• Home
  • About Us
  • Contact Us
  • Privacy Policy
  • Special Offers
Business Intelligence Info
  • Business Intelligence
    • BI News and Info
    • Big Data
    • Mobile and Cloud
    • Self-Service BI
  • CRM
    • CRM News and Info
    • InfusionSoft
    • Microsoft Dynamics CRM
    • NetSuite
    • OnContact
    • Salesforce
    • Workbooks
  • Data Mining
    • Pentaho
    • Sisense
    • Tableau
    • TIBCO Spotfire
  • Data Warehousing
    • DWH News and Info
    • IBM DB2
    • Microsoft SQL Server
    • Oracle
    • Teradata
  • Predictive Analytics
    • FICO
    • KNIME
    • Mathematica
    • Matlab
    • Minitab
    • RapidMiner
    • Revolution
    • SAP
    • SAS/SPSS
  • Humor

Fake Loyalty

April 13, 2016   CRM News and Info

There’s an interesting connection between customer relationships in subscription businesses and loyalty, according to a recent article by Zuora CEO Tien Tzuo. It had particular resonance for me, since I just wrote a (soon-to-be-available) book about customer loyalty myself.

My research is full of old-style approaches to customer loyalty that aren’t really about loyalty so much as they are about, shall we say, customer coercion. You can coerce customers into being loyal — what I consider performing loyal behaviors — but they don’t exhibit true loyalty.

Customer loyalty should be about inspiring customers to defend your brands, to preferentially seek out your products, and to buy them even when they aren’t discounted, don’t have a coupon attached, and don’t come with so-called loyalty points.

Customers who behave loyally because of such inducements are attracted easily by the next enticing offer, so their loyalty is often more closely associated with the discount or reward than with the brand, I found through my research.

Musically Inclined

A great example that I had overlooked is called the “negative option,” an arrangement that keeps you exhibiting loyal behavior as long as you fail to cancel a service or promotion, according to Tzuo. The negative option is something of a relic, but you can still see it operating in the market today. Columbia House, the now bankrupt vendor of music, and AOL are examples.

If you are too young to remember Columbia House, then good for you. The basic offer was some large number records, tapes or CDs for a penny as long as you agreed to be a member and receive a monthly shipment until you’d bought an equal number of recordings at full price. At that point, you could cancel the service, but human inertia often prevented or delayed that event. As a result, people appeared to be loyal but weren’t. They were trapped.

Even today, AOL has 2.1 million subscribers to its $ 20-per-month dial-up service. Those customers certainly aren’t paying for the convenience of dial-up, Tzuo noted.

He’s right: Having a dial-up account today is likely more habit for most people, though it’s also possible a few still don’t have cable where they live.

A Ticking Bomb

The negative option lives on in the subscription industry in the form of automatic renewals from month to month as long as a credit card stays active. In these circumstances, customers who appear loyal to the negative option might not be using or otherwise engaging with the vendor, despite what appears to be loyal behavior.

Businesses in this situation have a ticking bomb on their balance sheets, for while the revenue is good, it can disappear at any time, and at some point, the negative option practice will generate a good deal of bad will toward the brand.

Companies such as Totango, Gainsight and even Zuora use their analytics and large customer datasets to understand customer behavior and to spot true loyalty as well as the warning signs of its opposite.

Intimacy, Not Inertia

Vendors are becoming more aware of the problem of the negative option and, more generally, customer behaviors that appear loyal but that might represent inertia or laziness so that they can head off unpleasant surprises like a spontaneous social media campaign that damages a brand.

The rise of the subscription economy and its culture has placed a bright spotlight on issues of customer retention, engagement and loyalty. The days when you could sell a product set for a lot of money and move on to the next prospect are ending and being replaced by various forms of subscription and the requirement for greater customer intimacy.

The negative option is from another time and ought to seem out of place today as we focus on retention, subscriptions and customer intimacy, regardless of the markets we serve.

What was most interesting to me from researching my book (available next month) was that customers aren’t necessarily interested in amazing experiences that cause delight. Delight is another fad that’s come and gone, or should at least be on the way out.

Very often customers want and expect simple, basic competency and effectiveness so they can get on with everything else they have to do. This in itself is great insight because it shows that inspiring customer loyalty is within anyone’s grasp if we simply avoid creating a circus and focus on what matters most to customers. end enn Fake Loyalty


Denis%20Pombriant Fake LoyaltyDenis Pombriant is a well-known CRM industry researcher, writer and speaker. His new book, Solve for the Customer, is now available on Amazon. He can be reached at denis.pombriant@beagleresearch.com. You can also connect with him on Google+.

Let’s block ads! (Why?)

CRM Buyer

Fake, loyalty
  • Recent Posts

    • NOW, THIS IS WHAT I CALL AVANTE-GARDE!
    • Why the open banking movement is gaining momentum (VB Live)
    • OUR MAGNIFICENT UNIVERSE
    • What to Avoid When Creating an Intranet
    • Is Your Business Ready for the New Generation of Analytics?
  • Categories

  • Archives

    • January 2021
    • December 2020
    • November 2020
    • October 2020
    • September 2020
    • August 2020
    • July 2020
    • June 2020
    • May 2020
    • April 2020
    • March 2020
    • February 2020
    • January 2020
    • December 2019
    • November 2019
    • October 2019
    • September 2019
    • August 2019
    • July 2019
    • June 2019
    • May 2019
    • April 2019
    • March 2019
    • February 2019
    • January 2019
    • December 2018
    • November 2018
    • October 2018
    • September 2018
    • August 2018
    • July 2018
    • June 2018
    • May 2018
    • April 2018
    • March 2018
    • February 2018
    • January 2018
    • December 2017
    • November 2017
    • October 2017
    • September 2017
    • August 2017
    • July 2017
    • June 2017
    • May 2017
    • April 2017
    • March 2017
    • February 2017
    • January 2017
    • December 2016
    • November 2016
    • October 2016
    • September 2016
    • August 2016
    • July 2016
    • June 2016
    • May 2016
    • April 2016
    • March 2016
    • February 2016
    • January 2016
    • December 2015
    • November 2015
    • October 2015
    • September 2015
    • August 2015
    • July 2015
    • June 2015
    • May 2015
    • April 2015
    • March 2015
    • February 2015
    • January 2015
    • December 2014
    • November 2014
© 2021 Business Intelligence Info
Power BI Training | G Com Solutions Limited