Technology Does Not Create Customer LoyaltyBy Samuel Greengard Print
Businesses increasingly live and die by data and analytics, and not always in the ways executives think about.
There's no denying that analytics produces spectacular gains for many organizations. But, like any technology, it can also introduce unintended consequences. For example, faceless data can create an abstraction layer between a business and its customers. Handshakes and personal greetings are supplanted by log files and computer-generated decisions.
Today, despite powerful analytics tools and the availability of customer-specific data, many businesses treat top customers about the same as mediocre customers. Over the last few years, I've had run-ins with banks, airlines and other firms that won't take even a modest request into account -- even when I've flown hundreds of thousands of miles or have substantial financial assets with them. That has led to me taking my dollars elsewhere.
Unfortunately, the problem is only going to get worse.
Amazon already uses dynamic pricing, otherwise known as "surge pricing." Uber and much of the travel industry, including airlines and hotels, also adapt pricing on the fly, based on changing supply, demand and other factors -- including when a product appears in an article at a high-profile website.
In some cases, such as at Amazon and Uber, pricing can double at peak periods. Airlines and hotels can deliver entirely different results from one minute to the next. This can prove incredibly baffling and frustrating to consumers. Now, brick and mortar retailers are joining the party using digital signage.
Yes, consumers now have powerful tools to compare pricing at various sites. While these apps level the playing field to some degree, they also mask an issue that winds up largely overlooked by business and IT leaders: When there's an inordinate focus on pricing -- and consumers perceive that they're paying more or valued less -- loyalty fades.
Alas, most loyalty programs do little to address this issue. Amazon is an exception because Prime members receive some clear benefits, including free and fast shipping and access to online movies and music. However, many companies place so many restrictions on programs and perks that they are essentially useless. For example, it's next to impossible to use the two-for-one ticket offers airline credit card companies offer or the mileage you've accumulated from a frequent flyer program.
I have no doubt that loyalty will become less meaningful for consumers in the years ahead. While the ideas of maximizing financial results and engendering loyalty aren't mutually exclusive for businesses, it's a tough feat to pull off in the digital age. Without well-conceived policies, outstanding service and support and a loyalty program that delivers some value, a business is essentially reduced to a transactional player.
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