Your customer won't take a bullet for you

Aug 14, 2011

Your customer won’t take a bullet for you

[Today’s guest post is from the world’s most admired ex-blogger, the great Kathy Sierra.]

“Customer Loyalty” is a figment. Business “Loyalty Programs” are nothing more than rewards-based marketing. And by rewards (aka “incentives”), I mean bribes. That we so easily refer to a customer with a bagel punch card or virtual badge as more “loyal” is an example of just how far we’ve allowed corporations to abuse the language around human relationships.

I would storm a burning building to get my kids. THAT is loyalty.

I would even storm a burning barn to get my horse.

But I won’t storm a burning Best Buy no matter how awesome their Reward Zone program.

I’m not going to become more loyal to a business no matter how well-executed their Super Awesome VIP Exclusive Content Access Status Rewards Achievements Gamification program is. Not even if Banksy made their badges.

That I often DO buy (and sometimes buy more) from the businesses that offer formal Rewards Programs does not imply I am loyal to those businesses. I’ve nothing against my wallet-full of coffee cards (which I use, and appreciate). But that is not loyalty. I’m happy to “LIKE” your Facebook page for an entry in your iPad giveaway, but that is not loyalty.

I’m willing to comment, favorite, star, plus, and potentially even share your content, but if I do it purely for the points/status/rewards, that is not loyalty. In fact, when you “incent” me to “engage” with your site, deep in my heart I understand now that I have sold out. By giving me bribes/incentives, no matter how much you call them “rewards”, you have communicated to some part of me that if I had to be incented to buy/act/engage/whatever, it must have lacked value on its own.

This de-valuing effect can be true even if the thing really DID have intrinsic value for me. In other words, even if I’d actively wanted to do the thing-you’re-bribing-me-to-do, you’ve tainted it. Possibly even wrecked it for me, even if I am not consciously aware. (See Self-Determination Theory and the Over-Justification Effect for some of the potential issues with gamification’s use of extrinsic rewards)

The darling of traditional “Loyalty Programs” is, of course, Frequent Flyer miles. But odds are most of you have taken a flight you didn’t want, on an airline you hate, thanks to a Frequent Flyer plan. When we make tough choices based on our “rewards” program, that’s not loyalty we’re feeling… it’s resentment.

A way to tell you’re heading down a dark path is to ask:
“If we took away the incentive/rewards programs, would our customers behave in exactly the same way?”

If we have to pay to get it, it’s not loyalty.
That doesn’t necessarily make it wrong to use customer incentives, but don’t mistake the results for actual loyalty.

So, how do we explain the companies, brands, products, services, etc. that we do feel fiercely loyal to? The ones that did NOT incentivize, bribe, coerce, coupon/Groupon us into choosing them over competitors? The ones we talk about to friends NOT because we get a referral bonus? Isn’t that true loyalty?

Almost. Sort of. If you tilt and angle it just so. Because I DO have a few products I appear loyal to:

I would give up my iPad for Adobe InDesign.
I would give up sleep for the latest Neil Gaiman book.
I would give up carbs for my Astund Icelandic saddle.

And I’d give up all of the above to keep using my Mac.

That sure looks, sounds, smells, quacks like loyalty.

And it is.

But it is NOT loyalty to Adobe, Gaiman, Apple, or my Icelandic saddlemaker.

I’d walk through hot coals for those because I’m loyal to… myself.

The key to understanding (and ultimately benefitting from) true “customer loyalty” is to recognize and respect that customers–as people– are deeply loyal to themselves and those they love, but not to products and brands. They are loyal to their own values and the (relatively few) people and causes they truly believe in. What looks and feels like loyalty to a product, brand, company, etc. is driven by what that product, service, brand says about who we are and what we value.

That doesn’t mean we can’t benefit from customer loyalty. The moment we stop trying to manipulate, coerce, incentivize, gamify customers into being loyal to us is the moment we free ourselves to consider how to help them where their true loyalty lies. And it starts with the deep recognition that:

If I buy from you it’s not because I like you but because I like myself.

