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The Flip Side of Customer Loyalty: The Case of the Demanding Customer 

Jim Barnes | Mar 19, 2007 2,020 views 5 Comments

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So, you have done everything that customers might expect from your firm; you have created lots of emotional value, and your customers now reward you with repeat patronage, positive referrals, and virtually all of their business. Congratulations! But, have you thought about the onerous responsibility you have now created for your company and its employees?

I spend a lot of time observing, listening to and watching customers. I have noticed recently a phenomenon that seems to be more and more evident. Many customers now realize their value to a company and are determined to capitalize on it. These are customers who come back to buy from you again and again, and expect to receive some special reward as a result. Possibly because of the sheer volume of material written on the value of loyal customers and possibly also because they are now rewarded for repeat buying by all manner of organizations through so-called “loyalty” programs, returning customers often bring with them an abiding sense of entitlement.

I saw this recently when a couple returning to a vacation hotel for only their second visit were absolutely convinced that they were entitled to an automatic upgrade. Frequent flyers expect to be invited to sit in business class. Returning customers sometimes have a false sense of their own value. They not only expect rewards, they also expect lower prices, and special treatment. At the very least, they crave recognition.

Loyal customers represent the most important asset of a company only to the extent that they continue to bring in business, are prepared to pay higher prices, engage in recommending the firm to friends, and accord the firm a larger share of spend. They can’t hold the firm to ransom and remain valuable.

Such behavior raises the question of whether these demanding customers are truly loyal or just in it for the rewards. It raises the question also of how to deal with them. Do we place their business at risk by refusing to meet their often-unrealistic demands? In the absence of database information that will allow for an accurate estimation of customer value, we often leave it to front-line employees to make decisions on how such situations should be handled. This places them in a very uncomfortable position and leads to the possibility that some customers will be treated unfairly.

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5 Responses to The Flip Side of Customer Loyalty: The Case of the Demanding Customer

  1. rhmetzner March 19, 2007 at 2:20 pm (374 comments) #

    [img_assist|nid=956|title=|desc=|link=none|align=left|width=508|height=640]The issue Jim raises is real, but the fault is not necessarily the customer’s. If proper expectations are set, then customers that are of recognized and/or potential value will know what behaviors will earn them the benefits or rewards they want. And making front-line employees aware of those criteria also arms them with the tools to make the proper judgments.

    Of course there will always be those who want to game the system, and companies will need to set their policies accordingly.

    Richard Metzner
    Partner
    Metzner Schneider Associates, Inc.
    http://www.metzner-schneider.com

  2. Graham Hill March 19, 2007 at 5:22 pm (992 comments) #

    Jim

    As Richard suggests in his response, setting customer expectations at the right level is important for managing satisfaction and the occasional delight.

    There are a number of service management frameworks around such as SERVQUAL, the Gaps Model and the Zone of Tolerance model to help guide companies through this tricky process.

    The problem is often as much that companies deliver highly erratic service – one minute overwhelming the customer, the next underwhelming them – as that they don’t set expectations explicitly.

    Graham Hill

  3. Jim Barnes March 20, 2007 at 11:18 am (45 comments) #

    Of course, Richard and Graham are correct, it’s simply a matter of managing customer expectations. But that’s not as simple as it may appear in theory. It is tricky at best. My main point in the blog was twofold; first, it seems to me, based on my somewhat unscientific observations, that customers may well be becoming more demanding and feeling more entitled, driven in part by the fact that these days they seem to be rewarded at every turn. Second, trying to deal with increasingly demanding customers places front-line employees in a very difficult position. Try telling a front-desk clerk who is dealing with that second-time visitor who expects an upgrade that all she has to do is manage expactations.

  4. Graham Hill March 21, 2007 at 4:59 am (992 comments) #

    Jim

    As is often the case, all three of us are singing from the same song sheet. But perhaps we are singing in Descant.

    As both Richard and I suggested in our comments, just expecting the front-line to respond to demanding customers without appropriate insight, tools and training is a recipe for all-round frustration. And as I wrote in a previous post on Customer Service: Dr. Jekyl vs Mr. Hyde, there are a variety of practical management models, like the Gaps Model, that companies should use to understand the service delivery system in its entirety, including customer expectations, before planning how to manage service delivery successfully.

    Graham Hill

  5. Jonathan Narducci March 26, 2007 at 2:20 pm (1 comment) #

    “Expectations” is the right word: Do customers expect their suppliers to be in business after they receive the “above and beyond” demands? Do they have any idea the pressure supplying “above and beyond” demands have on the supplier to make a profit – just like they want to? If not, then the supplier has to set expectations.

    Customers have to ask themselves if they are going to get the “proper” value for the “proper” price from other vendors and what it will cost them to make the switch or loose their “loyalty gift” vendor due to market pressures because of “extra” costs. They have to ask themselves about the value they give up – consultation services, good communication about product availability, new technologies, and market changes, and solid knowledge about how they operate so the supplier is always adding new value to deal with their “hidden” issues.

    Bottom line: Does the vendor consistently meet the results customers expect from the provided value? If so, the value they expect from vendors shouldn’t be in the form of loyalty programs but in the form that makes their results what they expect (or better).

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