Loyalty Departments Are Garbage

Recently I was delivering a couple of master classes at the Starting Point Entrepreneurship Conference at Saint Mary’s University. I taught two classes, one on meetings and one on team development and at one point during my second class, one of the participants piped up and said, “you really hate businesses, don’t you?”

I mean…hate is a strong word.

There are however some things that businesses do that drive me absolutely batshit crazy. These are not business decisions made by one business here or a couple of businesses there. These are fundamental, industry-wide decisions that so many companies make. And they’re garbage.

Hear me now. Loyalty departments are garbage.

Here’s how companies do business.

Step 1. Provide a potential customer with a lot of promises in order to turn them into a customer.

Step 2. Provide the most basic level of service required to keep the customer as a customer.

Step 3. Wait until customer is so annoyed with your brand that they want to leave your company so bad that they might actually pay just to not be your customer anymore.

Step 4. Transfer the customer to a special department that will then bargain with them to provide the bare minimum required to keep them as a customer.

Rinse. Repeat.

It’s a terrible system but every bank, every cell phone company, every internet provider does the exact same thing.

And it needs to stop.

What loyalty departments have done, more than anything else, is demolish any sense of loyalty that existed. Brand loyalty is dead and in a major way, companies have themselves to blame.

A long time ago, I was a manager of a team that dealt with a major US cellular service provider. Oh my god. So long ago.

Anyways, our company, like every other company, had a loyalty department and when customers asked for a supervisor or asked to cancel, they would get transferred there. And if that department wasn’t able to help them, they’d get escalated up to my level…where I would generally give them whatever was required to keep them as a customer, within reason.

So I came up with a strategy.

I went to the agents that would have to transfer calls to me and told them my new rule;

“If you know I will give the customer something, give it to them and put my name on it.”

There were a few problems with this plan.

First, employees thought I was lazy. They thought I didn’t want to take calls from customers and so I came up with this plan so that I’d have to talk to less customers. They weren’t necessarily wrong. I didn’t want to talk to customers. But it had nothing to do with being lazy…well…almost nothing. It was a misallocation of resources.

Second, customers who had to move through level after level of support in order to get their problems resolved got angrier and angrier. When their issue was eventually resolved, they didn’t think, “well that was a pleasing experience.” They thought, “I hate that company and their entire customer service department, but I’ll stay with them…for now.

Third, it’s my ass. If an agent wrote, “Mike Tanner approved 5 new cell phones and 100% off for the rest of their contract”, I would need to say…”yes… that was me.” You can’t tell agents to put your name on things and then tell them that they shouldn’t have done exactly what you told them to do.

But here’s why I REALLY did it.

Empowerment.

I did it so that customers would see agents as empowered to solve their problems. I did it so that agents would see themselves as part of the solution, rather than just a stage of the problem. Agents started to think more about the lifetime value of the customer and they started to think about what made sense for everyone rather than just thinking about what would get the customer off the phone.

Loyalty departments are garbage. They establish customers as unimportant, agents as impotent and businesses as uncaring.

So we can keep doing business as usual, or we can start trying to inject loyalty back into the equation.