Marketers find themselves more confused than ever by customer behavior. Many customer loyalty technology systems rely on transactional histories as their input, but a customer who has been loyal in the past simply may not be able to make transactions right now.

Marketers thus need to be sensitive to abnormal behavior that results from tightened wallets and extend the metrics for defining loyalty. An insensitive system would move such loyal customers to the “dormant” category and recommend ignoring them. Still-loyal, though not buying, customers get treated as though they had never been a customer. These systems need some intervention so that this does not happen.  The customers need to be nurtured in the meantime. The retailer can gain valuable knowledge about the customer’s browsing pattern online to effectively continue communication with that customer.

But these loyal customers probably are still thinking fondly of the company, even if they are not spending the way they used to do. They may read e-mail offers, browse the Web site, and plan to continue their relationship with the company. As soon as these customers become more confident or improve their financial status, the shopping is likely to start again.  Customers are even likely to overcompensate for the lost shopping that they couldn’t do prior.

By engaging customers now, companies can reap long-term sales and earn real customer loyalty. In the economic turndown immediately after September 11, Southwest Airlines kept in frequent contact with its Rapid Rewards loyalty members, informing them about security changes at the airport and other travel details. After that brief turndown came to a close, these loyal customers were the ones who helped Southwest regain its sales levels.

Discussion Questions:

  1. What is counterintuitive to marketers in a recession?
  2. What should marketers do in the recession to increase customer loyalty?

Rick Ferguson, “Fear Factor: When the Going Gets Tough, the Tough Build Loyalty,” Colloquy, 16, no. 3, 2008.