The Loyalty Chasm

February 19, 2008 at 2:43 am 1 comment

Can you hear it?chasm

It’s the sound of plummeting customer loyalty.

Much akin to a five-year old’s adventures with his matchbox car on the kitchen table, customer loyalty can mirror the follies of a Daytona 500 “wanna-be”. The miniature Formula car cruises along on the flat plane of Formica at the mercy of the next Dale Ernhardt, Jr. (in his pajamas). The car reaches the table’s edge. Its fate is clear. With increased adrenalin and a face filled with intensity, the future Nascar driver let’s gravity pull the #88 car to an abrupt meeting with the linoleum tile.

CRACK!

Damage assessment? It’s just a minor scratch on the headlight; so he picks it up and repeats it no less than 100 times (you know boys).

Unlike matchbox cars, when customer loyalty drops off the table, the damage assessment reveals a lot more than a scratched headlight, but often goes undetected.

So what causes this drop into the “loyalty chasm”?

It’s a trickle-down effect that starts in the boardroom and ends with a severing of the sales rep/customer relationship.

A publicly traded company anxiously awaits the analyst’s reports and their shareholders’ response to quarterly performance numbers. If reports are favorable, and the stock ticks upward, high fives and a free round of drinks for everyone. If the reports go the other way, panic sets in. “We’re going to have to make some mid-year ‘adjustments’ to get back on course.” After numerous closed-door emergency meetings, a new strategy emerges, press releases go out, re-organizations ensue and heads get chopped. It’s called “Quarteritis”, the illness of leading and being led by Wall Street’s reaction to quarterly performance.

Bad news from Wall Street often equates to draconian measures, such as drastically changed sales compensation plans, territory re-alignment and hiring freezes (even for replacement positions). All these chess-like moves are designed to improve financials for the next quarter, often in direct contradiction with the firm’s core values.

It’s like turning around a battleship in a creek. If you turn too fast and hard, some passengers fly off the side…and some will jump off. Employee morale and trust erodes, triggering undesired turnover. When reps change, the loyalty chasm opens, helping to surface the last symptom of Quarteritis, a precipitous drop in customer loyalty.

Gee, didn’t think you might lose some high performing reps along with those marginal reps in those closed-door meetings?

Didn’t think how those decisions would impact morale and employee trust?

Didn’t think the loyalty to your company, that took months, even years to build is all but gone the day a customer learns their rep is no longer servicing their account?

Didn’t think that the customer has already starting thinking about their alternatives?

Didn’t think.

Publicly traded companies may want to think beyond the next quarter and give more weight to each decision that affects rep/customer relationships. Failing to do so, equates to saying, “c’mon, it’ll just be a scratch on your headlight.” From the customer’s perspective, it feels more like a hit and run.

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Entry filed under: Uncategorized.

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1 Comment Add your own

  • 1. Lee Kuhn  |  February 26, 2008 at 5:38 pm

    Mark,

    If I keep all of these articles, will I still have to buy the book?

    Lee

    Reply

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