Speech Summaries

Christopher M. Kelley Director, Consumer Technographics® Forrester Research, Inc.

Selling Track: Where Are All The So-Called "Loyal Customers?"

Christopher M. Kelley, Senior Analyst, Forrester Research, opened by describing how his local fish market, though it doesn't have the best prices or hours, wins his business by having a superior experience. This in fact was the theme: Great experiences -- not just price -- will build loyalty.

Loyalty was defined as a relationship developed over time from a sequence of great experiences. This loyalty starts from day one and will affect how loyal your customers are in their interactions with you. Consumers are disloyal, bribed, trapped, habitual, or loyal. When they are loyal, consumers won't leave, even if given the chance.

Brands are losing their power, as evidenced by the ubiquity of loyalty programs that are based on price and do nothing to cultivate loyalty. Fifty-four percent of primary grocery shoppers belong to two or more programs. Cross-shopping is also prevalent: 17% of consumers shop at Best Buy, and 32% of those shoppers also go to Circuit City. Likewise, 9% of consumers shop at Circuit City, and 32% of those visit Best Buy. Most companies cannot compete on price, as only one company per industry can afford to win on price.

Instead of competing on price, you can build true loyalty through continuity marketing. Through the presale, sale, and post-sale, companies can rely on store technologies and cross-channel services to ensure a presence for all three stages of the customer's experience. Chris noted that the experience is like a wave, and through smart touches throughout the purchasing cycle, the experience develops into more than the sum of its parts.

Loyal customers are out there: 57% of customers say they are loyal. These loyal shoppers are not demographically distinct, and they spend 10% to 15% more money on retail than disloyal shoppers. The loyalty to-do list: "Must dos" -- make the continuity program unique to your brand and create a program that spans across channels; "Can dos" -- experiment with new technologies and services and work with firms to help guide your vision; "Don't dos" -- fail to act and fail to measure the results of the program.

Questions And Answers

Q: Competing on price is suicide, but everyone does it -- how can you break the cycle?

A: Target has low prices, but the experience is not all about the prices -- shopping at Target is better than shopping at Wal-Mart. Their experience differentiates them; once you hit the wall in pricing, what do you have left? Break through the wall by competing on price but not relying on price.

Q: Can superior product performance on its own create loyalty?

A: A superior product helps, but if experience is lacking, the loyal consumers are gluttons for punishment.