Don't just try to change your customer's behaviour; change their attitudes

Despite it being a well-known fact that it is much easier (and cheaper) to retain an existing customer than to win a new customer, it concerns me that the vast majority of businesses still put much more effort into winning new customers than on the relationship they have with their existing customers. But what is even more surprising is that even the companies that make any effort with customer retention do so in a way that is often described by marketing academics as fostering ‘behavioural loyalty’.

Without going into heavy academic theory, basically what is meant by behavioural loyalty is judging a customer's loyalty on whether they are 'repeat purchasers' or not. In other words, it doesn't matter what people think about your company, so long as they keep buying from you.

This is a potentially dangerous and misguided business strategy, yet it is recommended by some of the most influential marketing academics of today. And more worryingly, this behavioural approach to customer loyalty is now filtering its way from respected academic journals and university departments, into mainstream business strategy.

You can test this concept very easily within five minutes of reading this blog. All you need to do is phone your car insurance company and tell them that you want to cancel your policy because you have found someone else who will do it cheaper.

Will they say: "OK we’ll cancel it now.”?

OF COURSE NOT!! They will transfer you to another department that will offer you a special discount off next year's insurance policy.

(Hmmm… why didn’t they tell you about this special discount before now?)

Let's face it. You've had absolutely NO communication from them for the last 12 months. You've had NO helpful information, NO special offers, NO courtesy phone calls, NO useful newsletters. NO appreciation and thanks for your custom. NOTHING.

Yet as soon as you phone them to cancel your policy, they are falling over themselves to help you. In the short term this approach probably works. But in the longer term, it is a very dangerous strategy for any business to adopt.

If your attitude to customer retention is simply to buy an expensive CRM software package and then offer special discounts to customers when they threaten to leave you, then this strategy will come back to haunt you eventually.

Moral of this story: If you want to encourage long-term customer loyalty, then your strategy needs to be based on a genuine and sincere love and appreciation of your customers - not just a cynical attempt to ‘buy’ their loyalty with discounts and special offers.