Consumer disloyalty: on the ascent?

Last week Time magazine ran a story based on Accenture's 2011 Global Consumer Research Study headlined "Most Consumers Switched Service Providers in 2011" and went on to suggest that "if you stayed the course last year and never switched banks, wireless companies, pay TV services, or any other providers, then you’re in the minority. And if you actually feel “very loyal” to your providers, then you’re part of an even smaller minority." 

Accenture's survey zeroed in on "five blind spots" that could "predispose" customers to being a rolling stone.

    – Missing the chance to set the right expectations at the onset of a customer relationship.

    -Not noticing subtle changes that matter to customers' need for recognition, special treatment and reward.

    – Failure to offer consumers opportunities to engage with a provider

    – Relying on technology point solutions to satisfy and keep customers.

Accenture's suggestions to improve in these areas are largely intuitive and self-evident but nevertheless, missed by a surprisingly large number of companies.

Time's article did not mention hotels or airlines but Accenture had included them in their study and the findings with regard to these two industries were, unsurprisingly, not substantially different to any of the eight other industries included in their survey. Only 23% of survey respondents participated in at least one hotel or airline loyalty program. Similarly, the percentage of respondents who stuck to their hotel or airline loyalty program came in at 53 and 51 respectively.

An area not covered by Accenture is the tendency to change goal posts in loyalty programs. Airlines are arguably the most notorious in that area. What were formerly 120,000 mileage award tickets now "cost" the customer 350,000 miles in the case of one leading legacy carrier. (Accenture suggests "rearchitecting programs to stagger promotion to elite levels.)  And that does not include a raft of taxes and service fees that were conspicuously absent a few years ago. Some of the big hospitality players too practice that dodgy art by changing requirements for attaining premium levels.

Time ascribed the disloyalty on the part of US consumers  to their being "commitment-phobes". A phobia stemming from economic uncertainty resulting in renters rather than buyers of housing, lessees instead of buyers of automobiles and, in general, consumers who who abhors long term contracts in a range of consumer necessities such as banks, cable companies and wireless providers. Maybe so, but that is the new reality across industries not only because of financial uncertainty but also because of a continual flow of new entrants whose expectation levels are different when the select few were able to partake of heretofore luxuries.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.