. The nature of “rewarding” such long-term behavior may change (it needs to) in order to accommodate changing levels of maturity and expectations. But it’s hard to imagine both sides aren’t seeing some benefits. “Tenure” gets rewarded.
Shouldn’t that be the case in loyalty marketing? With a goal of maximizing the lifetime value of a healthy relationship, shouldn’t longevity be factored into the algorithm?
A recent phone call with my mobile carrier of 12 years tested this theory.
Twelve years is a lifetime in my book. We have come to know each other — our quirks and ticks, preferences and distastes. Certain expectations on both sides, as far as I could tell, were regularly being met — until I asked how I could reduce my bill.
In response to my question, I was told by a very friendly CSR that they valued my relationship but there was no way to make any real reductions and my best bet would be to stay on my plan. “Sorry, not much I can do.”
Doing the napkin math over my 12 years of monthly payments, they had effectively waived close to $30,000 in lifetime value in one call because they were not equipped to maintain and enhance a mature relationship — one showing every sign of long-term profitability.
The organization seems to have gotten stuck at acquisition and never developed segmentation that was rich enough to identify and reward someone like me.
Let’s face it, in the family hierarchy, acquisition always gets the bigger party. Nurturing newly acquired relationships into maturity can be a boring, tedious and relatively thankless process. But done well, it can provide the means — the platform — for growing spend, profits and genuine loyalty.
Postscript: I’m in a new (wireless) relationship now. We’re still in the honeymoon phase, but they seem to get me.
DISCUSSION QUESTIONS: Why do retailers seem to underplay rewards structures that support longer-term loyalty? What advice would you have for retailers and brands looking to retain “tenured” shoppers?