It goes like this. Joshie is the property of a little boy who stayed with his family at a Ritz-Carlton hotel in Florida. After the holiday, Joshie’s owner discovered his toy was missing and to calm him down his parents told him that perhaps Joshie had simply taken an extended vacation.

So what did the housekeeping staff at the Ritz-Carlton do after finding Joshie? They created a photo album with the giraffe lounging by the pool, relaxing on the beach, and making new friends with other stuffed animals. And then they sent Joshie back with the photo album and some other swag.

This is the sort of story that customer service directors love. It is also a perfect example of what not to base your service strategy on, Dixon and his team assert. Based on detailed surveys with more than 97,000 customers of more than 400 companies, The Effortless Experience says that delivering superior service does not build customer loyalty for most companies.

Why is customer service important? Because only one in five brands is seen by consumers as truly differentiated. Every brand owner fears that they are seen as a commodity.

In Dixon’s research, 83% of companies believe that customer satisfaction leads directly to loyalty. They believe there are gains to be made from “delighting customers”.

But the facts differ. There is no difference between the loyalty of customers whose expectations are simply met with those whose expectations are exceeded. Dixon advises that companies “grossly underestimate the benefit of simply meeting customer expectations. Customers are quite happy to simply get what we promised them. If there happens to be a problem … help me fix it. No need to dazzle me. Just solve the problem and let me get back to doing what I was doing before.”

Consistently meeting the expectations of most of your customers is the most economically valuable thing you can do.

The second finding is that satisfaction is no predictor of loyalty. One in five customers researched reported that they were satisfied with the service they received but were intending to buy from someone else.

The third is that customer service interactions (your call centre) tend to drive disloyalty. This is driven by psychology. When people discover something great they like to tell people about it as a reflection of their own wisdom. With customer service they are more likely to talk about a negative experience to gain sympathy.

The statistics: 71% of people with positive product experiences engage in word of mouth. Only 32% with negative experiences want to tell other people about them. Only 25% of people who experienced positive customer service will pass the story on. But 65% with a negative experience will talk.

The fourth finding is that the way to reduce disloyalty is to develop an effortless customer experience. Having to contact a company more than once is the biggest turn off. While some companies report that they resolve all their calls first time, they often fail to take into account that if a customer has already been on their web site. If they have, the customer will see this as two contacts.

The book argues that instead of trying to shift the loyalty curve to the right by exceeding expectations, companies will do better by removing opportunities for customers to be disloyal.

The recommendation is that you:

• Boost the stickiness of self-service channels so customers don’t have to phone. What customers want is a simple, intuitive and guided self-service experience.
• If customers have to call, don’t just solve the current issue but advise customers on how to avoid future issues.
• Train your representatives to actively manage the customer interaction and to understand the different types of people who they will be dealing with.
• Empower front line staff to deliver service by moving away from stopwatch and checklist cultures so your staff can exercise judgement.

Everyone loves the great customer service stories from firms like Zappos. But most businesses are not really in the same space and the Effortless Experience will provide you with lots of ideas how to better invest your time and effort in creating loyal customers.

For more, go to http://www.betterretailing.com/

• It’s now or never. The young Indian consumer (‘millennial’ henceforth) is smart, aspirational and impatient. Unlike their parents, they are not prepared to wait indefinitely for material satisfaction. As the economy continues to open up, the millennials are embracing the change whole-heartedly, getting brand-aware at a younger age than ever (Economist 2011). It is forecast that by 2020 this group will account for nearly 75 percent of the total spend.
• Tech’s fun, but won’t throw caution to the winds. The last few years have witnessed a surge in mobile and Internet adoption in India. Most millennials were born digital natives — 60 percent of them own a smartphone. And more millennials — 22 percent — had their first experience of the Web via their mobile or tablet in the last year than via a desktop — 18 percent. At the same time, they care a lot about data securit y, clearly indicating they will share personal information only if its privacy is promised. Eighteen percent of millennials and 20 percent of non-millennials called reassurance on security their primary need. However, 24 percent of millennials indicated they would not share personal information under any condition.
• There are holes to plug. There is a huge gap between awareness of and participation in loyalty programmes. Seventy percent of millennials and 74 percent of non-millennials have heard about loyalty programmes, but only 54 percent and 56 percent, respectively, are actually members of any programme. While some of this gap can be attributed to the socio-economic context, there remains a more fundamental issue. Young Indians are not dancing to the loyalty beat because it simply doesn’t excite them at the moment.
• We identified four core reasons for this discrepancy: (a) Propensity for a quick buck. Seventy-two percent of ‘in a hurry’ millennials believe they should be able to earn rewards in under three months, which is distant from reality; (b) Infra woes. The weak Internet infrastructure makes it challenging to access loyalty programmes enough to see adequate value from them;
• Lack of meaningful rewards. Loyalty programmes need to better answer the ‘What’s in it for me?’ question. Thirty-five percent of millennials and 40 percent of non-millennials reported that relevant rewards would encourage them to join a loyalty programme; and (d) Insufficient point-earning opportunities. We feel a robust loyalty programme proposition for India would include the ability to earn across multiple purchase points. Many programmes in India are currently restrictive in these areas. Not everyone can, or wants to, have a credit card.

