Here is an article written by Sean D’Sousa of Psychotactics. It talks about customer loyalty in a way that we seldom think of.
Are you concerned about customer loyalty? Are your customers so loyal that they will stick with you through hell and high water? And if not, you really need to question how you can create a customer relationship that’s so gluey, that you never go bluey in the face. Funnily you don’t have to go far. Reach for your Webster’s dictionary and you’ll discover a hidden secret to customer loyalty.
Do you find it amusing? Giggle if you must, but stick with me and I will show you the simplicity and longevity of this sane advice that will change your marketing strategies and tactics forever.
But First, Let’s Look At Nasty Hurricane Andrew
In August 1992, Hurricane Andrew went bananas. Like a drunk on one too many Tequilas, he tore into South Florida with wind gusts of 175mph, redrawing the landscape as he stomped onwards. Approximately 600,000 homes and businesses bore the brunt of his menace.
By the time Andrew left, he had run up a tab of $26 billion dollars and the curses of some very, very angry insurance companies. Andrew had single handedly run up the highest insurance recorded payout in history , if you don’t count September 11.
Many an insurance company looked gloomily into their crystal balls and decided the future was too dicey. So while they grudgingly forked out the costs required to cover the claims, they refused to renew customer policies.
State Farm Insurance Had a Different Opinion
The biggest reason Hurricane Andrew blew the roofs off the houses was because contractors had not anchored them to the frames. State Farm not only happily forked out the policy claims but also paid its customers more to bring the houses up to code.
Amazingly, this insurance company was willing to overpay just to make sure their customers have peace of mind should Andrew or one of his family come visiting.
State Farm Wasn’t Too Far From the Leo Burnett Advertising Agency
Agencies are like turnstiles. Clients come, clients go and it’s the same mantra for employees. Not if you look at the Chicago-based agency called Leo Burnett. At Leo Burnett, over a four-year period from 1986 to 1989, 98 per cent of business came bounding back from repeat clients. No other agency even came close.
Furthermore, this Houdini of advertising has had an almost zero client defection rate for decades. In an almost boring, old fashioned way, they adopt a loyalty based management that keeps clients superglued to them. And it continues to amaze and fascinate the roller coaster advertising industry that can only watch in awe and extreme fascination.
Which Brings Us Back to Webster’s, Doesn’t It?
Now let’s look at how Webster’s Dictionary defines the word Client. It says: A client is one who comes under your care, guidance and protection.
See those words?
It doesn’t say someone you need to get money or make profits from. It asks, even beseeches you to care, protect and guide your clients, like you would with your own child. Everything you do, you do unselfishly for that child. You put your heart and soul into creating a safe, educated environment. You become the guide and the protector. You create a bubble as secure as you can to make absolutely sure they get the very best.
Scary, isn’t it? Especially when you look out there at so many companies, whose single motive is to simply get the sale and move on.
Hurricane Andrew Moved On, State Farm Moved Up
As soon as the brouhaha of Andrew’s visit died down, up came the vultures from other insurance companies. They tried to woo State Farm policy holders with discounts and other incentives. Most of them found doors slammed in their face. Their customers were staying loyal no matter what bait was being dangled in front of them. When the chips were down, State Farm pitched in to help like family. There was no way the customers were going to let down their own family.
Adhering strictly to Webster’s, State Farm had cared, guided and protected its clients. And the clients were repaying that with rock solid loyalty.
Leo Burnett Did The Same With This Hidden Clause?
The same principles apply to Leo Burnett. Like mother hens, they fuss over their clients, doing acts of guiding and protecting that other agencies would never even consider. Its first client, Green Giant, is still a customer some sixty years later. Even back then, founder, Leo Burnett, put in an additional clause that enlarged the standard vendor agreement of buying space, producing ads and maintaining confidentiality.
It read: Counselling with you in regard to your advertising and sales efforts, seeking new ways to improve your advertising, make it more productive, and in every way within our power, working with you to advance your business.
Founder Leo has been dead for over 30 years, but the tradition of caring, protecting and guiding doggedly lives on. Their policy is simple. If a customer runs into a bad year and has to cut back on its advertising – let’s say by 50 percent – Burnett doesn’t automatically cut back on its services by 50 percent and pull half of its management off the account. The company is willing to lose money on an account over the short term.
The inevitable result, Of its 33 clients, 12 have been with the company for over twenty years, and 10 for over thirty years.
Paying Attention to Webster’s Is Not Enough
It needs more. And that more is called sacrifice. Just like with children, you can’t deal with fifty all at once. Each child needs its own time, space and guidance. This requires huge resources, and if you chase every possible client, you’re soon going to run yourself pretty ragged.
The Leo Burnett Agency chooses carefully. It selects its potential clients, as you no doubt will. In 1994, 54 companies invited the agency to talk about a business relationship. Burnett pursued only five.
If your selection of customers isn’t deliberate and systematic, you will run yourself ragged trying to service customers that share neither your dreams nor standards. Invariably, you will find discord and the desire to care, protect and guide will evaporate like moisture on a hot summer’s day.
Care, Protect and Guide – Even If You Have To Send Clients To Your Competition!
If you’re scared, back out now, because I’m going to ask you to do something no seemingly rational business does. That is, you care about your client so much, that you take pains to send them to your competition if you cannot help them.
Hang on. This isn’t as bizarre as it sounds. If you really do care for your clients, you should want them to get the best advice possible. However, no one said you shouldn’t make money off this.
If you sell high end BMWs and you know your client needs a more economical Toyota, you should logically send them over to your competition. However, if you set up a deal with the Toyota dealer, you can not only generate a commission, but also give your potential client a bonus or discount if they go specifically through you.
Hey, those customers are going to walk anyway, once they find their exact needs aren’t being met. And if they get stuck with something they don’t really need, they’re going to be mighty mad once they find out. You aren’t doing yourself or them a favour by making them stick to what you have to offer. Sending them to a competitor that you know will treat them well, endears you to the customer and ensures a tidy profit as well.
Welcome To The Land Of Endless Loyalty
Loyalty at its very roots is exceedingly simple. It’s exactly like a parent-child relationship. While no doubt you will come to depend on technology as your client base grows, the enduring thread that binds it all is the underlying psychology.
Inevitably, you won’t always have a trouble-free course, and both Leo Burnett and State Farm have had stormy days. The only way out of the driving rain is to heartily embrace the care, guidance and protection concept. Let it be your guiding light, far superior to any mumbo jumbo mission statement, leading to exponential profits and devoted clients.
All you have to do to succeed is play Mother Hen.
And say a silent thank you to a certain Mr.Webster.
* Source: The Loyalty Factor by Frederick Reichheld.
**Secondary Source: Me. I worked at Leo Burnett in the 90’s.