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Loyalty: A rare commodity

By Val Hale And Donna Milakovic - | Feb 13, 2014

Donna: Loyalty is not a logical response to a person or situation; it is an emotion. It inspires action, sometimes fierce and sometimes long suffering. In a presentation by Rudy Vidal this week at the Utah State Chamber Conference in Salt Lake, we explored the world of customer loyalty. Rudy explained systematically the destructive forces of commoditization, or making things the same and charging less than competitors. Loyalty in business is fleeting in our day, and we wonder why brand loyalty is hard to come by.

Let’s take cars for instance. There was a time when not all cars could be relied on to start in the winter or get the same gas mileage or offer GPS navigation. At that time, buying a car that started reliably was important, and customers of well-made cars were loyal. There was a time when US jobs were threatened by car manufacturers overseas and the “buy American” campaign was in full swing. American made cars found a following of loyal customers. Now even American cars are not made in America. I drive a Dodge designed in Italy with most of its parts manufactured in Asia. It looks like every other minivan on the market and gets the same gas mileage and has the same features and probably the same engine.

So why did I buy my Dodge van when the Kia was more sensible? Because it feels like an Italian sports car inside. It fits me. I love it. It was not the sensible choice. There were options with fewer miles and more warranties. Several car dealers speaking to both my husband and myself attempted to sell me a sensible minivan with low miles at a great price and several upgraded features.

What they didn’t get was that “more-bang-for-the-buck” isn’t what I value. I leave that to my husband. When it came to my car, I didn’t feel like being rational. I spend upwards of 15 to 20 hours a week in my car. I wanted a vehicle that moved my family, fit my two dogs and luggage and still made me feel like I was driving something stylish and sporty.

So I paid more money for the one that made me feel like I was not driving a tired mom-mobile. I love it, and I will recommend it repeatedly to friends and family members.

As companies race to cut prices and sell the same commodities for less than competitors, they perpetuate the lack of customer loyalty. Those few companies that can differentiate themselves by finding what their customers value will break all the trends. Look at Apple. A company that charges much more than competitors for electronics and computers but has fiercely loyal customers. Why? Because Apple gets that I want to be cutting edge. They are not selling computers, they are selling happiness in a sleek, user friendly, be-the-coolest-kid-on-the-block packaging. The success and ridiculous income generated from making people feel cool for having their products is proof enough of the merits of building loyalty over slashing prices.

There are plenty of things in my life that I don’t pay more for, but when it comes to computers, crescent rolls, running shoes and chocolate, I definitely have brands I am absurdly devoted to. Loyalty is not logical; it is emotional.

Val: Customer loyalty truly is–or should be–the Holy Grail of businesses. When customers feel a tie or kinship with a business or product, they will come back again and again to share their money, even if they can get a similar product or service cheaper or easier somewhere else.

Donna used the example of her automobile and valuing its stylishness. I, too, am a loyal automobile buyer. My loyalty is toward dependability. I have owned several Toyotas over the years, and they have always been dependable and durable. I purchased a Toyota pickup in 1986 and drove it for many years. Then my children took turns driving it to school and around town. I owned that truck for 26 years, and I rarely had it in the shop. When it came time to replace that vehicle, I chose a Toyota Tacoma, which I have thoroughly enjoyed and plan to drive for many years.

I also love shopping at Costco. My wife has placed restrictions on how often I can go there because I tend to get carried away while walking down the aisles. I don’t mind the crowds and the long lines at checkout and the lack of grocery bags. The fact that I can get a big, sweet watermelon for about $6 and a pineapple for less than $4 and other delicious fruits and vegetables at a reduced price is all I need to keep me coming back. I value finding quality food (especially fruit) at a reasonable price.

I find myself very loyal in my media choices, too. When I was a little boy in Arizona, my family listened to KSL Radio early in the morning and at night when BYU football and basketball games were broadcast. The BYU sports connection has kept me listening to KSL my entire life. I occasionally listen to other stations for music, but KSL is my default station when I am driving in my car.

The same holds true with the Daily Herald. I have subscribed to the Daily Herald since I was a teenager. My first full-time job was as a reporter for the Herald. And twice I have written a column for the newspaper. I start every day with breakfast and the Daily Herald. It’s part of who I am. I like reading about local news.

Cultivating customers who will stick with you through thick and thin and who have blinders on when it comes to competing brands should be the goal of every business. It is, after all, much cheaper and easier to retain customers than it is to acquire new ones.

Val Hale is president and CEO of the Utah Valley Chamber of Commerce. Donna Milakovic is Executive Vice President of the Utah Valley Chamber of Commerce.

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