Why Loyalty Matters

According to 36 US Code § 115 May 1st is officially Loyalty Day!  The code states that “Loyalty Day is a special day for the reaffirmation of loyalty to the United States and for the recognition of the heritage of American freedom.”  On May 1st, all Government buildings are called upon by the president to display the United States of America flag and traditionally towns and schools will hold parades and celebrations. 

 To read more go to:

http://www.law.cornell.edu/uscode/36/usc_sec_36_00000115—-000-.html

http://en.wikipedia.org/wiki/Loyalty_Day

Read all about how Americans are more loyal to their soft drink brands and their country rather than the company they work for.  Then join the debate, already over 1,500 comments have been posted on this article.

http://news.yahoo.com/s/nm/20100429/lf_nm_life/us_loyalty_poll

A while ago I had the pleasure to listen to Brian Parsley, President of WeSkill, give a great presentation on business strategies.  Under the topic of customer service, Parsley spoke of wanting an In-N-Out burger while traveling on business.  Not having a GPS unit, Parsley called In-N-Out’s customer service hotline, where he spoke to a representative who helped direct him to an In-N-Out.  

This example raises several questions. First, how many people do you know who would call a hotline to help them find a fast food burger joint? Second, how many fast food burger joint’s hotlines would have representatives willing to help a lost consumer find the nearest burger joint?  The answer to both questions is probably, “Not many.”  This story doubles as a great example of providing excellent customer service and of displaying significant brand loyalty. 

The publisher of Stacy Perman’s book, In-N-Out: A Behind-The-Counter Look At The Fast-Food Chain That Breaks All The Rules, wrote that “Over time, In-N-Out Burger has become nothing less than a cultural institution that can lay claim to an insanely loyal following.”  To demonstrate the aurora of loyalty that surrounds In-N-Out, in a blog posted yesterday by blogger Nacy Luna titled, In-N-Out Burger Raises Menu Prices, has already generated 191 comments.  A critical reader would expect mostly negative posts.  However, many where is favor of In-N-Out. 

BeachBumBob wrote: I will always pay more if I know that the quality of standards are still the same or higher. When it comes to helping In-N-Out stay in business I don’t mind.

 Christina wrote: In order to keep your business in business, raising prices is sometimes the answer…. let me just also say, that IN N OUT is still going to be the cheapest place ever to get an awesome burger, fries and a shake…. so seriously, its not a negative, its a positive for them…. how would you feel if there was no more IN N OUT….I would cry!

 Talk about brand loyalty, “helping In-N-Out” and “I would cry.”  How many of your consumers would say that about your company or product?  In-N-Out is raising prices in an industry that relies heavily on loss leading “Dollar Menus” to entice consumers, and consumers are okay, even supportive. 

So what is In-N-Out’s secret?  A good place to start may be their consistently exceptional service providing quality products all at a reasonable price.  

Links: www.brianparsley.com/

www.powells.com/biblio/9780061346712

fastfood.freedomblogging.com/2010/04/13/in-n-out-burger-raises-menu-prices/58221/

The recession was a brutal test for brands last year. A recap of a few who managed to get an A, such as Johnnie Walker, who is applying what undergrad taught us all, that “drinking is cheaper at home”

Read the article at http://www.adweek.com/aw/content_display/community/columns/other-columns/e3i6914f3194e3fb193b9c23e969bf4d556

Part of loyalty includes remaining faithful even when it may be disadvantageous. For instance, a loyal friend of yours may say “Don’t worry, I have your back,” meaning that your friend will, symbolically or even literally, make sure that you do not get blind sided. Regardless of what direction you are heading, a loyal friend will support you.

Recently, Google defied the Chinese governments desire to censor all internet activity by rerouting its Chinese search engine through Hong Kong to bypass the Chinese “Great Firewall”. A China Daily article titled, “Google’s Exit Is Not Exactly A Windfall Foe Baidu” by Wang Xing, discusses consumers and advertisers reactions to this event.

Not surprisingly, “many of the company’s domestic partners and advertisers were scared away on fears that Google’s sour relationship with the government might impact them.” Investors also shied away from Google. Fearing Google’s ability to earn revenue from China investor’s sold their shares. Google’s stock price ultimately dropped by about 9%. Granted Google’s stock price has bounced back, it is still below its pre-China ordeal price.

But consumer have stayed loyal to Google. “Figures from Alexa [Internet] show that most of the traffic from Google.cn has been picked up by Google.com.hk, of which user visits surged 2,056 percent over the past week.”

How loyal are your customers, your investors, and your advertisers or suppliers? Would they risk government repercussions to remain loyal to your business? Would they support your business during rough times? If not, what steps are you taking right now to build their loyalty?

Link: www.chinadaily.com.cn/bizchina/2010-04/02/content_9680226.htm

Harley-Davidson is commonly cited as having one of the most loyal following of any brand.  A factory sponsored owners group called, Harley Owners Group (H.O.G.) has more than 1 million members and more than 1,400 chapters worldwide.  Harley enthusiasts regularly partake in group rides with Sturgis being referred to as “the granddaddy of all motorcycle rallies” as per Harley-Davidson’s website. 

Looking to capitalize on Harley-Davidson’s brand loyalty, Ford introduced an F-150 Super Crew Harley-Davidson edition pick-up truck fully detailed with prominently displayed Harley-Davidson logos.  Going one step further, many loyal fans have the H-D logo permanently tattooed. 

