I’ve just taken a momentous step and switched banks — after more than 20 years as a loyal customer maintaining two accounts, each with a healthy balance. It wasn’t an easy decision, since I knew that changing banks could be a pain (and this turned out to be no exception). But my old bank practically forced my hand.
Making a move first occurred to me for a simple reason: I concluded that my bank didn’t value my loyalty. In all the years I’ve been an account holder, the bank contacted me only once to see how it could better serve me — and that was just days after I had made a large withdrawal. Coincidence? I think not.
But what sent me over the edge, and across the street to the competition, was my old bank’s latest promotional offer to attract new customers. It wasn’t great — just a 0.65 percent interest rate on its money market account. Still, it was much better than the 0.15 percent the bank was paying me on my money market account.
Why Businesses Fail to Value Loyal Customers
There's a better-than-even chance that you, too, are feeling unloved by a business where you’ve been a loyal customer. These days, all sorts of companies offer better deals to new customers than to existing ones. Phone and cable-TV firms often do it. So do some car insurers, as The New York Times recently demonstrated. And magazine publishers are notorious for this: My editor is still steamed that he recently paid $26 to renew his annual SmartMoney subscription when new subscribers can order the magazine online for $10 a year.
To find out why so many companies don’t value their long-term customers, I rang up business-loyalty experts Fred Reichheld and Rob Markey. In The Ultimate Question 2.0
, they write that if you are a patient, loyal customer, “chances are good that you are paying more than disloyal switchers who signed up more recently.”
Businesses have few tools to measure a customer’s loyalty and enthusiasm, even though loyalty is precisely “what drives business and makes a company prosperous,” Reichheld says.
Older customers should be particularly valued. “They recognize the importance of good, solid relationships that are worth loyalty and will reward the companies that earn their loyalty,” Reichheld says.
In their book, Reichheld and Markey advise businesses to repeatedly ask their customers “the ultimate question” to measure loyalty: Would you recommend us to a friend?
Fortunately, some companies do just that — and build their businesses around customer loyalty. Reichheld and Markey are especially impressed with Amazon, Apple, Enterprise Rental and Jet Blue. Amazon is famous for its free shipping. Apple actively seeks feedback from customers and is very responsive to it. Enterprise ranks its branches based on how well its customers have rated their rental experiences there. (After I rented from Enterprise recently, the company called me to ask “the ultimate question.”) JetBlue measures consumer satisfaction for every flight and doesn't charge passengers for their first checked bags.
Not surprisingly, the businesses applauded by Reichheld and Markey consistently rank at the top of customer-service surveys.
How to Take Action
But what about the companies that haven't adopted that policy? Are there ways you can get them to reward you for your loyalty, or at least get the same sweet deals as new customers?
Yes. If you make a request, some companies will agree to match their introductory rates for new customers. Through a simple phone call, I’ve been able to renew subscriptions to some magazines at promotional rates (though I’m annoyed that I had to ask). But this doesn't always work. My old bank flatly rejected my request for its 0.65 percent promotional rate on my money market account, for example. Fortunately, my new bank offered me 1.0 percent interest.
Social media is another effective way for loyal customers to squawk if they believe they’re being mistreated. Last year, when Bank of America announced its plan to charge customers $5 for making purchases with their debit cards, a wave of consumer protests — most of it online — quickly prompted the bank to drop the plan.
And if you don't get results? “If you’re unhappy with a company, leave,” says Markey. “Just like you wouldn’t form a relationship with a jerk in your life, don’t form a relationship with a jerky business.”
Maybe you’re wondering how things have gone since I switched banks. I’m pleased to say that my new bank already called to make sure that I received my new checks and debit card, and to ask if I needed help setting up online bill-paying. So far, so good. Now let’s see how well they treat me after I’ve been with them for a year.
Have you felt unloved as a loyal customer or have you been rewarded for being one? Tell me about it. My email address is [email protected]
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