Sometimes I talk about the idea of Profitable Loyalty and often I’m asked what I mean. So, here it is:
Not All Loyalty is Profitable, therefore, Not All Loyalty is Good.
Profitable loyalty is the result of a successful alignment of our corporate goals and capabilities with the values of our strategic customers.
When we are aligned with these customers’ values, we have a greater likelihood of setting the right expectations, of delivering on those expectations, and of creating partnerships based on mutual trust and benefit.
When we are not aligned, we find ourselves with large numbers of unprofitable customers who never seem to understand our capabilities and often demand that which we find difficult to deliver.
Profitable Loyalty comes from clearly defining who we are, who we want to become and with whom we want to do business – Segmentation.
Once this is clear we can develop and maintain policies, processes and delivery mechanisms that add value to strategic customers who are aligned with our direction and understand and value what we do. It is here we want to invest in creating positively emotional touch-points.
There is nothing worse than having customers push us to be something we are not, and don’t want to become. It adds instability and costs to our business. It creates frustration in our employees and stresses our processes.
Let me be clear. I‘m not saying we should not listen to our customers when they are asking for new capabilities or innovation. Great customer communications and flexibility to meet market needs is a basic tenet of Loyalty. However, trying to be everything to every customer is a sure formula for failure. There are things we do well, there are thing we need to improve and there are things to which we need to say NO.
If your company is NOT concentrating on Profitable Loyalty, you may be experiencing some or all of the following:
- Your most important customers are the least profitable.
- Price is the prime negotiating variable
- Process exceptions seem to be the rule
- You are becoming increasingly reactionary
- Customer attrition is increasingly an issue.
At times these symptoms seem endemic to an industry and therefore, par of the course. Accepting this as our reality, puts us in danger of racing our competition to the bottom. On the other hand, we can thrive in the face of adversity if we are able to re-align ourselves with the values of our strategic segments.
All customers are not created equal.
Rudy Vidal
Committed to XCS
