Before I started my venture in SaaS, I worked for several years in the telecommunications industry, almost always in marketing and customer intelligence. Interesting how the concept of customer loyalty has developed over time in that industry. Knowing where we come from, to understand where we want to go is a fundamental step in our evolution.
Acquire, acquire, and acquire one customer more!
At the end of the 90s, with the arrival of landline Internet connections, and the unbridled development of cellular networks, the stables order was one, and only one: to acquire customers. And customers were acquired at any cost. There was no need to worry about how high was the price of that specific acquisition. It was essential to gain market share towards incumbents. At that time, I was already working with machine learning models. Still, they were not considered useful to the cause of the acquisition: it was better to send a mailing to the whole base of potential customers than to try to understand in that group who were the members of a subset more inclined to purchase. No one believed that the machine learning systems could work, and all the executives were afraid of not being able to acquire enough contracts, so they proceeded to spam without restraint. It was frustrating enough for people like who consider CRM and analytical CRM as new models for customer-company relationships.
What was unusual at that time was the enormous promotional cost that telcos were willing to invest in the acquisition—a massive amount of money, and discounts, ONLY for new customers. No one offered discounts to existing customers.
Retention, retention, and retain one customer more!
The 2000s began with a big thud created by the bursting of the .com bubble. The most visited site at that time was fuckedcompany.com, and in the world of telecommunications, it was clear that the game was changing. The saturation of the market had drawn executives’ attention to the importance of retaining existing customers and in the same way of stealing customers from their competitors. Fresh meat – understood as potential new customers – was over, both in the mobile and the landline market. That’s when the money spent on acquiring new customers switched to the retention and win-back activities.
I’m not going to tell you the details of that period. Still, you just have to imagine that the smartest customers took advantage of these retention activities, with significant benefits from a financial point of view. And, of course, with an extremely negative impact on the financials of various telcos. Expensive and, more or less, simple loyalty programs have been created in all this area. It was the years from early 2000 to 2010, and some telcos continue to use those types of approaches. In parallel, however, Customer Feedback Management and then Customer Experience programs were developed in the world of telcos to increase customer loyalty. I don’t go into detail about these programs, but today I think that probably 99% of telcos in this world have a plan of this type. In recent years, however, something completely new has developed: the convergence between the physical world and the digital world. I mentioned it in a previous article, where I introduced the concept of “Phygital Journeys.”
Well, my attention focused on a fundamental point: in a Phygital world, how do you win customer loyalty? I focused on a Phygital model and asked friends and acquaintances what makes you stay loyal to an app, what motivates you to place it on the first screen of your smartphone. But most of all: what motivates you not to delete it from your phone. An app is a typical component of the Phygital customer journey – removing an app from your smartphone means that the specific experience is irrelevant. The company that offers you the app loses the relationship with you as a customer, and loyalty is lost probably forever.
The Technology Acceptance Model
Is it easy to use? Is it useful for me? These are two fundamental questions we ask ourselves when we install a new app on our phone. How many times has it happened that a few minutes after you install it, you delete it? Because the authentication process (onboarding) was so complicated that you decided to look for another one? In the end, we indulge in ease of use, if we perceive the product, or the app in our case, as something useful for our everyday life. I have a couple of personal examples, Expensify, which allowed me to manage my expense reports only by photographing receipts – it changed my life. Or, applications like that of the Swiss Federal Railways, with the purchase of the “check-in” type ticket, trying to remember to check out when you get off the train. I always forget it. If I don’t perceive a new expenses report management app in the future as something more useful for my life, they’ll hardly cut the cord of loyalty that binds me to Expensify. In a nutshell, if a new app to support the expense account management process comes along and gives me an even more useful and more natural experience than Expensify, I will most likely use that new app. Customer loyalty is very ephemeral in the digital world. My behavior is not statistically significant, nor does it identify collective consumer behavior. The study of those factors started already years ago. In a 1993 paper by Fred D. Davies, “User Acceptance of Information Technology: system characteristics, user perceptions, and behavioral impacts,” It is significant that in that study, the two main variables of motivation to embrace technology by the consumer are perceived usefulness and perceived ease of use.
A loyalty paradigm shift
My behavior, as I have already said, is not statistically significant, nor is it representative of a large part of consumers, so I was able to rely on another study. Still, I was able to see that these two principal factors of TAM have a positive correlation on loyalty. In the study “Technology Acceptance Model And The Paths To Online Customer Loyalty in Emerging Market” (T. Nguyen, N.P. Tuan, 2013) they concluded: “Particular contribution of the results is that perceived usefulness, perceived ease of use, fairness, trust and the quality of the customer interface have direct or indirect impacts on customer satisfaction and customer loyalty.”
This opens up an entirely new vision, especially if we consider the new normal after the COVID19 pandemic crisis. The need for the Touchless Economy to provide Phygital experiences – i.e., the meeting of physical and digital to deliver the Customer Experience – not only to meet the new needs of hygienic safety and distance between people but also to become relevant to the experience and to gain customer loyalty in a world that is exceptionally prone to digital transformation. If we think about how we have lived and managed loyalty in the past years, this is a considerable change.
Who will win in the new normal?
Companies will win customer loyalty if they can deliver those Phygital experiences that are the perfect harmony between physical and digital events. Those customer experiences that give the wow effect from an experiential point of view and, in particular, that make that part of the customer journey, or of the episode as Bain defines it, an experience so easy and relevant, that a strong bond of loyalty is established between the product/service and the final consumer.
Winning customer loyalty in the “New Normal” means melting together physical and digital creating a seamless and relevant experience. But be careful, your competitors are probably trying to be better than you in this Phygital game.