How to Build Customer Loyalty in an Internet World

by Edward Prewitt of CIO magazine

"ONE of the best things you can do with CRM technology is find out who your valuable customers are." —FRED REICHHELD, BAIN & CO.

If you really want customers to keep coming back, then toss out those glossy brochures from vendors looking to sell you the latest in CRM software. Customer loyalty does not stem from clever stratagems to collect every conceivable piece of data from customers and then cross-sell them something they don't want, says Fred Reichheld, Boston-based Bain & Co. director emeritus and Bain fellow who has studied the topic.

In fact, the very concept of customer relationship management is misguided, Reichheld argues. Companies shouldn't try to manage loyal customers, he says; long-standing relationships arise from trust gained over many transactions, and they are sustained by customers' belief that the company wishes to keep them around rather than drive them away.

"CRM is manipulation in too many cases. Companies are acting on information of customers against their interests—calling them at home at night, charging them at the highest price point [that CRM software shows they will pay]," says Reichheld, author of two books on loyalty, including Loyalty Rules (Harvard Business School Press, 2001). "Loyalty means listening to your partner, creating mutual satisfaction."

Customer loyalty seems like a quaint notion in the Internet age, when customers can search out lower prices and defect to competitors with a mouse-click. Yet Reichheld's research has found that in the faceless online market, customers yearn for trustworthiness more than ever. Give it to them and they're yours forever, he says. That kind of loyalty is immensely valuable: Reichheld's analysis shows that a 5 percent increase in customer retention rates results in a 25 percent to 95 percent increase in profits. Clearly, customer loyalty is too central to companies' fortunes to be left to the marketing departments alone. And with technology so important in determining retention—or customer disaffection, if technology is improperly used—CIOs have a role to play. "If I were a CIO, I would really want to start to influence customer data," Reichheld says. This influence can take two forms, he says: a redeployment of CRM software and the creation of entirely new metrics for customer loyalty.

Shooing Away Butterflies
CRM is not altogether awful, in Reichheld's view. It's just that, too often, the standard CRM practices lead to vexation or worse from customers, not loyalty. Not many people enjoy being inundated with telephone calls and mailings from a vendor and its marketing affiliates. There is a good and virtuous use of CRM, however. "One of the best things you can do with CRM technology is find out who the valuable customers are—those who are staying, not just any customer willing to accept your offer to switch [from a competitor]," says Reichheld.

CRM data can do more than tell your marketing department what to pitch to customers. CRM software can also be used to determine which customers are worthy of a sales pitch. This may sound counterintuitive to capitalists, but loyalty is a two-way street. "Companies should try to invest only in relationships where there's the potential for long-term value," Reichheld says.

What he calls butterflies—customers who jump from one promotional offer to another—do not create that potential. Such customers often don't even provide short-term value, in fact. Think of credit card customers who flit from bank to bank following a succession of introductory rates.

Instead, companies should invest their resources in courting "barnacles"—customers who are likely to stick around for many years, as long as they're treated right.

Once companies know who their best customers are, the real work begins—convincing them to stay forevermore. Dell Computer, for instance, uses CRM data to determine which customers have the greatest hardware needs and then provides extra value to that select group, in the form of free Web portals. Although Dell garners a great deal of valuable customer information from its sales transactions, which are largely conducted via the Web, the company abjures common practices such as selling customer lists to outside vendors. Instead, Dell has set up Premier Pages for thousands of its best customers. These customized, secure websites allow customers to check on order status, arrange delivery dates and troubleshoot problems through Dell's help desk. Many Dell customers, which tend to be large companies, use their Premier Pages to keep track of systemwide computer purchases for better asset management. "The Internet offers most businesses a rich set of possibilities for improving the customer lifetime experience, but few firms have matched Dell's initiative," Reichheld says in Loyalty Rules.

Gauging Customer Loyalty
IS groups are typically content to fulfill the data-gathering requests of other departments rather than create their own surveys. But if existing measures of customer loyalty are inadequate, perhaps it's time for CIOs to step up to the plate. Companies typically gauge how well they're serving customers by getting them to fill out satisfaction surveys. There's a far more effective way to measure satisfaction, Reichheld says: Rather than limit yourself to the fraction of customers willing to tell you what they think, track the percentage of customers who come back. Retention rates capture the real financial ramifications of whether or not a company is delivering high value to its customers.

Although less than 20 percent of companies track customer retention, a few use it to great effect, estimates Reichheld. USAA, a San Antonio-based insurance company, for example, has made customer retention the top metric for executive performance. USAA's budget submittals must address how they will maintain or improve customer retention. Not surprisingly, the company has one of the highest retention rates of any insurer in the world.

A second loyalty metric that CIOs should consider instituting for their companies is Reichheld's own Loyalty Acid Test, found at www.loyaltyeffect.com/loyaltyrules/index.html, which asks customers whether a company is worthy of their loyalty. The 25 survey questions capture how loyal customers are to a particular company and why. Reichheld benchmarked the acid test with several companies that his research has identified as "loyalty leaders," including Enterprise Rent-A-Car, Harley-Davidson, Intuit, L.L.Bean, Northwestern Mutual, USAA, The Vanguard Group and SAS Institute. Overall, 70 percent of their customers said these eight companies deserved their loyalty—compared with less than 50 percent of the customers of a representative sample of all U.S. companies.