As I said in my previous post, the key is to help users become better at something they care about. My what-looks-like-rabid-loyalty to Apple, Adobe, Gaiman, and Astund is because they have all contributed to Me Kicking Ass in a measurable, meaningful, sustainable, powerful way. Yes, even author Neil Gaiman. (His work has not just entertained and inspired me, but provided the foundation of my wedding ceremony. Long story, ‘nother time.)

If you want to benefit from a customer’s loyalty to himself, you can’t bribe it, you must earn it. Deserve it. Focus not on upgrading your product but upgrading your user’s capabilities. If you can’t enhance your product, enhance the context in which your product is used. Provide better and more inspiring documentation. Make YouTube tutorials. Join forums and offer expert help where it’s most needed. Use every nanosecond of your social media time to help people become better at something for themselves. Understand and design for Social Objects. Relentlessly ask, “How are we helping our users kick ass? What can we inspire, amplify, teach, enable, empower?”

There is always a way to help users be better at something, even if that thing seems disconnected from your product. Help them be better, smarter, stronger, funnier, more aware. Better coders, better shoppers, better parents. Better designers, better DJs, better citizens. Better puzzle-solvers, better photographers, better writers. Better joke-tellers, better conversationalists, better gardeners. Better makers, better cooks, better cartoonists. Better brainstormers, better bloggers, better runners. As Hugh once put it, “if you can’t figure this out, you’re just not being creative.”

Instead of “rewarding the customer” focus on “how can I make the user’s experience and result more rewarding”? And by “rewarding”, I mean FOR REAL. Not because of a little dopamine hit they get from earning your next virtual badge. I mean rewarding as in, “OMG look at this amazing thing I just made.” Rewarding as in, “That was one of the most stimulating conversations I’ve had.” Rewarding as in, “It’s official then. I’m bad ass. Look at the what I am now able to do that I couldn’t before…”

Of the four products I appear loyal to, none have ever given me an extrinsic reward. No punch cards, frequent-purchasing discounts, or Exclusive Access VIP Status (Now! With Better Badges!). No leaderboards, no contests, no discounts. But all have given me something far more valuable: enduringly rewarding experiences.

They have upgraded my personal skills, knowledge, and capabilities. They have made my life better. They have made ME better. THAT is the ultimate customer reward. When you give your users that, you still won’t have loyalty, but you’ll have something sustainable, robust, and honorable.

Those that understand and support the loyalty we have to ourselves are the ones to whom we write glowing unsolicited/unrewarded reviews. They’re the ones we will not STFU about in our on- and off-line conversations. They’re the ones whose logos we wear on our shirts, shorts, and car bumpers. The companies who we appear loyal to are those that best help us define, refine, and express who WE are.

[Footnote: if you do want to give an extrinsic reward to a valued customer, the most powerful, effective, and appreciated way is ALWAYS an unexpected, surprise thank-you acknowledgement (which may or may not include a valuable or symbolic gift). Rewards that are expected are perceived not as rewards but simply part of the product.]

-Kathy Sierra

33 Comments

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Janice

13 years ago

Agreed! WHOLEHEARTEDLY! The incentive for me to return should be there, and whether I have a card or not, I’ll go where I think I have the best value. That value is not in esoteric points that are rarely useful.

Nicolau Leal Werneck

13 years ago

Yeah, this seems to make sense, but your examples are obviously from kinds of business that directly relate to “empowering” users, be it as tools or as instruction (Gaiman). How can restaurants, cafes, video stores and airlines do this?

I love my mobile phone, my notebook, mechanical pencil and my running shoes for these reasons you said, but I have a preferred airliner (with a frequent flyer program) and a preferred Italian restaurant at the mall (with the little card…), and I am loyal to them because I like their service. These programs should really not be considered loyalty programs, that is definitely right. And it’s also an expected discount for long-term usage, definitely, not a surprise reward… But there is now way they are going to build loyalty by making me “kick ass”.

that only drives to those silly advertisements for cigarettes, for example, where the guy seems to take all the prettiest girls because he smokes the right brand, for example. Pure nonsense…

John Dodds

13 years ago

Reply to Nicolau Leal Werneck

I think you’re being a little too literal Nicolau. The indirect effect can also be powerful.

