Posted: 06 Feb 2011 11:56 PM PST
We are all familiar with the disempowering feelings of dependency and the prices and poor quality that go with it. The food on a cheap flight, restaurants or hotels in a tourist area, train tickets and petrol prices.
Old school business logic declares that a business model that locks customers in is a good one, and so it may be, but there are risks associated with it too.
With customers locked in for reasons of geography or facility, a lack of alternatives can easily lead to complacency. While the money rolls in, where is the incentive to develop products, streamline systems, build strong relationships or get the best from people?
Over time a business that creates a success from dependency can become disconnected from customers, arrogant and sloppy.
Business is at it’s best under the scrutiny of competition with rivalry demanding the best from all involved. For customers and employees the effect of competition is invigorating and engaging.
Dependency easily leads to relationships that are exclusively transactional on both sides. There can be little care, passion, engagement or fulfilment in a transactional relationship. Think of the last time you made a purchase because it was the only option available; how did it feel? If you told anyone of the experience did you report it positively or negatively?
The reality of transactional relationships is that they are only ever as good as the last transaction. Transactional relationships do not lead to loyalty.
Loyalty emerges in a space beyond the transactional.
Loyalty is not only rational, it combines rational with emotional. A product or brand that evokes loyalty fulfills customers by exceeding expectations, delighting and thrilling them. The expectations created by this level of service, shift the relationship from transactional to an unconditional space. Mistakes will be forgiven.
Loyal customers will take the time and the energy to feedback supporting the process of learning and improvement. Even if they don’t feedback, they will remain willing to engage with marketing materials. Loyal customers become ambassador. “Viral marketing” the Holy Grail of marketers is only comes from loyal relationships.
Without loyalty mistakes result in silent departure.
Let me contrast two hotel experiences one in Hamburg one in Denmark. The middle size Hamburg hotel was near the airport and clearly had not had to put in a big effort to serve customers for some time. The other was a small boutique hotel in Aarhus a medium sized town in the middle of Jutland. The Hamburg hotel was a transactional experience with some specific problems with the room I was in, when asked how my stay was at check out of the Hamburg hotel I said “OK” I didn’t even feel strongly enough about the experience to bother to help them improve it. I won’t recommend the hotel.
By contrast the Danish hotel was an engaging experience, and in spite of my usual grumpiness when staying in hotels on business I was charmed. When I noticed a problem, I volunteered the feedback and it was promptly resolved. I recommend the hotel entirely.
Many businesses manage to exist their entire lifespan without ever engaging customers at a deeper level. What happens to those businesses when, because of competition or other changes in the market, they have to shift from being able to rely on dependency to having to generate loyalty?
Assuming the leaders of the business correctly diagnose the problem, the treatment is significant, especially for a larger business.
Loyalty describes a relationship that goes beyond transactional in a mutually positive and supportive way.
Transactional describes the logical and functional benefits that underpin any business relationship. Loyalty is the space beyond transactional, where the emotional benefits exist and the relationship is less conditional and less about the specific results.
This is distinct from a dependent relationship where most of the positive value flows one way and the binding force in the relationship is more like addiction than loyalty, in that it is ultimately destructive. Cigarettes are probably the most extreme example.
Loyalty is created by people and it follows that a company seeking to engage loyally with customers must start by engaging loyally with staff.
To transform any relationship requires the actor with intent to model the relationship they would like to experience unconditionally. As Gandhi put it: “You must be the change you want to see in the world.”
For a business to enjoy an honest, loyal and rewarding relationship with their customers, for example, they must offer that relationship to both customers and staff. And they must offer that relationship to staff first, because it is the staff who will be the ones creating and holding the customer relationships. And staff will only represent the relationship they themselves have with the organisation.
Fortune Magazine have just published their annual survey of the best places to work in the US, as a cool info graphic. If you drill down into it, you will see the key words staff use to describe their work experience. If you compare the words staff use to describe their experience, you can easily translate them into the brand as it is experienced by customers.
Delivering this requires what I call Authentic Leadership. It is the highest level of leadership yet identified and it is what businesses require to create loyal relationships.
More on Authentic Leadership.
Magic Monday – the compilation of six years of the best of these Monday morning e-mails is available as an e-book. (There will be a print edition when I can make the time).
Also, working with my wonderful friend Dawn Waldron, we have written a new, thorough and really easy to use Life Purpose work book.
You can get your copies here.
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