Naturally. Loyal customers come back and buy more. They recommend the company to others. And they're less price sensitive. A pretty cool trifecta.

There have been some quibbles in academia and the business press about some of the details of the Net Promoter Score. We've mentioned NPS in several recent postings, so we won't describe the methodology again. If you're not familiar with NPS, click here for a brief description.

Although the Net Promoter Score has become a widely-accepted metric for customer loyalty, the principal that companies do well when their customers are loyal isn't dependent on the specific measurement used to gauge satisfaction. Whether it's the Net Promoter Score or Harley Davidson's definition of loyalty (the brand's logo tattooed on the customer's body), loyal customers tend to result in a healthy bottom line.

That being the case, it seems logical that companies would be eager to make their customers loyal to them. Apparently not.

Some companies seem to go out of their way to make things difficult or unpleasant for their customers.

Customer-hostile policies, practices and procedures can infect any part of an organization. This posting is focused on  the ones that make it difficult or unpleasant for customers to interact with or buy from a company. Marketing issues.  

Some examples:

•  "Do it our way" web commerce sites. A BrainPosse principal recently tried to make a purchase from an online site. The data entry page was repeatedly rejected. Finally a notice popped up: the phone number had to be entered as xxx-xxx-xxxx, not (xxx) xxx-xxxx. It is effortless to program a site to accept a phone number in any format the customer prefers. And the programmer is probably perfectly capable of doing it. She or he simply chooses to force the customer to do things her or his way. And a very foolish catalog company is putting up with this hubris.
  

• We have to know you before we'll sell to you. A while back we needed a somewhat specialized battery and went into a Radio Shack, cash in hand, to buy it. The kid behind the counter wouldn't complete the transaction without knowing the purchaser's name, telephone number and ZIP code. Same thing happens on some online commerce sites. You can't buy unless you register. Get over it.  We just want the battery or the gadget. We don't want to be your My Space friend.  Forcing customers to waste their time costs a lot of transactions.
  

• Incomprehensible instructions. About ten years ago a BrainPosse principal consulted with a company that offered interactive 360˚ imaging for web sites.  The operating procedure was so complicated that it took half an hour to explain it. When our guy suggested that simplifying the system and clarifying the instructions might be the smartest marketing move the company could make, one of the engineers said "It's the customer's responsibility to learn how to use it."   This ignored a critical revenue stream from licensing fees for each picture posted to the internet. The company went out of business.
  

• The new customer is king. Ever seen a special offer reserved for new customers from a place where you regularly buy? Not the bait-and-switch come-on from a cell phone carrier or cable company, a genuine price-off offer reserved for new customers only. Did it make you mad? Of course it did. And it's really stupid. The economics of keeping an existing customer are a lot more attractive than the cost of bringing in a new one. But retailers frequently – and openly – give preferential treatment to new prospects and ignore repeat purchasers.
  

• Weasel offers. A judge recently told Verizon to pay a seven-figure reimbursement to customers whose service was cut off for using too much of the "unlimited" minutes Verizon promised them. All 13,000 of the customers who were cut off, the 130,000 friends and acquaintances to whom they probably griped about Verizon and the millions more who read angry web postings now think Verizon is a bunch of unscrupulous weasels. And they may have a point.
  

• Airline pricing. Most airlines fill most of their seats with business travelers. Whom they gouge unconscionably every time they fly. The attitude is "We know you have to fly, so we'll really stick it to you. The vacation traveler in the seat next to yours has a choice, so we'll cut her a great deal." They don't hide it. The Saturday night stay requirement to get a bargain fare is a blatant declaration of hostility toward road warriors who'd like to get back home when the work week is done.
  

• Airline frequent flyer programs. After a road warrior has forked over enough overpriced fares to accumulate the miles to take the family on a vacation what's the airlines' response? What else? "Sorry, those dates are blacked out." This is absolutely stunning.  Airlines: 1) know that anyone with all those miles is one of their best customers; 2) know that they're creating some serious animosity by putting impediments in the way of that best customer using a perk they've been promised; and 3) don't seem to care.
  

• The car buying ordeal. The chicanery at many dealerships turns a car purchase into such an adversarial ordeal that most people dread buying a car. If it weren't for laws protecting dealerships' territorial exclusivity, we suspect that half the cars sales in America would already be online transactions. CarMax built the country's largest used-car company on the simple principle of taking the adversarial haggling out of the car-buying equation. We consulted with a megadealership that moves metal in good times and bad by treating customers respectfully, honestly and fairly. People might just buy cars more frequently if the whole process weren't so repugnant.
  

• The iPhone debacle. We had a posting about this marketing fiasco a few weeks ago. The short version is that Apple infuriated a lot of their most loyal customers by cutting $200 off the iPhone's price just weeks after launching the product, then by sending out a signal to deactivate phones running third-party applications. The price cut may have been necessary to meet a unit volume target, but Apple's bottom line took a hit when things got so ugly they had to send earlier purchasers a refund. It got buyers and the applications development geeks who are Apple's core fan base really, really angry. The decision was reversed and the phones reactivated, but a lot of damage was done.

From Henry Ford's "Any customer can have a car painted any color that he wants so long as it is black" in 1928 to "Special orders do upset us," the never-articulated mantra of McDonald's today, company-centric philosophies probably destroy more shareholder equity than the sub-prime mortgage crunch.   

The other side of the coin is the opportunity customer-hostile companies create for their competitors who are customer centric and customer friendly. Companies whose interactions with their customers have earned NPS scores of 50% to 80% (versus a norm of 5% to 10%) have a tremendous advantage in the marketplace. And it's an advantage that compounds, as new customers brought in by positive word-of-mouth from satisfied/delighted existing customers become promoters themselves and bring in more new customers.

A look at a list of high NPS companies gives an interesting insight at how powerful a cadre of strong consumer promoters can be:

Apparently 81% is beyond the threshold at which customers are so loyal to a brand that they have its logo tattooed on their bodies. Makes it kind of awkward to switch to a Kawasaki. And, of course, the implied endorsement is right out there for the world to see.

Obviously company behaviors during interactions with customers are the prime drivers of customer loyalty. To find out how the interactions that occur in marketing and communications can be tailored to optimize the customer experience, click here or call BrainPosse at (865) 330-0033.

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