A Day at Works

Customer loyalty across industry is declining, driving a new paradigm of managing customer. Instead of pushing loyalty to certain product, you needs to realize that customer’s need is growing thus migration must be managed to the way profitable for the firm. In managing customer migration, you need to understand the indication of migration, and redevelop value.

But before you manage migration, you must sure whether customer migrate or defect. Defection is occurred when customer value (what value customer seek for) is remain the same but competitor offering is better. Migration is occurred when customer value is changes because:
1) customer need is changing due to changes in lifecycle and/ or social status, for instance mini sedan buyer migrate to buy medium sedan
2) customer seek variety due to active competitor, for instance apparel buyer who buy from new designer who do promotion. Based on above reason then we understand indications whether customer will migrate or not.

Value redevelopment can be conducted by many ways, from the most essential to the most superficial: 1) product re-design, 2) enhance delivery channel and 3) developing marketing program –after understanding why customer see existing offering is not relevant anymore, and whether customer will come back.
Product redesign commonly happened when the product status is decreasing, for instance Volvo is considered as vehicle chosen for executives, but as Volvo maintaining its value proposition, corporate executive nowadays changes to be younger, and casual thus making BMW more relevant. To gain back his position, then Volvo design is changing to be more casual and feminism.
Delivery channel enhancement can be conducted by enhancing frontline’s service skills, adding augmented value in delivery such as tracking system. Developing marketing program includes developing loyalty rewards, and ways to enable cross loyalty.

The idea of loyalty program is good. The firm identify loyal customer, rewards them based on their personal needs captured by firm’s dB through data mining activities.

The problem is that the programs have already become generic. The rewards is similar, the system is mechanistic – thus although customer is greet personally, we know that the system actually do it. “We are bits of data not a person”, customer said. As the result the program fail to develop true loyalty of customers, even worse customers getting loyal to the one giving the more rewards or loyal to the rewards NOT the firm who provide it. Customer would go shopping at Metro when Metro Dept Store giving more points and discount than Matahari. As program become commodity, the programs becoming the cost of doing business for those industry, i.e. as an entry barrier. As an escape, firms back to customer service and brand (precisely branded experience) – the two, that are could not be copied easily.

The second problem is that, as program could not cover all customer need, then program becoming segmented and educate customer to loyal in certain ways or behavior. For instance take a look HSBC Credit Card. This Credit Card attracts certain customer, that is a group of customer who travel a lot. All benefit provided by HSBC tend to cover on traveling, thus customers will use HSBC Card when they are on a traveling or vacation. For food (restaurant, café, etc.), customers now using Mega Visa and for car related need they use AstraWorld Credit Card (co-branding with BCA, and BII).

So actually we educate customers to loyal to certain program (for this example are programs linkage to credit cards), related to certain behavior or partial loyalty. A young dynamic individual who drive a Yaris, would use AstraWorld Credit Card when having a transaction at workshop, but when he wants to see a firm at 21 Cineplex, he would use BCA Visa, and when he has a dining with friend he will use Mega Visa.

So what’s the solution?

A: When we want a clan, create for them a common culture which then create a community (~ having something in common). You can do it by establishing value, communicate and express the value throughout verbal and non verbal ways, and creating unique artifacts.