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customer loyalty is important

Is Customer Loyalty Worth the Risk?

One of the more controversial components in The Journey to WOW is the concept of extending to loyal customers the same kind of loyalty you would a friend. This concept runs directly against the transactional, quid-pro-quo approach favored by most businesses.

The “right thing to do” is typically viewed quite differently in a social construct than a business one. When someone talks about ‘the right thing to do’ in our personal lives, they are usually referring to ethics, morals or principles. When people discuss ‘the right thing to do’ in a business context, they are more likely to be discussing things that impact profitability.

The Journey to WOW suggests that there is greater benefit to applying the social construct when it comes to creating customer loyalty. It is a similar philosophy to that of the Santa Claus in the iconic movie Miracle on 34th Street. He caused an internal furor when the management found out he was referring customers to the store’s arch rival – until they discovered how positively customers were responding.

— Related: The Truth About Customer Loyalty (Video) —

Below is a brief example of doing the right thing from The Journey to WOW. There is obviously a big risk in this approach. What do you think? Is the payoff worth the risk? Please comment – I would love to hear your thoughts!

“Doing the Right Thing” from Chapter 36

They walked slowly back to Gary’s desk, and he told them of some of the other customers they had talked with that day. One was a long-time customer who was shopping for his wife’s birthday, but his credit card was at its limit. The man had lost his job a few months back, Gary explained, and hadn’t got back on his feet yet.

When the cashier in the jewelry department couldn’t complete the transaction, she notified one of Gary’s colleagues who went straight down. The customer was told that there would be no charge for the $200 necklace. It was a gift from the store. The customer was also given an additional $100 gift card to help him through the tough times.

“He and his wife have been customers for over fifteen years,” Gary explained before Cameron could ask. “They have spent a lot of money with us over that time. Given that they’ve always been there for us, it only seems right that we be there for them, doesn’t it?”

Cameron wasn’t convinced. “That’s a pretty big precedent,” he said doubtfully. “What if all of your customers suddenly started asking for the same treatment? Plus, there’s no guarantees you’ll ever see that money back.”

Gary gave him an understanding look. “True. But that’s the thing about loyalty, isn’t it? It’s given freely. You can’t say ‘I’ll be loyal to you only if you are loyal to me.’ That’s not loyalty – that’s a contract.”

“Loyalty is about doing the right thing for the right reasons,” he continued. “And we believe that if we are loyal to our customers, they will be loyal to us. We also believe that if a customer has been loyal to us, they deserve our loyalty. It’s an integrity thing.”

“I have also learned since working here,” Gary said, addressing Cameron’s concern that customers might take advantage of them, “that people are not nearly as opportunistic we fear. In fact, once you’ve created an emotional connection with customers, and they perceive you as an organization that genuinely cares about them, it’s very rare that someone will take advantage of you.”

Is loyalty worth the risk?

Does the potential payoff make it worth the risk? Could this work as a business practice?

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