The seven myths of online loyalty — part seven

In this seven-part series, Michael Shostak explores why many of the loyalty tactics employed on the Internet don't work. Previous instalments can be found online at www.strategymag.com by searching for 'Seven Myths.'...

In this seven-part series, Michael Shostak explores why many of the loyalty tactics employed on the Internet don’t work. Previous instalments can be found online at www.strategymag.com by searching for ‘Seven Myths.’

In this month’s column, I explore online customer loyalty myth number seven: Technology saves the day.

Every November, approximately 200,000 delegates from around the world descend on Las Vegas to participate in a technology ritual called COMDEX – a gigantic tradeshow and conference that includes every major technology company in the world, and is the place to announce new technology products.

Last fall, keynote speakers such as Bill Gates and Larry Ellison, chairmen of the number-one and number- two software companies in the world respectively, enlightened eager crowds on how technology will save the day. Bill Gates, always a crowd pleaser, gave a thought-provoking presentation called ‘Agility Through Software.’ Larry Ellison, equally poignant, delivered a presentation called ‘Software Powers the Internet.’ Smart perspectives from two very smart individuals.

But the highlight of the keynote speakers was Dick Brown, chairman and CEO of EDS. In his presentation titled ‘Succeeding in the Digital Economy,’ Brown declared that his mission was to help companies succeed in the complex digital economy, and his message was simple: ‘it’s beyond ‘E” – beyond the hardware, software and networks that power businesses today. This was quite a powerful statement coming from the chairman of the world’s largest technology-services company speaking at the world’s largest technology conference. But the point of his message was brilliantly simple – technology is great, but success always relates back to business fundamentals.

I’d like to thank Dick Brown for bringing a timely message to a market fraught with too many technology-centric thinkers. And I’d like to extend his message to readers of this column to suggest that technology is great, but it’s time to get back to marketing fundamentals.

In thinking about customer loyalty, be it online or off, the last matter you should worry about is technology.

Never has this been truer than in the Internet era. In fact, much of the growth of the Internet industry can be attributed to the ‘we can do it, therefore, we should’ approach to technology innovation.

Before investing in technology as a tool to help build customer loyalty, consider the following basic three principles.

1. It’s not a zero sum game.

In a survey conducted by the META Group at its Annual CRM Conference last year, more than 70% of respondents reported little or no impact from their sales-technology investments. Seventy per cent! Despite what the white papers say, most technology investments do not yield a positive ROI through cost savings or increased revenue. To attain positive ROI from technology, you need to first change your business processes. In the case of marketing technology, you need to adjust your marketing processes to take advantage of the technology. Throwing technology into your marketing mix alone won’t do it.

2. Plan your technology strategy with your customer in, not your enterprise out.

To truly make an impact on your customer interactions and build loyalty, you first need to understand how your customers view the world, and build your technology platform to fit with that world. Too often, organizations define a marketing need and find a technology solution to fit that need without ever considering the value it brings to customers.

I recently read about a company offering online live customer service using the latest in Internet telephone technology. The value they believed they were bringing to customers was real-time human interaction on their Web site. The one drawback was that the online customer service representatives were available only from 9 a.m. to 5 p.m. – ironic, because the goal of the site was to increase convenience for their customers.

3. It’s not how big it is, it’s how you use it that matters.

Technology can only take you so far. At some point, human intervention is required. Despite what Internet technology vendors claim, I’ve yet to see a personalization engine, collaborative filtering tool or any other marketing technology widget that understands human behaviour.

In summary, technology can be a powerful facilitator and enabler in your customer loyalty efforts. But you must first know what it is you are trying to enable – and as Dick Brown boldly said – this is a matter beyond ‘E’.

Next month, I’ll recap this series and provide some concluding thoughts on what it takes to build customer loyalty online.

Michael Shostak is president of Wideframe, a Toronto-based Internet professional services firm that specializes in helping organizations make better use of technology to build profitable customer relationships. He can be reached at mshostak@wideframe.com or at (416) 480-3760.