4 Retail Marketing Practices That Destroy Customer Loyalty
People consider Monday to be the most daunting day of the week. As if it didn’t need more spotlight, everyone’s “favorite” day of the week was forever characterized as Manic Monday in a song written by Prince for the 80’s pop group, the Bangles, in 1986.
Marketing has its own claim to mania – creating campaigns and mismanaging data in ways that swing your mood as a consumer in seismic shifts - impacting your emotions and attitude in the process.
Over the past month, members of our staff have contributed stories of “Main Street Maladies” created by retailers that frustrate them as customers. Each story is an illustration of how brands have many gaps to fill in how they interact on a daily basis with customers.
Here are 4 Main Street Maladies:
Subaru
Our staffer owned a Subaru Ascent which was thoroughly enjoyed during the term of a three-year lease. The lease reached its end in 2020 during the pandemic and the staffer realized that the car carried a market premium well above the residual value in the lease. This was due to the high demand for used vehicles during the 2020 – 2021 period.
The car was sold back to the Subaru dealer which originated the lease. This was three years ago. Since that time, the Subaru dealer periodically reaches out to express interest in buying back the same car. The latest was a 5 x 7” postcard signed by the general manager, with the message “I am ready to make you a very aggressive offer on your Subaru. Your vehicle may be worth more to us now than ever before. By coupling this buyback opportunity with all of our new car incentives, we are confident you will be leaving a VERY happy customer!”
A much happier customer would be one that feels like the dealer actually knows who they are and is driving its marketing efforts to existing customers based on accurate data.
Pinch a Penny
National retail pool supply and service company Pinch a Penny is running a spring sale on pool equipment. The store manager was enthusiastic about the efficiency of the latest robotic pool vacuums and pointed out that buying one during this promotional period carried a $175 rebate. That broke down as a manufacturer’s rebate ($100) and a store credit ($75).
After buying the robotic vacuum, our staffer went online to register the unit and submit information to obtain the manufacturer’s rebate. He quickly reinforced the idea that OEM rebates are the “surprise and disappoint” of all promotions.
During the online registration process, the web form asked for a “coupon code.” There wasn’t one on the packing nor on the purchase receipt. When she called the local retailer, she was told that no one knew the code and that she should “call the 800 number”. Reluctantly, she called that number and after navigating a non-intuitive call tree, was told to complete the registration form first and that a code would be sent via email as a follow up. After some pleading, the rep agreed to send an email immediately with the rebate code to expedite the process. Need we say more about the brand damage done in the process of seeking to fulfill a simple rebate?
This should tell you why many consumers are saying in research to “just give me cash back” or to “forget your loyalty program and lower your prices.” You may not like to hear this, but as marketers it is up to us to create the promotional structures and executional processes that create pleasing experiences and build trust, not dilute it.
Just about every retailer we have contacted for service
Whether it is Chase Bank, Verizon, or an online retailer, service requests are increasingly routed to chatbots on a website. Our staffers (a few of them) had to dig to locate a phone number to contact these companies to talk with a customer service representative. In almost every instance over the past month, the message begins with “Hello, we are currently experiencing a high volume of call (higher than normal volume of calls) and suggest that you visit our website to talk with our online chat feature.”
The are a few problems with this type of messaging:
- It’s not logical based on market circumstances (i.e., it’s not the holidays or another busy retail season), therefore skepticism is aroused.
- When this messaging becomes “standard,” it’s time for a change or risk being perceived as not truthful
Consumers are well educated about marketing tactics in 2024. They know most of the tricks that are used to shift people to digital channels, or just stall to gain access to understaffed customer support centers. To differentiate your retail brand, what if you became more forthright with contact information and transparent in letting people the limitations and time investment for each channel? With that approach, customers could make a choice and expectations would match the service levels in each channel.
State Farm
Insurance rates for home and auto are skyrocketing all across the US. Sitting down with your agent twice a year to review policies and seek to optimize coverage and premiums is worth the time invested. One of our staffers sat down with his State Farm agent recently and discovered the ugliest truth about the market today – that a 30-year client of State Farm was treated no differently from one who acquired coverage just one year ago.
After a review of the policies in place, it was apparent the agent had little to offer to save the customer some money. It was at that point that our staffer posed the telling question, asking if his 30 years of being a customer afforded him some preferential treatment. The answer was delivered diplomatically, but was essentially, “no.”
If you live in the US, you would be aware that the major home and auto insurers, Allstate, Farmers, Geico, Liberty Mutual, Progressive, State Farm, all invest heavily in advertising. Geico has its Gecko, Progressive has “Flo,” and State Farm has the Kansas City Chiefs among other sports superstars. True loyalty is developed when companies put their customers first. The model in the auto and home insurance business in 2024 seems to put the advertising budget first – and all the customers in the same bucket.
Wrapping it All Up
The four examples shared as Main Street Maladies are representative of business practices that have been in place for many years. Each one disappoints customers through different means, but the result is the same, trust is broken and the prospect of generating long-term loyalty to the brand is diminished.
- The Subaru dealer had not updated its database and was marketing from faulty data.
- Pinch a Penny was touting deferred OEM rebates as a selling tool, effectively placing frustrating hurdles in front of the customer.
- Service providers and online retailers are transparent in their desire to move customers to digital channels but are disingenuous in how they communicate the options.
- State Farm committed the fatal flaw of revealing that relationship tenure has no impact on service or rates. Where’s the incentive for the customer to be loyal to the brand?
The lesson to be learned from these stories?
Fix what needs fixing now rather than gazing into crystal balls. The next time your team wants to set up an offsite retreat to debate a heady topic such as whether the future of customer loyalty is in Web3 or Blockchain, you might suggest that a review and assessment of operational and data issues would yield a much more productive outcome for the business.
