Mark Johnson on Building Customer Loyalty

by Susan Johnston on November 18, 2011
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Small businesses have what seems like a million potential strategies for building customer loyalty — Facebook, Twitter, online deals, and smartphone apps, to name a few — but many wonder why their approaches aren’t working. Mark Johnson (pictured), president and CEO of Loyalty360: The Loyalty Marketer’s Association, says it all comes back to the three layers of customer loyalty: voice, engagement, and experience.

The Intuit Small Business Blog asked Johnson to share his insights on how small businesses can better engage customers and inspire brand loyalty.

ISBB: What do the three layers of loyalty mean for companies?

Johnson: When we talk about three layers, there’s voice of the customer, customer engagement, and customer experience. They all are important to help drive long-term loyalty. You can have a shortcoming in any of the three but still have a long-term brand. For instance, if a brand has a problem, but they say they’re sorry and they address it, they have the opportunity to create more loyalty.

Tell us more about the voice of the customer. When and how should we listen?

People want to be engaged with brands. They want to feel that brands value them. The voice of the customer can take a number of forms: Someone filling out a warranty card or a customer [survey] after a dinner or hotel stay. You have email and call center responses. Social media has been traditionally kind of a push, but now you’re seeing brands using social media as a way to create dialogue and proactively respond to it. If you have a Facebook account, if you have a hashtag, make sure you’re using them in a proactive manner.

A lot of brands have the pieces in place, but they don’t truly listen. They don’t say they’re sorry. If they have a Twitter hashtag up there, they use a bot to respond. That’s not truly engaging. Take Peter Shankman’s story about tweeting that he wanted a steak when he landed at the airport, and Morton’s actually sent someone to meet him in Newark with a porterhouse.

Do you think Morton’s would have done the same thing for someone who didn’t have as many Twitter followers? Did they create the expectation that they’ll do that for everyone?

I think the gradation of response is important. Someone who has a lot of social clout may get preferential treatment. You still want the ability to be responded to. One of the dichotomies in a loyalty program is that there are hard and soft benefits. Hard benefits are miles, discounts. Soft benefits are the ability to surprise and delight. The soft benefits are actually more engaging — and they drive more behavior. For instance, saying “I’m sorry” or sending someone a letter that addresses a grievance they might have. Those don’t cost as much, but they create huge levels of engagement.

Doctors who spend five more minutes with a patient are 5 to 10 percent less likely to be sued. You can see if you have effective mechanisms in place. Delta and JetBlue have done it. Someone tweets that they’re going to miss their next flight on a layover in Atlanta, and I’ve seen Delta give someone a free ticket and food vouchers in real time. That’s someone who may not have been a million miles, and that creates huge engagement.

To your point, if you’re going to be committed to it, make sure you’re constantly engaging. So, local restaurants giving call-ahead seating or special tastings for someone who may be a long-term brand advocate. Larger chains become more regimented about what a clerk can do, but smaller organizations can create great engagement by, for instance, comping a dinner. It’s not only the comping of dinner, it’s apologizing when you screw up.

What about customer engagement and customer experience?

Customer engagement is what we’re seeing right now: Facebook and mobile marketing. There’s gamification with FarmVille, CityVille, LevelUp, and SCVNGR. That’s an engagement strategy. Hotels like the Hilton chain have done it with creating in-room games and technology that engages with the brand. You get rewarded for taking a survey. Engagement is all these processes that allow an individual to communicate with a brand. Gamification plays to the irrationality of the human mind, because 90 percent of all purchase decisions are influenced by irrational behaviors.

Anything else you’d like to add?

Someone can have a bad customer service experience, but it’s all in how that brand responds. What we’ve seen is if the brand asks, “What do I need to do to make this right?” the customer actually will ask for less than the company has anticipated. But a lot of brands don’t ask.

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