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Loyalty is changing…

It seems to me there used to be three distinct levels of customer loyalty

It seems to me there used to be three distinct levels of customer loyalty.

Level One consisted of those customers only interested in transactions. They went for the cheapest, operating almost as if they were seeking bids for their business. The only loyalty they displayed was to price. Unfortunately, for many businesses — and the professionals who work for them — we tend to overestimate the percentage of customers and prospects at Level One. It makes sense for ALL customers to inquire about pricing…yet we often mistake a reasonable question for a price objection.

Level Three held those customers who, to use Ken Blanchard’s terrific term, are “Raving Fans.” They aren’t merely clients, they are advocates of your products and services. They are passionate about the relationship they have with you — and you may count them among your best friends in your personal life, as well as terrific customers. No business or professional can have too many listed at Level Three.

Between these are those at Level Two, who are — to be quite imprecise — “kind of” loyal. In other words, they have a high degree of connectivity to you…however, they also have a similar level of loyalty with some of your competitors. They have a smaller cadre of suppliers where they place their business, yet they are not the exclusive type of advocates found at Level Three. Obviously, it’s always been vital to have many at Level Two as well, because they can deliver a significant degree of high quality business to you and your organization.

The problem — in today’s economy, as well as our contemporary culture — is that Level Two is evaporating.

We’re seeing customers either becoming more focused on the relationship with a trusted advisor…finding it more advantageous to tap into the expertise, quality, and Ultimate Customer Experiences (TM) delivered by a valued professional — OR — seeking the quickest, cheapest transaction possible.

What contributes to lack of loyalty? We only have to look at television — and the declining loyalty to both networks and to individual programs — to see the pattern. In a terrific column by Dave Morgan, CEO of Simulmedia, on OnlineSpin, he outlines the three major contributors.

1) So many good choices. There are lots of great TV programs…and you have lots of worthy competitors. This sheer explosion of options means customers can be like “kids in a candy store.”

2) Poor information and navigation. For broadcasting, it means, “There are no tools available today that can easily inform viewers in a timely way about all of the available programming that they might enjoy.” For your business and career, it might mean that customers and prospects are under-informed…or misinformed…and, therefore, cannot make decisions that would break your way.

3) Changing loyalties. Morgan suggests for TV it means that viewers are now loyal to “their TVs, to the days and times when they turn them on, and to favorite genres of programming. Most are no longer loyal to specific programs or networks.” Today’s technology also means that if you can’t be home watching “Family Guy” on Sunday night…it’s no problem. Where a few years ago it meant you would miss the program altogether, now you just record it and watch it at home when you desire — or go to Hulu.com and see it on your laptop.

Have you thoroughly examined how the shifts in technology and buyer behavior is changing not just the loyalty of customers…but, more importantly, HOW and WHAT they are loyal to?

It’s simply common sense if we’re seeing erosion at Level Two — and we don’t want to compete on merely price — we have to learn and execute the strategies that will enhance engagement and multiply the number of customers we have at Level Three.

The most important aspect, it seems to me, is we must focus more than ever before on being distinctive — and creating “Ultimate Customer Experiences.” (TM)

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More Stories By Scott McKain

Scott McKain is a business leader, bestselling author, and Hall of Fame professional speaker.
Scott's latest book, "The Collapse of Distinction: Stand Out and Move Up While Your Competition Fails" reached the #1 spot on Amazon.com list of Customer Service Bestsellers! He is the author of two #1 additional business bestsellers (Amazon.com & 800-CEO-READ): "What Customers REALLY Want" (currently available in trade paperback) and "ALL Business is Show Business."
He is the Co-founder and Principal of The Value Added Institute, a think-tank that examines the role of the customer experience in creating significant advances in the level of client loyalty, and has appeared on multiple occasions as a commentator and analyst on FOX News Channel. His platform presentations have run the gamut from the White House lawn with the President in the audience carried live on CNN and NBC's "Today" show...to a remote outpost near the Amazon...all 50 states, seven Canadian provinces...and from Singapore to Sweden...Mexico to Morocco.
An inductee into the Professional Speakers Hall of Fame, he is also a member of "Speakers Roundtable" -- an elite, invitation-only group of twenty of the world's top business speakers.