Is Customer Loyalty Dead?

Is Customer Loyalty Dead?

Or just irrelevant?

  • min read


Is Customer Loyalty Dead?

This post originally appeared on LinkedIn.

In a world where many customer interactions happen online, where human tellers and clerks have been replaced by ATMs and kiosks, where customers have tremendous price transparency at the click of a mouse, is customer loyalty dead?

I’ve certainly heard executives say it’s irrelevant. They describe their business as “low-involvement” and their transactions as “routine.” My colleague and book co-author Rob Markey says he’s heard executives from all sorts of industries say “In our industry, it’s just not possible to create promoters because the customers aren’t engaged.”

Having devoted most of my 35-year career at Bain & Company and four books to the topic of loyalty, you might think I’d find this worrying. But automation and self-service are not inherently harmful to customer service or loyalty. On the contrary, transactions that used to be costly for companies, and error-prone and frustrating for customers are now quick and painless. (When was the last time you stood in line to see a bank teller?)

What does concern me are executives who don’t understand that automating routine interactions places a premium on the interactions that are not routine.

Sometimes, these are just customer requests that involve an added layer of complexity that automated systems can’t handle. Get these right and you’ve got an opportunity to create a promoter. But other transactions matter even more. They are “moments of truth,” the interactions that have the greatest potential to delight—or alienate—customers.

At a wireless telecom carrier, that might mean how employees respond to the loss or theft of a customer’s phone. For a bank, it might be the ability to put a replacement debit card in a customer’s wallet within 24 hours. For an airline, it includes how they handle flight delays.

Or take the Vanguard Group. Many of the interactions between an investment management company and its customers are routine: a 401K statement arrives by email, customers go online to check balances or shift around allocations.

But Vanguard’s moments of truth with its customers are typically major life events: a birth, a child starting college, the death of a loved one. Help a customer through those moments with agility, compassion and a human touch, and your company is woven into the fabric of that person’s life. Get those moments wrong and…well, you just can’t get those wrong.

In Vanguard’s case, the company scrutinized hundreds of transactions to identify moments of truth and then made sure that its employees have the authority and the tools they need to respond independently and immediately.

That means confident, caring responses to customers during some of the most important events in their lives. And the result is customers whose loyalty lives on, long after they have returned to a more “routine” relationship.


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