Some posts ago I mentioned McKinsey’s study on the customer decision journey. Besides the fact that the journey is not as company focussed as a classic sales funnel proposes, they discovered another interesting fact: Loyalty comes in different shades. In this recent paper they mention active loyalists and passive loyalists. In their 2002 article “Customer retention is not enough” they mention 3 types: Emotive loyalists, Inertial loyalists and Deliberative Loyalists.
Loyalty comes in many shades.
Emotive loyalists are the clients who love your company and the products you offer. They tell their friends about you, they recommend you to others. A friend converted to the iPhone recently and told me: “There is a life before the iPhone and there is a life with the iPhone”. He’s an active loyalist.
Inertial loyalists are customers that stay with your company simply because they don’t care or because they fear the switching costs. I’m one of those for my household insurance. To me, they are all the same, so why bother switching?
Deliberative loyalists frequently reassess purchase decisions and reaffirm their choice by rational criteria. At Stimmt, we are frequently reassessing our SAAS project management tool. So far, nothing better has emerged for our clearly defined needs, so we stay customers.
According to McKinsey, in life insurance, 41% are deliberative loyalists, 31% are inertial loyalists and 26% are emotive loyalists.
A customer centric strategy for life insurance therefore is: Increase the number of emotive loyalists and get as many of the deliberative and inertial loyalists from your competitors to switch. Compelling especially in saturated markets in Europe and the US.
So what makes emotive loyalists? Providing for processes and interactions that meet and exceed expectations.
What makes inertial loyalists switch? Making switching easy (the processes are usable and pleasurable) and making it desirable to switch (by offering truly desirable components in your services and products that stand out).
And what makes deliberative loyalists switch? Offering a better deal that stands out.
Do you know what makes your customers loyal?
Now all of this is hard to find out in the ivory tower of corporate head quarter. Do you know what really matters to your customers? What is more important: Not having to wait longer than 2 minutes on hold when calling the call center or an easy to understand invoice? Competent advice in one-on-one meeting with a client advisor or nicely layed out brochures? The new special product feature that nobody else can offer or a hassle free downgrade process? All of it? What if you need to prioritize? And what exactly means “easy to understand invoice”? Certainly, there are also different priorities for different user groups. Phew!
The solution: Get out and find out.
It’s best to start by understanding your customers through qualitative research maybe validated through quantitative surveys. This will let you segment your customers by needs. Mix this with profitability and you know exactly who to target how. Then configure your offering by reassembling not only products and services but also processes and maybe even your recruiting and incentive philosophies, go on to orchestrate your touchpoints to create a consistent experience throughout your organization. And then design your touchpoints to meet and exceed your customers expectations.
Being customer centered is more than a promise in the annual report. Being customer centered is focussing your company around your customers. Because they pay your bills. It’s safer if they do so with joy.