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Why Loyal Customers Will Turn Left in Traffic
Travel agencies who want long-term customers should focus on what is best and most relevant to their clients –– rather than on selling them specific products and services.
That’s the way to create deeper loyalty that’s built on an emotional connection, instead of mere superficial or behavioral loyalty, said Bryan Pearson, author of the upcoming book The Loyalty Leap: Turning Customer Information into Customer Intimacy.
Travel Market Report spoke with Pearson to learn how travel agents can build deeper, longer-term relationships with clients. Pearson is president of LoyaltyOne, which operates the AIR Miles Reward Program, a travel and entertainment rewards program in Canada.
Is long-lasting loyalty hard to achieve?
Pearson: With most companies, there is a lot of behavioral loyalty and not enough emotional loyalty. With behavioral loyalty, a customer can be completely satisfied. But true loyalty is when somebody continues to spend with you, (despite) some very meaningful and available alternatives.
What do you mean?
Pearson: If I can go left or right for gas and I choose consistently to turn left for gas, even though I have to cross traffic in order to pull into that gas station, I’ve got a higher level of loyalty to that gas retailer. That’s emotional loyalty.
So what you want to do is figure out how you build the customer experience, around all the aspects of how a customer would use your products and services, in a way that you start to build emotional loyalty.
Why is it harder to drive emotional loyalty than behavioral loyalty?
Pearson: Most companies are product- or operationally-centric as a model. They focus on: how am I going to differentiate my product, or how am I going to drive greater efficiencies in the business?
In most industries, there is going to be one (company) who is going to be the clear-cut innovation leader or price leader. In technology, for example, there’s only going to be one Apple.
If you look at price, there’s only going to be one Wal-Mart. If you’re going to compete on price, which is ultimately about operational efficiency, there’s always going to be somebody who is able to and willing to go deeper on pricing than you will.
So for most companies, the way they have to compete is foundationally around customer intimacy and the relationship.
How can a travel agency differentiate its customers’ experience to drive emotional loyalty?
Pearson: You can differentiate around how the interaction with the customer happens at the front line.
We like to talk about the three R’s of loyalty –– reward, recognition and relevance. To reward a customer you can give them a discount or points in a loyalty program.
But while rewards are very useful in making a connection, the reality is that it creates behavioral loyalty. If a competitor also comes up with a loyalty program, the risk is that you begin a dog fight over whose program has the higher value.
What’s a better alternative?
Pearson: Where reward drives behavioral loyalty, recognition starts down the route of driving emotional loyalty. It drives a higher level of engagement.
You’d be shocked at how many times you are a best customer of a business and you have no idea (because) the company has never reached out to you to say, ‘You’re one of my best customers.’
Recognition is a very simple thing to do. But relevance is the area you should focus most on, especially for travel agents.
What do you mean by relevance and why is it so important?
Pearson: So much communication that comes from companies is built from, ‘What do I have to sell?’ and, ‘What are my specials being pushed out to customers?’
That’s as opposed to looking at the customer first, then backing into the products and services I have available, and then tailoring the offer to what I know about those customers.
If eight of the 10 vacations I’ve purchased from you were cruises, then clearly there is an opportunity for you to fine tune your communications to me based on that knowledge.
Past behavior is a strong predictor of future behavior. So relevance is probably the biggest lever that exists.
So relevance and customer communication should be closely linked?
Pearson: Meaningful communication is about targeting offers based on the history of clients’ activity.
Relevance also includes communicating to the consumer through a channel they’re interested in – email, text message, direct mail.
How can travel agents make their communications more relevant?
Pearson: Step back and ask yourself the question: who would this really be relevant to? Look at: it is a great offer; who would it be absolutely perfect for? Then figure out how to communicate it in a way which will really cause them to pay attention.
We know that if you can take the content you have and put it in a contextual environment that resonates with the customer, you can double the response rates you get from a campaign.
Can you give an example?
Pearson: You could put a cruise offer in a generic email that goes out once a week from your travel agency that lists what your specials are. Or you could take the same cruise offer that is embedded in the generic email and put it in something that really rings out cruising. That would appeal to people who love cruises and it is going to be more relevant to them.