We used to be big fans of Frederick Reichheld. The Loyalty Effect is still probably the best single book on the topic of customer lifetime value. More recently, though, he seems to have been favouring headline-grabbing buzzwords over substance.
I was relieved, therefore, to come across some solid common sense from Reichheld in Phil Dourado's latest newsletter:
"The idea that there has been a change in customer psychology leading to a chaotic world of churn that we have to learn to live with is, quite frankly, bunk. The state of churn in many industries is due to companies abusing their customers and customers searching for what they have always wanted: a supplier they can trust who will fix it if they screw up."
Frederick Reichheld, talking to Phil Dourado
Exactly right. Customers are always prepared to be loyal, if you give them reason to be. In fact I would argue that customers are often surprisingly easy to make loyal. We like feeling that we have made the right decision, so we tend to look for evidence to support the fact that the choices we make as customers are the best ones, until we're proved painfully wrong.
As Reichheld suggests the problem is not that companies are failing to make customers deeply loyal—most disloyalty is due to companies actively pushing customers away with poor service. It's time companies stopped fretting about mythical super-savvy consumers who are constantly playing poor helpless mega-corporations off against each other, and started getting the basics consistently right.