Take an Evergreen Approach to Loyalty Growth
Companies must shift their focus from customer acquisition to customer engagement to preserve retention and maintain satisfaction.
Noah Fleming, author of Evergreen: Cultivate the Enduring Customer Loyalty That Keeps Your Business Thriving, emphasizes that, much like the roots of an 800-year-old evergreen tree, loyalty and trust must be embedded in every successful customer relationship, for the foundational components go beyond the desire to complete repeat purchases. In this interview, Fleming discusses why companies that chase prospects are destined to fail and how brands can cultivate loyalty in an ecosystem that favors transactional behavior.
Customer Strategist: Why write Evergreen?
Noah Fleming: I wrote Evergreen because I realized just how misunderstood the idea of ‘customer loyalty’ was to larger organizations, and how the expectation of loyalty was blatantly wrong. I kept meeting more and more prospective clients [and other business leaders] who had terribly confused notions about what loyalty meant and how they could get it.
CS: In your book, you discuss the difference between companies that are “addicted to sex” versus those that are “looking for love” when it comes to loyalty. What behaviors define these types of organizations and what mindset drives such actions?
NF: Companies are enamored with marketing activities because they’re glitzy, glamorous, and fun, but often carried out with blatant disregard for the customers they already have. It seems like it’s more fun to try and attract new customers and less interesting to care for the ones they already have. Much like an addiction, there are consequences. Brands lose customers because, instead of cultivating a relationship, they’re focused on getting their next fix.
In terms of organizational behaviors and mindset that drive these actions, consider the following: Most of the companies that chase new customers tie marketing budget solely to customer acquisition efforts. They forget the very simple concept that marketing is equal parts keeping the customer as it is getting them. Or they are companies that compensate their sales team for hunting over farming. And, of course, there are companies that only pay limited lip service to the concept of retention; Comcast and their ‘retention department’s’ sole mission is to make it hard for customers to leave to the point of threats and verbal abuse.
The first step to overcoming any addiction is admitting you have a problem.
CS: You also mention three important qualities—character, community, and content—for those brands pursuing this sustained approach to relationship building. Can you describe what each entails and why all are critical for success?
NF: Character is the first thing that comes to the customer’s mind when they think about your business. It’s your brand personality, and who the customers think you are. It’s not enough to define your company with a mission statement on the office wall. It’s more about developing your story and character traits in a way that’s both meaningful and memorable. Character is about why you do what you do.
The next crucial component is Community. The Internet and the rise of mobile have connected us while simultaneously disconnecting us. It’s easy to feel alone today. That’s why, when we find groups of people who are like us, we want to become or remain part of that group. Companies that recognize this need for connection and create structures that allow communities to form have a significant advantage when it comes to retaining customers, building customer loyalty, and maximizing customer value. When brands bring advocates together, they pour cement on the customer relationship because customers don’t just become more connected to the brand, but also with each other.
The third and final ‘C’ is Content. Content is the shorthand I use to describe the thing you give in exchange for money. Most organizations spend 99 percent of their time and focus on their product, service, or offering. Just having a fabulous product or service is no longer enough for long-term success. You can’t create a loyal following through quality products, or even quality service. The other Cs need to support your content because great content alone won’t create a customer for life.
CS: What prevents companies from embracing the long-term view of loyalty?
NF: There are three simple reasons why companies don’t embrace an Evergreen philosophy:
• They don’t know how to measure loyalty and retention.
• They don’t know how to define it.
• They don’t even know how to believe it when it’s happening!
One of the core challenges for relationship-based models is that it’s very hard to measure retention or attrition. It’s hard to measure what’s been successful and unsuccessful. After all, how do you know you could have kept a customer? Or how do you know that another customer wouldn’t have stayed anyway?
When we start talking about loyalty, it’s like we’re talking about an alternate universe. One of the worst pieces of advice that consultants, business experts, and gurus like to shout everywhere they go is the old proverbial statement that “it costs 5x as much to get a new customer as it does to keep them.” The reason why that’s the worst piece of business advice ever is that they forget to tell you exactly how to spend 5x less to keep them, or when to spend anything at all, and on what. In fact, they don’t tell you anything actionable at all beyond “provide WOW service,” which in turn becomes even more terrible advice.
CS: Why is that terrible advice?
NF: We’ve been tricked into believing that the “do whatever it takes to please the customer” model will lead us to customer salvation. We’ve been fooled into believing that evangelists are formed because of the odd feeling of surprise and delight. While these are important, we need to continue evolving. It’s time to go beyond the punch cards and reward systems, and explore further and deeper opportunities for engagement and involvement with our customer base. Extrinsic motivators started out with the right intent. As a customer’s loyalty increased, they were rewarded for their patronage. But now, everyone offers a card and calls it a loyalty program. We must reclaim loyalty’s original purpose and understand our customers with total focus and relevance. They’re demanding it, and they’re choosing to do business with the companies that treat them like humans.
The advent of Big Data allows brands to do business like it’s 1897 all over again—where the clerk we’re talking to at the store knows who we are as individuals. She knows what we’re trying to do, so she helps us and makes useful recommendations. She helps us find our way around if we’re new, greets us with familiarity if we’re regulars, and generally treats us with the respect that everybody is due. But that’s so sorely lacking in the modern corporate environment.
CS: Why is the status quo no longer enough to maintain the optimal level of loyalty?
NF: You know, I really don’t like the term ‘customer loyalty.’ It implies that, when a customer stops doing business with us, it’s because they’re disloyal. It implies a character fault in the customer, instead of either a fault in the business or simply the nature of the often transactional relationships between companies and their customers.
I’m loyal to my wife. I’m loyal to my daughters, and to my friends. But if I were to have an affair or steal from my friends, I’d be considered disloyal, and we’d have no problem attributing a character flaw to me. But what if I drive by Burger King and have McDonald’s instead? Is it because I’m a customer who lacks loyalty? That’s ridiculous. The whole concept is a martyr complex for senior executives. “Oh, we’d be doing so much better if only our lousy customers were loyal! Why did we have the bad luck to get the disloyal customers?” In Evergreen, I talk about how to drive repeat business by earning it, not through the ‘loyalty’ guilt trip lens.
CS: What can businesses do now to take an Evergreen-style approach to their loyalty strategy?
NF: The philosophy of Evergreen requires you to rethink how you approach sales, marketing, and customer service. It requires you to be brutally honest about your current customer loyalty strategies and wheather they’re working the way you want them to, but more importantly, working to generate results. Understand that there’s a lot more to creating enduring loyalty than simply trying to create great experiences and offer decent service to customers. There are certain patterns that are consistently present in organizations that have tremendous customer engagement and loyalty.
Start by asking a few simple questions:
1. What are you currently doing to inspire customer loyalty or to curb customer attrition?
2. How are you measuring your current attrition/loyalty?
3. How confident are you that you could successfully measure an uptick in loyalty?
4. Is your company chasing new customers at the expense of existing customers and if so, what needs to change?
An Evergreen-style approach requires an organizationwide understanding that loyalty is never to be expected, it’s only to be earned. ξ