One blogger wrote, “People get tattooed for a variety of reasons, but a common desire is to honor something for which one has a deep and abiding reverence.”  Beyond a handful of companies, including Harley-Davidson, most companies do not instill such deep, devoted feelings.  However, as one blog, albeit one titled, “Ugliest Tattoos: The Gallery of Regrets” has  a webpage devoted to brand loyalty.  Companies such as Cheetos chips, Triscuit chips, Oreo cookies, Elmers Glue, Hamburger Helper, Converse All-Star, Newport cigarettes, Velveeta cheese, Cracker Barrel dinner, and Monster energy drink are all tattooed on at least one person. 

In looking for new engagement metrics, the “tattoo metric” may not be far from reality.  How many people would tattoo your company’s logo on their arm or back?  What does your answer say about the way your company is perceived by its constituents? 

Source: http://www.motorcyclistonline.com/calendar/122_0709_hog_members_adirondacks/index.html

Source: http://ugliesttattoos.com/tag/brand-loyalty/

“You mean there is more to loyalty than just frequency?” YES! In an interview between Mark Vondrasek, Starwood’s senior vice president of interactive and loyalty marketing, and USA Today, Vondrasek described Starwood is looking at factors beyond just frequency in guest says. Referring to Starwood’s new loyalty program, Vondrasek said, “We looked at factors beyond just frequency, which is the key measure in traditional hotel loyalty programs. For instance, we evaluated factors including guest’s profitability, their lifetime growth potential and their ability to influence travel by others. We even targeted some travelers who were loyal not to Starwood, but to our competitors.”

This is one case where Starwood is leading the pack. In what looks to be a future Harvard Business Case Study, Starwood has taken the initial step in welcoming selected guests into their loyalty program. This is where Starwood segregates itself from the pack. Traditionally, hotel guests start off in the lower tiers of a loyalty program and then as their total stays increase so does their standing within the hotel loyalty program. With Starwood, however, it seems that Starwood is welcoming guests with the full benefits of their loyalty program in an attempt to woo hotel guests.

Link: http://content.usatoday.com/communities/hotelcheckin/post/2010/03/starwood-scoop-starwood-hotels-exploring-new-loyalty-incentives-targets-hilton-marriott-hyatt-/1

Napoleon Hill once said, “Lack of loyalty is one of the major causes of failure in every walk of life.”  This quote could very well could be a summary for the Chinese General Guan Yunchang, God of Loyalty, Fortune, and War.  Westerners will likely see the connection between war and fortune, for a powerful country can loot a weaker country during times of war.  In actuality, General Guan Yuchang is a peaceful deity who uses his skills to avoid the confrontations of war. Thus, by avoiding war his country is able to prosper.  This period of prosperity then creates loyalty among the countrymen.  However, not all battles could be avoided.  During one battle when General Guan Yunchang is said to have been captured and forced to decide between switching alliances or facing death.  Holding steadfast to his virtue of loyalty, the General chose the latter.  General Guan Yunchang is traditionally found within Chinese restaurants, displaying a sword and helmet, being serenaded by candles, incense, fruit, and tea.

Link: http://www.gz.gov.cn/vfs/subsite/JGIN7QPB-AZE4-2MTO-EA6G-R281E8V2SFJH/content/content.jsp?contentId=496756&catId=6654

Link: http://www.godchecker.com/pantheon/chinese-mythology.php?deity=GUAN-YU

Loyalty is an integral part of forming relationships and actualizing overall happiness.  Jim Becker, a 79-year-old Green Bay Packer fan who has attended games for 56 years, recently learned this lesson.  As a modest man with a wife and 11 children Becker regularly sold his blood to offset the cost of season tickets.  Becker’s doctor later found that his father died at age 43 from a condition of the blood retaining too much iron.  Donating blood is the only known treatment for this condition.  Thus, Becker may have also died at a young age had he not gave blood as a result of his loyalty to the Green Bay Packers.

Link: www.google.com/hostednews/ap/article/ALeqM5jnWvzDeLifn-vP4s_sL3LhOmLLLgD9EE8HVO0

About two years ago I found the best deal ever, a two year contract for $100 per month “Unlimited Everything” plan with Sprint. I thought, “What a great concept, unlimited everything for a little more than most plans.” The relief of not worrying about going over my minutes each month alone is worth a few extra dollars to me. I am a fully satisfied customer who has never experienced a drop call, inaccurate billing (its always been $100 per month), or any other issues. I tend to use my fair share of minutes and have no intention to switch carriers or plans. Thus, thank you Sprint.

I am a loyal customer. However, despite all my acclaim for Sprint I am perplexed by a 14 page pamphlet I received in the mail today promoting the “one-year anniversary of Sprint Premier,” Sprint’s loyalty program. Over the course of a whole year there was never any introduction or reminder of this program. One may ask what exactly does a loyalty program celebrating its one-year anniversary that a loyal user has never heard of include? The Sprint Premier loyalty program includes a $5 reward or 75 bonus minutes, “Just Because” sweepstakes to shows and golf, early phone upgrades, 25% off accessories, courtesy plan check-up every six months, and inclusion in the Premier Community online forum. In all, a lot included in this loyalty program. While the sweepstakes, early phone upgrades, discounted accessories, and courtesy plan check-up are appreciated, the other rewards are lacking. First, the $5 reward equates to less than a 0.5% reward compared to the annual $1200 I spend with Sprint. Second, the Premier Community online might be great if I feel a strong desire to communicate to other Sprint customers.

Oh yeah, only Sprint customers with individual plans of $69.99 per month, family plans of $99.99 per month, or Sprint customers for at least 10 years are allowed access to Sprint Premier.

Sprint is not alone in offering lacking loyalty programs, many other companies also offer loyalty programs leaving customers desiring more. Three key points to remember when creating a loyalty program as a point of competitive difference is to make sure you offer rewards or benefits that are:

1) Meaningful

2) Perceived as real value added

3) Relevant to or consistent with your products and services

By following these rules, companies can create successful loyalty programs.