Mark Johnson Loyalty360

Sorry for the brief hiatus of this column. I heard from both of the people that read my piece and they were a little miffed as to why it was missing the last couple of weeks. So I blame kids, swimming, soccer, moving, and other ancillary issues. I promise not to let the two of you down going forward.

The behavioral and loyalty brilliance of Redbox! The irrational attachment!

As we all know true loyalty is about creating a behavior and since most of us also know that most (if not all) decisions are based on irrational inputs it is quite compelling to see what Redbox has been able to do. First off, I have to admit I am probably the ideal customer for Redbox; overextended and someone who needs/values (perceived) convenience; oh, and having four kids that partake in and require relief from. Yet the perception of convenience is individually based, hence the challenge in creating individually directed communications for all brands; yet that is another point.

Redbox has a perceived value in that its rentals are only $1.50 and it has influenced me and countless others who have moved from Netflix (at least the DVD rental aspects) or other areas where they have invested their discretionary entertainment dollars. I would also argue that impulsivity of the purchase does not allow those to rationalize that spend effectively. “What is $1.50 when I would spend $14.00 for a ticket at the local AMC?”

Redbox is based on convenience; if you go to your local grocery store (Kroger, Bigg’s, etc.) or Quick Service Restaurant (McDonald’s) or some convenience stores and airports, you have the ability to rent and return a series of new and old release titles in a convenient location where you partake in other activities. The convenience of renting at Kroger and then returning the next morning while you are in line at McDonalds is quite compelling for a good percentage of the customer base, yet I do not fit that mold and it took the 100 late returns for me to realize this. I have always wondered what percentage of the rentals from one locale are returned at another, as I always feel compelled to return them to one of two locations (both Kroger locales). 

OK, back to my piece. The fact is that loyalty and engagement is about creating a mutually beneficial behavior. Redbox rents movies in convenient locations and who DOESN’T want the releases (to watch a movie) after you spend 30 (or 5!) minutes shopping with your kids or significant other. Yet the fact is the relationship that Redbox has with me is a decidedly dis-mutual relationship. I also rent a movie when I go to Kroger’s, yet I only go to Kroger’s periodically to buy small items. But I always INTEND to return the movie the next day or have my nanny return them, yet this NEVER happens. Worse yet, I receive the coupons for free rentals or the popup for $.50 off an additional purchase and I ALWAYS take that bait in my irrational exuberance. The fact is the most important thing to me is the convenience of the rental and the perceived convenience of the impulse purchase overrides the salient and objective fact  -- I always swear I am NOT going to rent from them again as I always have the video for five-plus nights!

The Redbox locations have to be VERY mutually beneficial to Kroger’s and other locales and I’d be curious as to the financial arrangement between the two, as I would expect a large percentage of the returnees ventures in to make an incremental, unplanned, and impulsive purchase, even it if is just two doughnuts -- oops – that was not me! The fact is that Redbox has done a brilliant job creating a product with a much higher perceived – rather than actual – value. Consider the fact that it takes me probably 15 minutes that I had not planned to allocate to return the DVD and, therefore, my subconscious mind puts off the return (even when I place the DVDs smack dab in the middle of the kitchen island) as time is the one resource that I (and many others) do not have an excess capacity for. Armed with the realization that the $1.50 rental is costing me $7.50 or more, it’s time to make a switch; back to Netflix (there is convenience as it comes to you via the Internet or mail) or just rent the $4.99 movie on iTunes; at least it takes it back after 24 hours and you have 30 days to watch it.

The Power of an Apology Revisited – Integration of Corporate Culture and Mission Statement!

Most of you know that I had issues with a large home goods retailer earlier this summer; from fans that were not in stock that caused complete orders to be held for months, to issues with the installation crew who wanted $183 per fan installation. Yet the power of one “I am sorry” and “How can I help you?” from one customer service representative (in-store) and several others along the way have led to the mending of the fractured relationship with that brand and to many additional incremental purchases.

Yet, in light of recent conversations with Dan Ariely, J.D. Power, and Interbrand CEO Jerry Preyss, the corporate culture is quite important. I have recently begun to look at our corporate culture. You need to have dedication to your mission at all levels and the ability to hire the people that put in the extra effort to their service -- employees that partake in the mission take accountability as a brand. Be consistent with your mission and charter and explain the issues and how they are being resolved (instead of “This is NOT going to work”) goes a long way toward enhancing the efficacy of the loyalty metric. More brands should take heed as the engagement level and loyalty I feel to Home Depot now is unquestioned. From a one-time potential detractor, to a huge and LOYAL (behavioral-based) fan.

See you next Friday.


Written By: Mark Johnson, CEO, Loyalty 360 - The Loyalty Marketer's Association

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