While keeping customers happy makes sense on an intuitive level, Reichheld is at pains to stress that it is good business sense. "The question is, Is a company getting profits from employees and customers or at their expense?" he asks. If the answer is the latter, then CIOs do their company a painful but important service in revealing the extent of customer dissatisfaction.

會員制度的成敗關鍵

前文提到，任何「客戶忠誠計劃」都必須始於設立「會員制度」（Membership System）。事實上，目前不少零售業都有設立會員制度，不過就未必很有成效，花了大量金錢、時間和心血，會員還是很少重訪，生意額沒有顯著增加，甚至客人仍然蟬過別枝，一點兒「忠誠」的意識也培養不出來。於是，一些「受害者」就宣稱，會員制度根本沒用，還不如減價促銷來得便捷。

要令一個「客戶忠誠計劃」成功，確實不是設立一個會員制度這麼簡單，而是要有一套整全的「配套」措施和工具，才會見效。這一篇，我就是要跟大家分享這個主題。

折扣咭無助增加客人重訪率
國際知名的「蓋洛普市場諮詢公司」（Gallup Organization），做了一個有關「客戶忠誠計劃」的研究，報告裡有這樣的發現：折扣咭對吸引會員重訪並無功效。蓋洛普的發現似乎有點兒違反常識，我們都傾向相信，客戶都是貪小便宜的，所以，只要商戶願意給予折扣，客戶都必定會積極回應。

要揚開這個謎底，我們可以從自己的經驗出發：首先請自我檢視，你擁有多少張零售業的會員折扣咭？不少吧！你是否經常使用這些折扣咭購物？換句話說，你會否為了一個常存的折扣優惠而增加光顧這些店舖？

客人不信任折扣咭
蓋洛普說，一般的消費者都不會！原因是他們根本不相信這些常存的折扣是真正的優惠。在他們的腦海中，太容易獲得的折扣其實是零售商的詭計：他們認為，零售商先將價格調高，然後再用折扣的方式調下來，以製造優惠的假象。

另外，一張全年通用的折扣咭產生不到重訪的催迫力。會員知道，一年裡的任何時候，來到這家店舖消費，都會得到同等的待遇，他們就會傾向延遲消費。相反地，一家沒有設立會員折扣制度的店舖，突然來一次季度或周年大減價，客人就會在限定的時間之內趕往「執平貨」，因為他們知道，這種機會不是常有，不常有的優惠才顯珍貴。

「價值感覺」是命脈所在
折扣咭還有一個先天不足之處，就是將所有客戶獲得的優惠齊同化：陳小姐、李太太和張女士出示會員折扣咭，一律都是獲得九折。即使這間零售店舖的會員制度較為「先進」，分白金、金和普通三級制，但基本的優惠邏輯還是一樣：同一級別的會員獲得的折扣都是一樣的。這種一體化的優惠政策很難在客戶的心目中產生「價值感覺」。

事實上，「價值感覺」是所有「客戶忠誠計劃」的命脈所在，是客人會否積極地參與的主要因素。若客人認為你所給予的優惠不夠吸引，又或他們質疑你給予的優惠是名過其實，就會打擊他們的參與意欲，整個「客戶忠誠計劃」就會淪為裝飾品，這正是目前不少會員制度問題的濫觴。

積分制度獲大企垂青
折扣咭對吸引會員重訪是無效的！這是蓋洛普的研究結果，那麼，什麼才有效呢？蓋洛普說，是「積分制度」（Bonus Point System）！

事實上，積分制度是全球大勢所趨。無論是信用咭、航空公司的飛行里數或是八達通付款系統，都是採用積分作為「客戶忠誠計劃」的計算和獎賞制度，說明了積分確實有效，才得到這些超級企業的垂青。

客人增加消費的「誘因」
我們可以說，積分制度跟折扣制度在本質上剛好相反，以致它給予客人一個很高的「價值感覺」。首先，積分制度奉行的是經濟學最基本的道理，即「誘因」（incentive）是人類行為的動力。如何才能使客人增加消費？就是當他們愈多消費可獲得愈多的「獎賞」（Reward）或「優待」（Privilege）的時候。換言之，每一名客人得到的優惠都不同，端視乎他們在店舖內的消費水平和頻率。這種「多消費多著數」跟資本主義的「多勞多得」背後的理念是同出一脈的。

積分制度創造「追分」效果
另外，一般來說，積分制度都會設定積分的有效期（Expiry Date），這驅使客人在指定的時限內累積足數的積分以換取心儀的優惠，這種格局形成了「追分」的效果，也就達到增加重訪消費的目標。

正如文首所言，一個成功的「客戶忠誠計劃」，必須有一套整全的「配套」措施和工具，我會於下一篇跟大家繼續分享這一個課題，並介紹市面目前有那幾種的主流積分計劃。

作者簡介：徐少驊｜Jeff 畢業於澳洲悉尼科技大學。先達智能有限公司創辦人及行政總裁，多年從事VIP、會員、客戶管理方案及諮詢服務，經常主講有關全球「客戶關係管理」（Customer Relationship Management, CRM）趨勢，為多間報刊撰寫企管文章。jeff@chinetekintel.com

原文刊於《盛世》月刊2006年8月號