COMING UP TRUMPS

• Keep it simple. Complexity is a turn-off, especially for the time-poor and information-inundated consumer.
• Facilitate early redemption. Waiting for months, let alone years, for rewards is not going to work.
• Mobile-optimise. Manage customer relationships through smartphones. It’s not the future – it’s the present.
• Promise privacy, keep word. The Indian consumer typically starts from a position of active mistrust. One slip-up, and they are gone.
• Forge alliances. Joining forces with non-competing organisations can help overcome the barriers to participation. One plus one is bigger, better and more noticeable than one on its own.

By Akash Sahai, Managing Director, Aimia India

RLS saw the release of 7 Knowledge reports. Key insights are highlighted here – full details are available at http://rls.net.in/Knowledge_Zone.html

RAI – TCS: Retail Operations Benchmarking Excellence Survey (ROBES)

There has been an increased e-commerce adoption by consumers during 2013. Brick and Mortar retailers have begun to view multi-channel strategically, instead of considering their e-tailing counterparts as price predators.  This report benchmarks the multi-channel practices of 40 Retail brands against e-tailers.  Key insights which emerged:

• Brick and mortar retailers are looking at multi-channels as one of the top 5 priorities for 2014.
• Ecommerce channels (non-store channel ) of brick and mortar retailers are yielding higher growth, higher cash memo size, and lower returns.
• For example, on an average, brick and mortar retailers find that their online cash memo size is 12% higher than in-store.
• Online returns of Brick and mortar retailers are <3% – significantly lower than pure-play e-tailers.

For brick and mortar retailers, multi-channel is about “on-demand retailing” – about giving the consumer better access and deeper range. Unlike their ecommerce counterparts, it is not a ‘pricing’ game: most retailers have a uniform pricing policy across all channels.

RAI-KPMG: Emerging Consumer Segments in India

This report identifies new segments of consumers including – the urban time starved consumer, the rural ‘windfall’ consumer, the “Value conscious” customer etc.
Key insights:

• Leveraging technology is the key to reaching the consumer.
• Supply chain innovation is needed to provide ‘stripped down’ service models.
• Hybrid models – using a mix of online and offline are emerging.

RAI-AIMIA India Millennial loyalty survey

Millennials are defined as those between the age of 19 and 29, and are expected to be the generation that will force brands to change the way they build sustainable customer loyalty.

AIMIA loyalty survey profiles the buying habits of this segment of customers. Key insights:

• Today’s customers are more ‘social and vocal’: 60% of millenials use social media and 41% seek opinions of their network before buying.
• They are willing to share data, but need transparency on what that data would be used for.
• They are more willing to engage than their counterparts in other countries.
• They are interested in more than just cash rewards.
• They want loyalty programs to provide ‘faster’ rewards.

RAI –PWC: Total Retail:  A change is underway

This quantitative survey of 1000 Indian online consumers profiles buying habits.  Key insights:

• Online shopping is driven as much by “trust” as by “price”.
• Online is about convenience.
• The customer experience matters even in an online context.

RAI-GP2WW: Great Places to Work in Indian Retail

This ‘first of a kind’ report surveyed 50 retailers to answer the question “Which retailer is the best employer?”. The Great Places to work with uses a proprietary framework which includes employee surveys and interviews as well as representations from management.

Lifestyle International emerged as the top retailer in India, followed by Titan and Shoppers Stop.

RAI –JLL: Emerging trends in retail spaces

This report profiles cities which are emerging as retail destinations in Tier 2 India.

• Retail realty in India is driven by income growth, a demographic ‘dividend’ and the fact that available space is polarized as regards quality.
• Mumbai, Delhi and Bangalore continue to mature.
• Emerging markets include Pune, Chennai, Ahmedabad, Chandigarh, followed by Surat, Amritsar, Ludhiana and Jaipur.

RAI – WWF: Sustainability in India Retail

This report profiles global practices by retailers in terms of creating sustainability in the supply chain and business practices.  Key insights:

• The world is today consuming 1.5 planets worth of resources annually.
• Demand for certain commodities such as palm oil, milk and beef (buffalo meat) is threatening India’s biodiversity.
• Owing to its direct contact with consumers, the retail industry is in a position to drive change towards sustainability.
• Experience with mature markets shows that the ‘tipping point’ towards structural sustainability is when consumers adopt and are willing to pay for sustainable products.

