4 Ways Companies Sabotage Customer Loyalty

Short-Term Strategies With Long-Term Consequences

After a recent keynote session on customer experience, I led a breakout group with 30 business leaders in a spirited discussion on the many ways companies sabotage customer loyalty. The insights that emerged were a harbinger that companies everywhere should heed.

The foundation of customer loyalty is trust

We know that the foundation of customer loyalty is trust. The relationship between the degree of trust we have in an organization and our level of loyalty is well documented, and the equation is simple:

INCREASED CUSTOMER TRUST = INCREASED CUSTOMER LOYALTY

What many organizations fail to recognize, however, is that the same equation works in reverse, and they continue to sabotage customer loyalty with counterproductive policies processes and practices. Here are just some common practices that sabotage customer trust:

SHRINKFLATION

Shrinkflation is rampant in the consumer-goods business. Rather than face outrage over price increases, companies quietly reduce the product size in hopes that no-one will notice.

The landmark work by researchers Mayer, Davis & Schoorman identified Integrity as being one of the three pillars of trust. Shrinkflation is a practice that sends the message that yours is questionable. Here are just two examples:

TOBLERONE: In 2014 the Swiss chocolate company reduced the weight of its bars by 25%, but tried to hide it by reshaping the bar. After loud consumer outrage, they reversed the move two years later. It’s not just Toblerone, though. It’s everywhere. Check out this list on the Bored Panda site – Products by WD-40, Kellogg, HÄAGEN-DAZS, Nabisco, Johnson’s, Colgate, Costco – the list of companies who have compromised their integrity goes on.

AIRLINES: It’s not your imagination. Over the last 20 years, legroom has decrease as much as 4 inches, and seats are 1½ inches narrower. But wait – they still raised prices. One of the other pillars of customer trust is Caring. That’s certainly not the message here.

Why would anyone want to be loyal to companies that do these things?

REDUCED QUALITY

The third pillar of customer trust is Competence. Bought an appliance lately? Our first refrigerator and stove were already 20 years old when we got them in the 1980’s, and were still working fine 25 years later when we decided to update. That’s 45 years. According to home improvement guru Bob Vila, don’t expect today’s appliances to last longer than 13 years in total. Planned obsolescence or incompetence?

Reduced quality is also in the foods we eat. Larry Olmsted, in his book Real Food, Fake Food, recited a litany of scary practices in the industry. What possible reason are these companies giving to customers to be loyal?

REDUCED CUSTOMER SERVICE

An increasing number of companies are reducing their customer service staff, and relying on chatbots and self-serve solutions. Many eliminating human contact altogether. A large proportion of business-to-business companies, particularly in the world of software, now only operate via email or ‘tickets,’ creating lag of several days to answer questions that could been dealt with in just a few minutes. The message to customers is clear – that these companies care more about their customers’ wallets than their customers. Why should they expect any loyalty in return?

Compounding this for many companies is an absence of customer service training – or reliance on training that is either outdated or ineffective. The adoption of AI in customer service isn’t the answer for customers who want to feel cared about.

MISREPRESENTATION

The appetite for sabotaging trust among companies with trickery, misrepresentation, and outright lying appears to be growing. Last week, our mobile provider called to “just check in and see how satisfied we were.” She was really just a commission sales rep trying to sell us a new package. This has become a common practice in many industries.

AMAZON

The retail giant, Amazon, has been under fire recently for the integrity of their search results. No wonder. At the top of a recent Google search for Oodies – the insanely popular blanket hoodies – was a sponsored ad by Amazon, claiming: “Shop Oodies – Amazon.ca official site.” The link didn’t lead to Oodies – at least, not many of them. In the first 80 Amazon results, 77 were not Oodles. The ‘official Oodies site?’ So much for integrity.

VOLKSWAGEN & BOEING

Volkswagen’s lie about their diesel fuel efficiency seemed trivial in comparison to Boeing. When their defective 737 Max planes killed 347 people, the CEO first denied the software problems that led to the two crashes, then tried to blame the pilots. (They got caught in the lie, and had to pay $2.5 billion in penalties)

In each of these cases, somebody somewhere made a decision that it was okay to either not care, not be competent or not have integrity – with the price being:

DECREASED CUSTOMER TRUST = DECREASED CUSTOMER LOYALTY

Want Loyalty? Focus on Trust

The easiest way to avoid sabotaging customer loyalty is to focus on building and maintaining trust. Genuinely care about your customers. Be very good at what you do. Do the things you say you will do, and take ownership over the experience you create. Focus on these things, consistently and relentlessly, and you will never be short of loyal fans.