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Contractual Loyalty is No Loyalty at All

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Contractual Loyalty is No Loyalty at All
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We just passed by Valentine’s Day, which means we should be fresh in our thinking about relationships. The other day I heard someone I respect say that the most solid relationships are ones based on “trust and freedom“.  In human terms we’re talking about trust which leads to freedom which means an absence of jealousy and related emotions.

“There is no fear in love. But perfect love drives out fear” This quote from the Bible has been read at many a wedding, so even if you’re not prone to church-going, you might have heard this one. Basically, if you’ve got trust, freedom will follow, and there will be no fear of all the “bad’ things that can happen in a relationship.

Before you think I’ve turned into a wanna-be talk show host or self-help guru, let me make the point – customer loyalty is not possible to achieve when a business relationship is bound by contract, particularly when most terms exist to serve the interests of a single party.

This one way street exists in wireless communications. We are all familiar with the upgrade game we play when seeking a new handset, the insurance that evaporates if we drop a phone into a puddle more than once, and the cancellation fees that keep us in line when we think about leaving our carrier early.

The wireless phone business is one of the few where the supplier has virtually all the levers to dictate the relationship, and where customer service to rectify service or equipment problems is doled out grudgingly; normally only after repeated threats are made by the customer.

If the wireless companies in the US were heads of state in the Middle East, most of them would be dethroned similar to what recently took place in Egypt.

The latest interaction with my wireless carrier sparked this post. I recently switched from an iPhone to a new Samsung Captivate (model SGH 1897). The Android platform is fantastic as it allows me (a PC user and Gmail user) to sync contacts and calendars automatically. I use the phone for business and this is important to me. When I had my iPhone, the syncing process was multi-step, time consuming and clumsy.

The problem is not Android, its the Samsung handset and the carrier’s reaction to solving the problem. After reporting problems with the phone including faulty touch pad, sketchy or inoperative GPS, and pitiful battery life, a representative in the corporate store finally admitted that there are “known issues” with the Samsung unit.

The solution offered? The phone company offered to let me purchase a newly released Android model by HTC at the “upgrade price”. They would not count this as an upgrade but would extend my contract life 2 years from the date I got the new unit.

Hmmm, I paid $199 for the Samsung 6 months ago, it is acknowledged to be a lemon, and now all I can do is to buy the next phone, unproven as it may be, while marrying myself to my captor for 2 more years.

When consumers purchase just about any other electronic item within reason, the retailer stands behind the sale, provides a refund or swap with no strings attached, and make the manufacturer responsible for their poor work. I’ve seen it happen with Best Buy, Target and others.

Why not the phone company?

The way loyalty can be fostered in wireless is to deliver on the customer experience by making amends with valuable customers to resolve service or equipment problems easily and amicably. I suggested to a client recently that points or other scoring keeping currency could be awarded based on monthly spend, and could be redeemed to solve service problems or purchase accessories.

Exceeded your two draws on insurance? Cash in some points and get a new handset. Go over your data plan allocation by mistake? Cash in points to make good. If not points, the carriers could establish customer tiers based on value and establish benefits for each tier based on value. At the rate I spend with my carrier, I probably would have received a new phone gratis!

Like many things in life, its not difficult to solve the problem if you have the will to do so. If the wireless carriers adopt a different viewpoint with customers, we might stick with them regardless of contract terms. As the business is structured today, only the Stockholm Syndrome is likely to make you feel comfortable with your wireless carrier over the longer term, and the slightest sniff of freedom will have you running for the doors.


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Loyalty Truth named among Top 50 Customer Retention Blogs

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NG Data, a customer experience management solutions company, recently announced its list of must-read blogs covering strategies and tactics for customer loyalty, customer experience, and customer retention. We’re pleased to announce [...]

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