Saturday, January 31, 2015

Brand Love

I was at a Marriott in Minnesota recently.  It was cold and snowing that week.  One morning I get up and look out of my window to see the road and the lawn completely blanketed by snow.  I got ready and came down to go to the client office.  I had equipped myself with a muffler around my neck, ear muffs, winter gloves and a coat.  I was ready to brush the snow off my car and scrape the ice off the windshield. 

I walk out and am greeted by a car that had no snow or ice on it.  I glance around to see that someone had cleared the snow and ice off all the cars in the parking lot.  I was, to say the least, pleased with the pleasant surprise Marriott offered.  They made my life easier and they made me look cool.  While all my colleagues (staying at another hotel chain) were sweating in the Minnesota cold scraping ice off their windshield, I simply got in my car and drove off.  It not only saved my time but also saved me from the trouble of clearing show and ice in sub-zero climate.  You can bet I am going back to that Marriott.

This got me thinking about customer loyalty and brand loyalty. 

What is Customer Loyalty?

Customer loyalty is where a customer is loyal to a particular company/service/product.  Customer loyalty can be garnered by offering rewards, discounts and other perks. 

A simple act like clearing snow off cars, which is not part of their SLA or contract goes a long way in making the customer happy and finally loyal.  What Marriott did was make me cool and kick ass.  This reminded me of one of Kathy Sierra's posts on this subject (Image courtesy: Kathy Sierra).  

Brand loyalty, however has to be earned in a whole different way.  Brand loyalty is earned by offering exceptional products and services.  

Companies like Apple command brand loyalty mainly by producing excellent products that consumers want.  The products are of such high quality that they command a cult-like following of brand loyalists.  Apple has also creates an ecosystem (iTunes) that ties the customer into their products for a seamless experience (and forced brand loyalty).

Other companies indirectly force brand loyalty.  Take for example Canon or Nikon in the imaging market.  Once a consumer invests significant amount of money on the foundation product (say, the camera body) and a few accessories (say, lenses, flash, etc.), it is hard to switch to another brand due to the fact that they are different standards (say, lens coupling).  Switching would mean an entirely new investment to get back to where you were.  Not that these companies produce inferior products.  Both produce products on par with each other which makes it even more difficult to keep customers from wavering.  Hence, proprietary standards like lens coupling ensure brand loyalty. 

Customer loyalty is directly related to cost, discounts and rewards.  Once the rewards and discounts vanish, the customer will easily wander.  But, brand loyalty is not related to any of the factors mentioned above.  Irrespective of the cost or rewards, customers will always be loyal to the brand.  This kind of loyalty can only be commanded by producing exceptional products.

Everyone takes great service for granted.  Great service is not going to garner loyalty.  But the opposite is absolutely true.  Bad service will absolutely drive away customers.  Businesses should concentrate more on dispute resolution than on exceptional customer service.  It is human to make mistakes.  But, what sets apart great businesses is how they resolve disputes.

Businesses should concentrate on both customer loyalty as well as brand loyalty.  They both require different strategies and resources, but go a long way in customer retention.

Remember, the cost of customer acquisition is always higher than the cost of retention.