Just off the top of my head, I could suggest that restaurants can “empower” customers by knowing their preferences/treating them as individuals/expanding their palate. Some of this is of course tied up in the service to which you ascribe your loyalty above, but far from all of it.

Similarly video stores could work to broaden the users’ knowledge of cinema/tv and thereby open them up to new richer experiences both from their shelves and via communities of shared interests.

Those may or may not be convincing examples – as I say they’re instant thoughts. But I hope they serve to reinforce the idea that it’s not just about what the product/service provides directly, it’s also about the collateral impact that it has on the user. And that’s a real impact, not the illusory advertising fantasy that you rightly deride.

Jack

11 years ago

Reply to John Dodds

This is a great point, and I’m going to throw in a real-world example for you….

During college, I worked as the manager of a Blockbuster Video (this was back when BBV had relevance and Netflix didn’t exist). There were about 10 different movie rental places in town. We were not the cheapest. In fact, our store was the most expensive rental place (on a per rental, new release price). Yet our store was far and away the most successful; we had the most repeat customers; and we were the busiest on a weekend night.

Why? We loved our customers. We knew them by name. We developed relationships with them. We learned what kind of movies they liked, who their favorite actor was, and what movies they were looking forward to. We laughed and we joked with our customers. We talked with them about movies and genuinely listened to what they had to say. We out-right canceled late fees for regular customers (even if we knew the movies were returned late) with a smile and empathy to whatever the reason was that made them late. (The loss of a $3-4 late fee charge is vastly outweighed by grateful customer who feels appreciated and cared for. They will come back.) If we were out of the latest movie that everyone wanted to see, we would call our competitors to see if they had it in stock, and if they did, we would have them hold it under our customer’s name.

And every now and then, for no reason whatsoever, we would give a regular customer a free movie. They had to do nothing for this. We didn’t send them something in the mail. They didn’t have to juggle a coupon. They got it just for being them. “Hey, Mike, I see you haven’t had a free rental for a while. Tonight’s movie is on us. Here’s some popcorn, too.”

And before you say that these type of actions are all well and good, “but how did that affect your bottom-line?” I’ll mention that our store was the most profitable in the district, out of nearly 20 stores.

People appreciate being appreciated. Even if it’s just one three-dollar movie at a time.

Ned

13 years ago

Did you really use an example about your Horse? That’s a sure fire way to disconnect you from your average reader. Do you know the % of people who own horses?

Editor

Hugh MacLeod

13 years ago

Reply to Ned

Ned, since when was Kathy writing for the average reader? 😉

Kathy Sierra

13 years ago

Reply to Ned

That is so awesome. Back when I was still on Twitter, I used to joke that my horse tweets were useful for keeping the follower count down. If people cannot imagine a horse as simply an instance of fuzzy-four legged-beloved-pet then they may struggle with my tendency to give specific examples of abstract concepts. But your point is still relevant; not everyone relates to or likes my horse references. As Hugh said, I don’t write for *everyone*.

Kathy sierra

13 years ago

Reply to Ned

Off-topic, but I just found this comment so fascinating that I wanted to answer it directly. Ned, your assumption that most readers would not relate to a line about horses is a common one, but consider this: the recreational horse industry in the USA is a $40billion industry. Yes, $40 with a B. That makes it much larger than the entire music industry, and nearly up there with the video game industry. I think about 4 million people are involved directly with the horse industry, with roughly 2 million people as owners. Tens of millions more when you add spectators at horse shows and other events.

And the guy who got me into horses in the first place is someone I am sure you have heard of… He was the originator of the term “Web 2.0” and one of the tech/business/government leading thinkers: Tim O’Reilly. Not only is he a long-time horseman, but we share the same obscure geeky subset of horses, Icelandics.

I suppose if there’s a lesson here, it is not to discount the size of a market simply because it seems small and/or distant from your perspective. It might be massive. There was even a feature in Wired magazine a couple year’s ago called “Pimp your Pony” looking at high-tech innovations in the horse/gear world.

Ok, back to the original topic, but thanks for the opportunity to bring this up 🙂

Oh yeah, I just thought of another geek icon who is a fabulous horseman that I am sure you have heard of: Tim Ferris.

