Howard Lax

Marketers have long recognized the significance of generational differences in branding and the use of media and advertising. Branding and advertising aside, however, is there a generational effect when it comes to customer loyalty and satisfaction? How do the generations compare in terms of their level of loyalty to a brand? Or their satisfaction with a particular customer experience? Do they have the same drivers of delight and dissatisfaction? The same expectations?

Drawing upon GfK benchmark surveys [1] in the banking, automotive, credit card and cell phone sectors, this article explores the concept of generation and the extent to which various generations are both similar and different in their degree of loyalty and the drivers of loyalty to companies in the various sectors. The benchmark data captured Voice of the Customer input for consumers regarding:

The recent HBR Management Tip (“Don’t Bother Wowing Your Customers,” October 20, 2011) and the larger article on which it is based (“Stop trying to Delight Your Customers,” HBR, July/Aug 2010, Dixon, Freeman and Toman) is both eye catching and thought provoking – and totally misleading.

The authors present data illustrating that their Customer Effort Score (CES) outperforms satisfaction and NPS as a predictor of customer loyalty. Responsible researchers and marketers, however, have long recognized that satisfaction is a necessary but not sufficient hurdle for loyalty, and the weaknesses (and strengths) of NPS are well documented. Outperforming these measures is a straw man performance and not much of an accomplishment.

I see two fundamental problems with their line of thinking. First, they fail to differentiate between the customer service experience and customer loyalty and actually seem to flip-flop between the two for their own convenience. Loyalty is...

But Who Comes First?

Not to get lost in a seemingly philosophical debate, but what is (or should or can be) the central purpose of modern business? While this might seem like a navel-gazing exercise, the answer provides the core principle around which to organize the firm and galvanize its resources. All four stakeholder groups are important, but it is impossible to maximize on four fronts simultaneously. Without a focal point there can be no criteria for setting priorities and making informed decisions. So which one should be primary?

The classic Milton Friedman answer is that it’s all about shareholder value. Peter Drucker puts the customer first, while Jack Welch placed employee engagement at the top of his list. Microcredit social entrepreneur and 2006 Nobel Prize winner Muhammad Yunus probably is the strongest voice for the social responsibility paradigm for business. (It’s worth noting that he was awarded the Peace Prize for his work, not the Nobel for Economics...

Stuff happens. No matter how customer-centric a firm is, no matter how attentive, no  matter how disciplined, some number of product/service/experience failures are inevitable. Even if strong, loyal customer relationships provide some support to help weather performance failures, how companies handle a botched experience can spell the difference between a customer and an ex-customer.

Instead of consultant-speak about models and statistical relationships, I’d like to step back and talk about real-live customer (and former customer) behaviors: mine. I serve these up as bad, worse and truly ugly examples of how companies have lost and even ruined beyond redemption a customer relationship: mine. This is 100% anecdotal, a few examples based on a non-projectable sample of one. I offer these as illustrations torn from my life (instead of the headlines). Most of the names, alas, have been changed to protect the heroes and villains alike.

GPS: Where Am I?
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