Findings

• 85% of smartphone and social network users are below  the age of 35
• 45% of online consumers access the internet only through their mobile devices
• 40% of India’s urban internet users report that their online activities influence what they buy, whether online or offline
• Up to 8% of India’s retail market expected to be online by 2020
• In India, Kirana and traditional retailing still continues to be the single largest outlet for sale of fast moving consumer goods (FMCG
• 60% of urban internet users surf the net for entertainment, networking, business, education and shopping

The foundations of customer loyalty are created by the core drivers of:

• Quality
• Cleanliness
• Trust
• Service
•  Value
• Information

Nature of young, urban, Indian consumer; his and her attitude to life and their relationship with technology

• Self-investment
• Cleanliness
• Trust
• Born better connected
• Value
• Information

Reasons for discrepancy between awareness and customer participation

Keeping in contact: The lagging internet infrastructure makes it challenging for Indians to access

Tangible value: Millenials believe that they should be able to earn rewards in less than three months. This is a long way from the current reality.

Meaningful rewards: Loyalty programs need to better answer the “What’s in it for me?”  Question. Thirty-five percent of our Millenials and 40 percent of our Non-Millennials reported that relevant rewards would encourage them to join a loyalty program.

Multiple opportunities to earn:  A robust loyalty program proposition includes the ability to earn across multiple purchase points with multiple types of payment.

Working together: One way of closing the gap, is through the introduction of coalitions and partnerships — where multiple complementary businesses work together so the sum of the parts offer greater benefits than individual businesses can deliver in isolation.

Loyalty programs: for registration or account checking purposes to see adequate value from them.

Based on the findings of study, the following is an advisory on program development:

• Keep it simple
• Facilitate early redemption
• Optimize for mobile
• Be sensitive to privacy
• Be open to partnership

About the Study

• Aimia partnered with IMRB International to conduct quantitative consumer research in India.
• Both online and face-to-face methodologies to provide a more robust set of data
• In total 1,516 quantitative interviews were conducted by IMRB — 706 online and 810 face-to-face.
• Fieldwork took place in Mumbai, Delhi, Chennai, Kolkata, Bangalore, Hyderabad, Pune, Ahmedabad, Lucknow and Guwahati.

• The surveys were randomly administered to individuals aged 19 years and above, SEC A, B & C across urban India.
• There were no specific quotas set for various age bands within the Millennials (19-29 years) and Non‑Millennials (30-55 years).
• Online participants were drawn from IMRB International’s online panel of 150,000+ verified panelists.
• The face-to-face also used the same questionnaire, converted into a Computer   Assisted Personal Interviewing (CAPI) format.

“Now is the Time”: Customer Loyalty in India, Mr. Akash Sahai, Country Manager, AIMIA.

As the global economy slows down, retailers want to ensure that customers remain loyal.  Acquiring a new customer costs 5 times more than the cost of deepening an existing customer relationship.

Consumer churn has led to a rise in marketing & consumer acquisition costs – and retailers are using loyalty programs as a way to retain consumers. Retailers with mature loyalty programs have realized that 20% of loyal customers can account for as much as 80% of sales.

Investment in these high-value segments (‘high value customers’ – HVC) is the focus of the PwC report on Loyalty.

Companies are shifting from being product-oriented to consumer-oriented.

According to PwC’s 13th Annual Global CEO Survey, 60% of CEOs expect customers to play a more active role in product development. In addition, 90% consumers trust peer recommendations but only 14% trust advertisements. Thus, an optimal loyalty programme should have a perfect balance of the right customer, the right message and the right channel leading to higher referrals and repeat purchases.

PwC believes that loyalty programs need to be structured on three dimensions – interactions, incentives and intelligence.

• Interaction covers all touch points that convey the program tenets and offerings to the customer i.e. channels and services.
• Incentives involve management of marketing initiatives, including the design of loyalty programmes, and the overall economics of these and related initiatives.
• Intelligence covers data collection and transformation activities to generate insights about program initiatives and customers.

Key challenges that loyalty programs face:

• Large number of programmes run on inefficient legacy systems
• Undifferentiated programmes lead to customer indifference
• Organizations haven’t been able to successfully tap into the potential of emerging technologies like social media and digital media in the context of loyalty initiatives.
• Challenges in estimating the customer lifecycle and on investment returns of loyalty initiatives

Conclusion:

• Five practices that drive profits from any loyalty management initiative:
• Understanding program costs & Drivers
• Developing profile of customer profitability & segments
• Proactively manage levers to engage members up the profitability chain
• Monitoring competitors
• Continually updating the model, ideally twice a year, to reflect emerging trends.