Charlotte Advertising

13 years ago

Reply to Kathy sierra

I do not own a horse and I understood what you meant… Am I average? I don’t know..

John Griffiths

13 years ago

Wouldn’t it have been great if the London looters last week had had the nerve to explain that as loyal customers they had gone inside the stores and were holding stock to stop anybody else taking it. Your point is well made. Loyalty shmoyalty..

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Clint Watson

13 years ago

“How can restaurants, cafes, video stores and airlines do this?”

I’m only one data point, but I definitely have restaurants and cafes that I am “loyal” to and rave about that don’t have any “rewards” programs. I can’t speak of video stores….are there any of those left? 🙂

Carolyn Stephens

13 years ago

After reading the first few paragraphs I was already formulating my comment but then I got it! I recently had a conversation with a business owner who said, “We are fiercely loyal to XYZ Printer because they always come through for us. When we have a tight deadline, they never let us down.” She went on to say that EVEN IF it sometimes cost a few dollars more, it’s worth it to maintain that relationship. Knowing that somebody will go to the mat for you is better than any punch card.

Nicole Rushin

13 years ago

You make some very good points here. I like this line, “The companies who we appear loyal to are those that best help us define, refine, and express who WE are.” It may all come down to selling lifestyle and once again, making people feel empowered and confident.

Paul Fabretti

13 years ago

Absolutely brilliant to hear from you again Kathy.

Dr. Phil Hendrix

13 years ago

Kathy – great post. Thoughtful and very timely… I would add several points:
1. In addition to “making us better,” products and services that make us successful engender loyalty. Success implies that the company deeply understands what the customer (consumer or business) is trying to accomplish.
2. On a related note, Clayton Christensen and others have argued that customers buy (and use) products and services to “do a job.” The importance of the job and the performance of the product/service in “doing its job” vis à vis competitors also drive loyalty.
3. Finally, being “indispensable” is another measure and determinant of loyalty. How much of a premium (time and $) will the consumer put forth to select, buy, use, patronize, etc. their favorite products and service providers? If you’ve made your product or services indispensable, customers will go out of their way and (be willing to) pay a premium… the opposite of “commodity.”

Dr. Phil Hendrix, immr

John Frost

13 years ago

Thanks for reminding me of one of the first business lessons I ever learned (courtesy Tom Peter’s In Search of Excellence). The best companies consistently exceed the customers expectations. Disney, about whom I blog, used to be an acknowledged leader in this. They still do a pretty decent job, but like so many, they’ve let the need to meet Wall Street’s expectations every quarter get in the way of a truly magical experience (particularly when it comes to guest service).

If your company’s mission, and the resources to fulfill it, isn’t to exceed your customers expectations by providing excellent experiences (either via your service or via your product) then you will always face an uphill battle in acquiring loyal customers.

How to do it? For a restaurant, some examples would be first name service, unexpected surprises for customers, supporting the local community. Video Stores (let’s assume they still exist for the sake of argument) can let their employees be experts, have customized recommendation lists based on past rentals, have a community room to support local film clubs, etc. As for airlines? Well they’re pretty much beyond hope 🙂

A big thanks again to Kathy for reminding me of this great business lesson.

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13 years ago

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13 years ago

I like the below ,

” They have upgraded my personal skills, knowledge, and capabilities. They have made my life better. They have made ME better. THAT is the ultimate customer reward. When you give your users that, you still won’t have loyalty, but you’ll have something sustainable, robust, and honorable. ”

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13 years ago

[…] Kathy Sierra (via Daniel Jalkut): Of the four products I appear loyal to, none have ever given me an extrinsic reward. No punch cards, frequent-purchasing discounts, or Exclusive Access VIP Status (Now! With Better Badges!). No leaderboards, no contests, no discounts. But all have given me something far more valuable: enduringly rewarding experiences. […]

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Wanzy

13 years ago

This is a really insightful but also kind of loaded because it misses that you can do both. I agree with a lot of what stated but it sounds like it’s a bad thing to do rewards programs. There are those people, that to them, incentive helps breed loyalty. After years of shopping with someone, that desire to maintain the life and bond created will live on even if the programs went away. I agree that it’s important to each a higher connection with your customers. I feel that way in all of my life. But not everyone is that honorable, nor do they live and aspire to altruistic lives. But does that mean we ignore those that don’t meet our standards of customers.

