The Loyalty Imperative: The Razor Blade has Gone Dull

There’s a classic model in business: Gillette’s razor blades. The animating concept is that someone realized they could sell a razor to men at a pretty low price, which would bring them into the brand. Then the brand would sell an unlimited supply of razor blades, and only the ones made by the razor company would fit into the razor itself.

Get consumers in quick and cheap, the model says, and you will profit from them forever. It’s a great tale and an interesting strategic twist. It has been used as a way of explaining how to make money from providing regular, recurring services.

And, like most of the business concepts upon which we’ve relied, it no longer applies. That model has been shattered by a shifting and oft-disrupted marketplace.

The idea of making money off razor blades made sense a long time ago, when the barriers to entry into a market tended to be high and the number of choices provided to a consumer was low. But today, you can walk into a Walmart and be awash in razors. If you don’t find one you want, go across the street to Target or Costco.

Because there are so many options, the prices on everything — razors, blades, shaving cream — race toward the bottom (often pulled by the house brand that looks remarkably similar to the known brands but sells for half the price). Even if you’ve purchased the razor, switch costs for a consumer are so ridiculously low that it no longer matters.

The only reason for a consumer to stay with one particular brand of razor (or anything) is if they love that brand.

Solving the Problem of Advertising

I’ve recently become aware of a critical truth: there is no silver bullet that will solve the problems of advertising, but consumer intimacy comes pretty close. This is the main reason why social media has suddenly become the number one priority on so many brand manager’s to-do list.

Sure, many brands are attracted by the tremendous amount of time people are spending on Twitter and Facebook, but they’re interested in something a bit deeper. They’re seeing an opportunity to begin using the interactive medium to make connections that are deeper than what has passed for loyalty in the past.

In the past, “lock in” equaled loyalty. Today, there’s basically no such thing as lock in.

Even a service like Facebook, to which people are fiercely loyal, would evaporate overnight if something better came along (remember what happened to Friendster?) or if they decided to begin charging for the service. If you can’t count on loyalty to a service that has a list of all a consumer’s friends, contacts, photos, and videos, how can you expect loyalty to a product?

We need an entirely new way of thinking about loyalty. We need to adopt a “loyalty imperative” for all our work.

Not a Social Media Story

The loyalty imperative isn’t just about social media. Certainly, you can engage with customers on a more personal level in social media, and that can lead to a more loyal customer. But we need to begin thinking about how we can use digital technology to connect the yesterday, today, and tomorrow of a customer’s journey.

Loyalty is a business measure that takes time into consideration. If you’re going to adopt loyalty as a key goal, then you need to think not just about the sale that you’re going to make, but how that customer lives with you across time.

Using the simple framework of “yesterday, today, and tomorrow” as a guide, you can begin to create a strategy to use digital technology to better achieve marketing goals.

• Yesterday: See a transaction with a person as a part of history. At the simplest level, this means paying close attention to cookies and registration information. No one likes walking into a transaction and having to explain that they’re a long-time consumer. People are generally willing to identify themselves with some kind of registration information (think of a log-in or a membership number). But once you know who they are, you need to make sure that the people (or the interactive tool) is ready with the relevant data about this person.
• Today: Understand what the consumer is there for and how they like to interact with you. This could be a particular preference for a method of communication, or a way that a consumer likes to get products finished. Customizing an individual transaction is becoming increasingly important for managers, and digital technology and the availability of data is the best step toward delivering that experience.
• Tomorrow: Anticipate needs. While this is nearly impossible to do at an individual level, it’s possible at a macro level. Consistently polling your audience and asking for feedback is the best way to get a glimpse of the direction that your consumers are heading. Several tools and services allow you to put out polls and introduce surveys to your site.

Loyalty Spreads

One great thing about generating loyalty is that you’re actually doing double-duty: by ensuring that current customers continue to come back, you’re also creating advocates and market movers who will help bring new consumers in. So, while you’re working with the people already spending money, you’re also doing the best possible form of advertising.