Two articles were published on the same day last week, which offered an amazing contrast between two companies that have been in the news over the last three months for the wrong kind of reason: Bad press. And in both cases, you know I’m talking about really bad press.
The contrast was not so much about what these companies have done or failed to do, but rather in the outcome of their debacles.
The Tale Of Two Brands
Check out these two headlines:
- “Toyota maintaining customer loyalty despite recalls” – http://tinyurl.com/2wlrmkk
- “Why the BP oil spill surpasses the limits of loyalty” – http://tinyurl.com/27afhgd
In short, these articles (completely unrelated to one another) go on to say how Toyota has managed to maintain its leadership position in Customer Loyalty[1] in Q1/10, while BP has dropped from first to – gulp! – last, also in Customer Loyalty[2].
To be truthful, both companies shared bad news in terms of market performance, with Toyota reporting a significant decrease in market share (from 13.9% last year, to 12.8% in Q1 2010), while BP’s stock market value had reportedly plunged by a “paltry” $25 billion since the oil rig began its own descent toward the bottom…of the Gulf of Mexico.
Why The Contrast?
Each article provides valuable insights as to what is going on. For instance, Toyota has managed to maintain repeat purchases from its customers by offering incentives such as zero-percent financing and special lease deals – essentially, “buying” loyalty, something very unusual for the #1 automaker.
On the other hand, the oil spill is in a direct blow to BP’s positioning as the greenest among all oil companies. Clearly, the company had stayed away from any advertising that would protect or even pretend to restore its image (unlike Toyota, reminding its customers that it was dedicated to fixing the issues with its vehicles) – probably a good thing, given oil companies’ previous mishandling of similar catastrophes.
Not The Same “Loyalty”
As is often the case, headlines fail to tell the full story. Certainly they can grab readers’ attention – after all, that’s what they’re made for. But these simplistic summaries can also leave the reader confused and, in this case, wondering how two similar disasters can lead to such different outcomes.
In this instance, the explanation lies mostly in that the word “Loyalty” represents two “outcomes” of the customer experience that are very distinct. In the case of Toyota, “loyalty” is defined as the percent of vehicle buyers who traded in a Toyota to purchase another Toyota. In other words, this is an objective and factual measure of customers’ actual behavior, which itself is the outcome of emotional and rational elements (experiences) – including never-seen-before attractive rebates.
For BP, the “Loyalty Index” is a combination of measures (survey questions) focusing on the brand – a mixture of emotions and beliefs about the brand’s various attributes. In my mind, the term “loyalty” is misused in this instance; something like “Brand Perception” or “Brand Value” would be more accurate.
Customer Loyalty, Brand Loyalty, Customer Satisfaction, Customer Engagement Loyalty Index, Word Of Mouth… Which One Is Right For You?
Semantics aside, it is clear that one cannot gauge the impact of the public relations nightmare encountered by BP and Toyota on their sales and overall financial performance, including stock price, by simply reading the headlines of these two articles.
What those articles clearly demonstrate is the need for organizations to properly identify and track the metrics that are relevant to their objectives and market conditions. When you think about it, how “engaged” are you when it comes to filling up your car? Certainly, in such a commoditized market, adopting a clear and distinct positioning (in part through a strong and unique brand) is one way to get it done. But does the key to success for BP, Shell, Amoco, Marathon, and others really lie in the concept of Customer Engagement?
The Difference Between What Sounds Good And What Makes (Business) Sense
In my dealing with clients, I have found too many times that senior management tended to focus on what “sounded good” (usually because it was easy to understand, cheap to implement, and simple to report) rather than on what was relevant – the latter typically requiring additional resources and brain power. But who said that success comes easily?
So the next time you analyze the customer metrics you track for your organization, particularly if they don’t align with other performance measures, ask yourself: Why did we choose this metric, and how long ago? How do I know it’s the “right” metric? Does it measure something different than what we’re calling it? You might be surprised.
[1] According to Edmunds.com
[2] As measured by Brand Keys’ Customer Engagement Loyalty Index
Filed under: Customer Experience, Customer Loyalty, Customer metrics
