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Disloyalty Programs: Trust Erosion Happens in Drips, Not Downpours

Disloyalty Programs

The Customer has been in charge ever since the arrival of social media. Suddenly, the people to whom companies pushed products, who advertisers sought to persuade and media tried to attract, began to talk back and make their own demands. Yet, many companies, advertisers and media groups continue to behave as if they are still calling the shots in the relationship. They even continue to believe there IS a relationship… an assumption most customers would dispute.

Relationships imply a two-way conversation, and a fair amount of trust. But daily, customer trust is eroded by the actions of the businesses claiming those relationships have value.

Here’s a question for ad agencies and their clients to consider: When are you actually being helpful (i.e., providing a service or benefit the customer finds valuable), rather than just doing something that hawks extra inventory, makes the company’s job easier, acquires customer data, or “meets the customer service standard”? What if customers perceive something the company or brand does as intrusive or negative?

Consider the latest meme regarding those mile-long customer receipts issued by drug store brand CVS. Consumers take selfies of ridiculously long CVS receipts, containing customer surveys, reward point reports, special offers, coupons and policy statements, prompting the company to defend its marketing-via-receipt strategy. The company saw these as helpful, but customers deem them wasteful, good only as a social media joke.

CVS competitor Rite-Aid Pharmacy instituted a “service” assigning a percentage rating for how well customers are doing at taking their pills as scheduled. This sounds like a useful behavioral feedback loop, but for many people, it feels intrusive. A friend shared that her pharmacist scolded her for a bad pill-taking record, when in fact, her doctor had phoned in a new prescription way before she actually needed it, skewing the data. She learned about the pharmacy’s Big Brother tracking because they chastised her based on bad data. That’s a prescription for trust erosion.

How Trust Erosion Happens

In Edelman’s 2017 Trust Barometer, business was clinging to positive trust ratings by the skin of its collective teeth. The 2018 report showed trust had eroded even further. Brands can cause customer trust erosion in a many ways, often related to poor service design. Here are a few examples:

Bank personnel leave vague phone messages to call back without saying why. Inevitably, it will turn out that some customer service person was asked to cold call customers to sell them investment products, or insurance, or a credit card—whatever product is on the quota list that month. Quotas got Wells Fargo into trouble… Plus, no customer is going to thank a bank for making them anxious about a possible overdrawn account, unauthorized account access, etc. And, the customer has to use their phone minutes to receive a sales pitch? Really? Trust erosion.

Loyalty programs are designed to collect data and track transactions, not reward loyal customers. Companies’ focus on sales and repurchase often translates to customer manipulation. The brand does all of the talking and forgets to listen. I recently bought water pitcher filters at Bed Bath & Beyond because of an advertised rebate. I assumed that meant a manufacturer’s rebate. It was only when I got home and read the rebate form that I discovered it was a store rebate… and not in cash, but in reward points, only awarded if I enrolled in the store’s rewards program… in which I could only obtain my “rebate” after accumulating many more points through purchasing more products… and only redeem those points by buying expensive appliances on their very short redemption list. Trust erosion.

CPG brands gradually shrink their packages while increasing the unit price. When was the last time you bought a bag of potato chips and got more chips than air? How do you feel about the incredible shrinking “half-gallon” ice cream containers? Some brands do both things while reducing the quality of the product. See any of the major frozen dinner brands, now featuring not tender broccoli florets as pictured on the package, but woody, chewy broccoli stems; or serving meat portions containing gristle or fat. Dare I mention manufacturers’ coupons that require you to buy three or more of a product to get 20¢ off? Trust erosion.

Beverage manufacturers package products to look “healthier” than they really are. PepsiCo labeled their Naked Juice products to appear to be veggie-heavy, while the primary ingredients were sweetened apple and orange juice. A consumer advocacy group filed a lawsuit. Even more annoying, this is the second time PepsiCo made dubious claims. They were forced to remove an "all natural" claim because it didn’t meet California legal standards for that label. Trust erosion.

Phone trees aggravate customers into frustrated, button-punching furies. A phone tree is the best method ever conceived for never actually answering customer questions or giving access to a human serviceperson. I’d share audio of my father trying to talk to Comcast, but your dad has probably done similar amounts of shouting. Who finds navigating 20-step phone trees “rewarding”? Prediction: artificial not-so-intelligent chat-bots will soon give phone trees nostalgic appeal. (Please stay on the line, your call is important to us…) Trust erosion.

Speaking of phones, your ring tone is meaningless. T-Mobile was just fined $40 million for setting phones to sound like they’re ringing through when they aren’t even making a connection. This is actually illegal per FCC regulations. Millions of affected consumers won’t see a dime of that money. Trust erosion.

Websites employ “dark pattern” interfaces to cause customers to enable actions they aren’t aware they are enabling. In a recent attempt to renew a magazine subscription online, I found at the very end of the form an asterisked statement that I was agreeing to auto-renewal. I only saw the footnote because the site refused my credit card; the expiration date didn’t extend to when my next renewal would come due. I decided to pay by mail using their business reply envelope, at their cost… if I elect to renew at all. Trust erosion.

Insert your own example here…

Brand Switching

Companies focused solely on transactions instead of on making customers happy are seeing customers abandoning rewards cards and points, willingly moving on to other brands and providers. New competitors spring up daily, especially online. Accenture Strategy’s 2017 Global Consumer Pulse Research identified new drivers of consumer loyalty, and cards or key-fobs are not in the mix. Seventy-eight percent of consumers surveyed are switching providers at “profit-crushing rates”; and it’s estimated that millions of loyalty/reward customers have abandoned programs they signed up for.

Forty-six percent of consumers say their loyalty is driven most by product experience; but 45 percent say trust (especially with regard to personal data security) is a big factor, as is customer service experience (44%).

Seventy-two percent of people polled said they would welcome a loyalty program that automatically applied discounts to a purchase, rather than their having to manage rewards points, Oracle reported on a February 2018 survey. People also are unhappy that accrued reward points expire because programs are not set up to remind them to use their credits. Too many loyalty programs require customers to exert time and energy to track and redeem credits… leading to people abandoning loyalty/rewards as just not worth it.

Why do companies continue to invest in loyalty programs? A 2015 Wunderman survey found that 65 percent of loyal customers buy more of a company’s products and services, and 61 percent say they recommend those to people they know. Finally, 66 percent of loyalty customers will spend more money with brands they love. Love and trust go hand in hand. But today’s reward programs don’t offer much to love.

Loyalty ≠ Customer for Life

Customers expect loyalty to be reciprocal, not a one-way street…. and with other positive behaviors like open dialogue and empathy. Loyalty does not equal “customer for life.” That kind of loyalty must be earned, not bought with points, coupons or frequent flier miles. Loyalty is earned when companies respect and value customers, just because they respect and value them…. with no expectation of guaranteed repeat purchase. Today’s consumers are loyal until they find something better, or poor experience with a company or product stirs them to try a competitor. Companies and brands must keep earning loyalty, or their customers won’t give them any.

The disconnect between brands and companies that think they have relationships with customers, and customers who are simply conducting transactions, demands attention. It behooves agencies to make sure clients understand this disconnect, and clarify the need to provide consistent, high-quality customer experience as a defense against brand-switching. Loyalty is only reliable based on the reliability of your product or service, and the positive experience of your most recent transaction.

Help your clients build trust through positive customer experience, improved customer service, and innovative ideas for addressing customer pain points. It’s agencies’ task to help clients prioritize customer wants and needs in balance with company objectives, and stop the drip… drip… drip of customer disloyalty.

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