Being able to cater to the 1 on 1 and the mass market, able to open your doors and your hearts to all kinds is to me where loyalty can be born. Showing that you have standards but do not judge, and long outstanding service can build loyalty as well. It’s all perspective. Doing the unexpected can become expected. It can also be viewed as a rewards program or incentive. I eat at “blank” restaurant because they gave me a free lunch once, or remembered I like Cheese cake, and throw one in for free.

In the end because it seems more personal instead of a mass marketing is why it appears more acceptable. In the end is doesn’t change the main fact. I give money to “Company” because the service and experience. It’s the reason I come back as well.

Just my 2 cents.

Kathy sierra

13 years ago

Reply to Wanzy

Wazny, you make several good points. I did say that customer incentive programs are not necessarily a bad idea, though I would approach them with great caution. It has long been known that while the rewards programs DO drive sales, the downsides of extrinsically incentivized behavior are also well known and can include the simple fact that once a reward program is in place, it can be extremely difficult to remove it. Once a customer has been “motivated” by incentives, they may no longer feel the same motivation they had for the thing *prior* to the incentive program, but that is a long, complex, nuanced psychological phenomenon for another discussion.

I agree that a long history of outstanding service can indeed inspire loyalty, though I will still consider that loyalty to myself, but it is simply a perspective. I actually don’t believe a company needs to have altruistic goals to behave this way. Behavior manipulation that leads customers/consumers into consuming more than they had wanted/intended comes at a steep price eventually.

Sure, as people, we can be manipulated, brain-hacked, by our “predictably irrational” behaviors that companies can exploit. But when that is their competitive advantage, it’s awfully fragile for the business, as competitors all rush toward sameness.. And those that keep their market share though customer lock-in, as some FF programs depend on, are already in deep trouble.

I don’t feel customer incentive programs are inherently bad. I do fee they are inherently risky. That they seem intuitively positive just makes them that much more risky to the businesses that go down that path. Extrinsic reward programs are extremely hard to back out of and should be approached with great caution and care. The art of using extrinsic rewards to then bridge people into intrinsically motivating behaviors is a beautiful thing, and rarely done well by businesses.

abhi

13 years ago

Certainly a common sense is a rare sense.
And Kathy just provided a couple of page worth of considerable things that are suppose to be common sense.
Good to see some one in this anarchy of world some sense. Thanks

David Everitt-Carlson

13 years ago

I clicked through a Tweet to get to the Dewar’s FB page to read a story about you at Ted Global, Hugh.

But when I got there, the page was frozen with an overlay that said, “Like this page” and an arrow pointing to the “like” button.

I didn’t “like” that. Ransom for reading standard promotional copy. Reverse incentive marketing.

I’d be more interested to see the numbers of people who blew the whole page off for that little bit of arm twisting – but I did it anyway because I wanted to see the story.

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Stuart Silverstein

13 years ago

Nice post Kathy!! Well written, and right on target. I am in the middle of a book called “Drive” by Daniel Pink which discusses the value of developing intrisinc vs. extrinsic rewards. Any chance this was inspired by that book? The concept seems similar, but I love how you pushed it way further in the context of marketing.

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[…] Kathy Sierra explains the dilemma quite well here. […]

Sabra Pickings

12 years ago

If you are going through hell, keep going.- Winston Churchill My favorite too, I guess those of us that have been through hell and made it out know how much perseverance is required.

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[…] Your customer won’t take a bullet for you – Loyalty programs don’t really build loyalty in your customers – they’re a bribe or incentive to get them to so something they might not otherwise. The “new” buzzword, gamification, is also a pretty shallow substitute for a product and/or service that kicks ass. If you really want customer loyalty, make their lives better in some meaningful way … […]

Swag

11 years ago

I read the phrase ” back when I was on twitter”. And teared up a bit. Dunno what drove you away, but you totally got it right. I feel pimped out by bagel,growler,and ice cream punch cards. But I’d storm a burning shack to save my beagle. So, there’s that.

Your customer won’t take a bullet for you

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