Are Your Suppliers Loyal?

Change is about the only constant in life. But in Internet marketing, there is so much change, it’s hard for customers to develop loyalties to online merchants and content sites.

We talk a lot about ways to engender customer loyalty, such as giving away airline miles, virtual green stamps, or other incentives. Customers try to be loyal. In fact, customers today are often more loyal to companies than companies are to them.

For instance, the company that issues my credit card, which I’ve had for many years, has recently changed ownership — four times! Just when I learned the ins and outs of being a Wells Fargo customer — locating its ATMs, branches, and policies — I also unwillingly became a customer of Verizon when several companies decided to merge into a new entity.

Fortunately, all of these changes have caused me very few problems. However, other customers have been greatly affected by changes occurring at web-based businesses.

The rash of dot-com failures, such as Furniture.com and Garden.com, has left customers scrambling to get deposits refunded, gifts delivered, and, in general, adapt to the ever-evolving web landscape.

It’s understandable when investors decide to shut down a business that isn’t performing. However, there is another group of web businesses whose management simply decides to discontinue certain operations that many of their customers have grown to rely on.

We are now seeing examples of customers being loyal to merchants longer than the merchants are being loyal to the customers. E-Stamp recently announced it is getting out of the Internet postage business and moving into logistics, thereby forcing its customers to make unplanned changes and find another supplier.

Fortunately for E-Stamp’s customers, another postage vendor, Stamps.com, has agreed to take E-Stamp’s current customers under its wing, using this opportunity to explain why it feels it has a better solution.

Another company that has given its customers the short end of the stick is AltaVista, which dropped its free Internet access service. When AltaVista’s ISP vendor discontinued its operations, AltaVista decided not to select another vendor, even though its decision would affect about one million users. A different approach was used when Kmart’s BlueLight.com ran into a similar problem with its free Internet service. Instead of shutting the service down, BlueLight acquired the assets and key people necessary so the operation could continue as part of BlueLight.

One of the most awkward results of a company discontinuing a service is ZapMe!. Its business model had been to give schools free computers and Internet access in exchange for ads, but it decided to suspend that service to focus on selling high-speed Internet access instead. The 2,300 schools that took advantage of the free computers have now been told they must return the equipment or pay up.

Companies quit selling products all the time. Manufacturers frequently add and drop items from their product lines. Retailers drop products that aren’t selling well. But most of the time, these changes in product offerings don’t affect customers the way changes in online services do.

Most online businesses are not just in the business of shipping products. They also provide a variety of information services that make the web a unique marketing environment.

Many sites now allow their customers to create contact lists, enter data to analyze and report, and review previous purchases. When a site encourages its users to invest time to personalize the site, there is an implication of mutual loyalty. In other words, the site will offer the service, and customers will be able to use the service — which leads to a long-term relationship. Each customer always has the power to quit using a supplier. However, when a supplier discontinues providing a service, it can affect a large number of customers.

When millions of online users begin experiencing similar problems from multiple web sites, it casts a cloud over our entire industry that affects everyone.

As online users find the web services they rely on being discontinued, their trust that any web site will be around very long starts to decrease, which leads to decreased loyalty and revenues.

There may not be an immediate solution to the current dot-com failures. The survivors, however, can see that it takes longer than expected for customers to be completely comfortable with new technologies and online business methods. These insights can be used to update plans in order to provide the products and services that will build long-term relationships.

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