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Should Apple change its view of customer loyalty?

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Should Apple change its view of customer loyalty?
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Apple obviously thinks about customer loyalty, but to this point in its business evolution, Apple’s “loyalty program” can be defined by two words – product innovation. I think it’s time to change and here’s why.

The apex of the business cycle is to be able to exact a price premium for products or services sold while enjoying rapid and sustainable growth. Apple has been in this position over the past decade and is one of a very small handful of consumer electronic companies that can exert full control over its distribution channels and avoid offering product discounts or *gasp* have to award loyalty points for its purchases.

This enviable market position was reinforced by an email in my inbox this week with the subject line “There’s still time to get great gifts”. With the influx of email around the holidays, the expectation created by this subject line has to be  “I’m about to get a (fill-in-the-blank) daily deal, discount, or two for one offer with free shipping thrown in.

This expectation would be entirely reasonable across the universe of e-commerce, except if you’re reading an email from Apple. What did Apple offer me in this temptingly postured email? I was being offered the privilege to shop with them in time to have my item arrive for Christmas. That’s it. The copy in the email made it very clear: “Shop online by Dec. 22 to get fast, free shipping on most products. Or select “Pick up” at checkout and we’ll have your order waiting at your favorite Apple Retail Store.”

I wonder if this is the last Christmas season that we’ll see this approach from Apple. Consider that there were 455 million mobile phones sold in Q3 2013. That volume represented just 5.7% growth overall, with the fastest growing segment being smartphones, the handsets running on Android, iOS, Window Phone, and BlackBerry. Smartphone sales accounted for 55% of total phones sold in the quarter.

Now, consider that Samsung has 32% of the global smartphone market while Apple is hanging on to just 12%. Smartphones themselves are being threatened by the growing selection of tablets and several competitors including Amazon’s Kindle Fire and a variety of Android tablets are pointing out the equal capability and cheaper price of their device when compared to Apple. For all but the most ardent of Apple brand-maniacs, there is compelling rationale to shop the handset and tablet market harder these days.

Apple introduced its iCloud back-up product in recent years, the equivalent of a loyalty program as we posted not long ago in LoyaltyTruth.com. We also postured that the introduction of iOS6 with Passbook might create “meta loyalty” for Apple. With the many options for data backup and storage and the slow ramp-up of Passbook as a loyalty program clearinghouse, we’re not so sure about the stickiness of either to sustain customer loyalty.

We also wonder how committed Apple is to use data to differentiate customers and create value for specific groups. Probably two years ago, I was offered a “business account” with Apple that was supposed to offer me a variety of benefits. Most were service oriented, but there was also implied promise of a good deal or two along the line. Since that time, I have heard nothing from the “program”. I’m not sure if Apple abandoned the program or if I’m just not worthy of their attention. Either way, it seems that reliance on product innovation and friendly staffers in well managed retail outlets has outweighed the perceived need to create any form of data-driven marketing strategy at Apple.

Putting pride aside, now is the time for Apple to embrace its customers for who they are and the value they offer to the company. There is plenty of runway left on the Apple “brandwagon” to create customer love within the context of a data-fueled customer strategy that targets specific product segments under attack. Doing so would once again put whitespace between itself and the nearest competitor, and Apple would be using innovation to create competitive advantage. The difference this time around is that the innovation will come more from marketing than product.

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