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Saturday, November 28, 2009

Where's the Loyalty on Black Friday?

From a services perspective, Black Friday is a tremendous loyalty creating / loyalty disrupting exercise. Companies lower margins and spend madly on advertising to induce trial from all customers, whether they’re loyal patrons or whether they’ve never passed through the doors before. Yet financial promises – the killer deal with a ticking clock – are the weakest form of linkage between a company & its customers. Like many, I hit Walmart with the precision and timing of a military operation. I checked my list off for nieces & nephews, bought nothing extra, and got out alive.

I also stopped at Nordstrom yesterday, though not because they had a once-in-a-calendar-year sale going on (they didn’t). Unlike the stores hit early, Nordstrom has developed a social bond, or relationship, with me. Kevin in the men’s department sends me a quick note when a new line comes in or when there is a sale, though there was no prompt for yesterday’s visit. I didn’t follow a script for this visit, but generally found what I was looking for, paid full price and still went away happy.

Going beyond social bonds, some retailers offer customization of the service experience. Some modify the experience through special “members-only” events where the store is open to serve the best / most loyal customers.

On Black Friday, the masses of customers are looking for a deal, and the transaction volume created through financial incentives rule. But these are temporary ties to a customer, until the next deal comes along.

I’m surprised more companies – the ones that can’t compete with Wal-Mart on price for the other 364 days of the year – don’t put effort into events taking advantage of stronger ties (with more margin) through relationship events or customized service experiences for loyal customers.

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