Thursday, September 24, 2009

Loyalty programs - an option for IT?

I have to admit, I am a sucker for dogs. Whenever I’d walk through a mall and see a pet shop, I take time to walk past the rows of puppy cages. My eldest daughter “rescued” a greyhound from a shelter and even in the heart of winter, when she was out of town, with snow piled high along the sidewalk, I still found time to take him for his constitutional walk. As the puppies stare at me through the glass of their cubicles, I find it difficult to just walk away. But these days, with the time I spend on the road, it wouldn’t be fair for any dog.

I had a dog when I was a child. It was a brindle-colored Boxer that we simply called “Loco.” He wasn’t completely normal – he would follow the bread delivery van and retrieve every loaf dropped off. My father quickly tired of compensating the neighbors after each visit from the baker. And when I went to Rugby practice after school, Loco would somehow manage to fix his teeth into the laces of the ball and run away with it. No matter how we all tried, we just couldn’t catch him and we would spend all of the practice session without a ball. I have had other dogs, after Loco, but he was always my favorite and one day, there may be another Boxer around the house!

There’s perhaps nothing more loyal in the natural world than a dog. The family dog has been the symbol of loyalty, and the number of times I have picked up a paper only to read of yet another heroic effort by a dog saving its master can’t be counted. Throughout life we too develop strong associations with people and places. We are often loyal to our home town, to our school, and to our friends. The picture at the top of this post is of me waving the flag for Australia! But these days loyalty is being institutionalized into nearly everything we do and there’s almost no mail delivery where there isn’t some form of enticement asking us to join some vendor’s loyalty program.

In the early days of my career, when I first started to travel on business, there was little attention given to the frequent flyer. There was a lot of attention paid to first class passengers, but for everyone else it was a pretty ordinary experience. And the cost of flying, back in the early ‘70s, meant that airlines didn’t see too many repeat flyers. So, no, frequent airline travel was rare. But today, we pretty much do everything we can to accumulate frequent flyer miles – and for many of us, our annual vacation is often greatly subsidized by the free air travel we earn over the course of a year. And it’s not just the airlines, as hotel chains quickly followed suite. Of late, I have even seen the cruise ships step up to support their most loyal passengers with upgraded cabins and deeply-discounted future sailings.

Across the computer industry, the story is quite different. For companies that really pride themselves on their marketing savvy, it’s been slim-pickings as far as receiving additional benefits for remaining loyal customers. Certainly, the sales teams are aware of lengthy business associations and work hard to retain a customer’s loyalty, but when it comes down to individual IT professionals, there is very little recognition. After all, it is often these individuals who determine future IT purchases and who stand the most to loose whenever a situation deteriorates and projects fail to launch.

For many years, the vendors have built a rudimentary program for their very best customers. Often participation in Customer Advisory Boards is solely the domain of customers with decades of association and where IT budgets often soar into the billions of dollars a year. Sitting around a conference table in a six-star hotel, along southern Italy’s Amalfi Coast, certainly is an occasion many customers would be reluctant to give up. No matter the state of the economy or the potential savings that could come from a switch in allegiance, or so these vendors hope.

Key Customer Symposiums and other targeted events come under the same heading – considerable marketing dollars expended on a handful of extremely loyal customers. It is true, I have to admit, that the vendors do learn a lot from these events and information obtained their always contributes significantly to prioritizing product roadmaps, but what about the remaining 99% of the customers? Those with relatively miniscule budgets yet they too exhibit loyalty and continue to purchase each new product as it becomes available!

For as long as I can remember, it has been the domain of the users groups to fill this gap – events and functions, even parties with celebrities, to help foster the sense of community at the grass roots level. It doesn’t matter to the users present whether you have a single server and a simple Customer Relationship Management (CRM) application, your presence is as welcome (and as enjoyed) as users with the most complex IT deployments. User group meetings, supported by the major vendors, have become extravagant and spectacular love-fests between users and vendors. While we see some recent downturn due to the current uncertain economic conditions – given all other options, vendors still enjoy the time in the spotlight these provide many of the executives.

I recently stopped by my Chevrolet dealer and saw a separate area set aside for Corvette owners, so I asked if the dealership had ever considered creating a loyalty program, along the lines of airline loyalty programs. I even took my question to a Corvette online forum for feedback. I went so far as to suggest to my dealer that I would think about proposing such a program. However, the responses posted to the online forum weren’t all that supportive.

And the general feeling was that, as much as they loved their Corvettes, unless a loyalty program offered deeply discounted (even free) services, no matter how many caps or custom shirts were provided, they would continue to shop around for their next Corvette – yes, the Internet has had a big impact on this community – and support the dealer who gave them the best price on the new car. (But return to their existing dealer for routine servicing, mind you, in nearly all cases!)

The airlines have been extremely successful with their loyalty programs as their recognition of high-value passengers have kept them captive for decades. Many are now too deeply entrenched in the program, with too many benefits, that switching airlines would only come with significant cost. Ongoing participation in the airlines program became a sure thing, and the ongoing participation by the member, unconditional!

But from all the discussions I have, and as illustrated by the Corvette owners, IT professionals just aren’t into protracted loyalty for the sake of a few “special occasions” and reward dinners. Even Apple users, for the most part, would change allegiances in a heartbeat if the new vendor came out with something measurably better and way, way “cooler” than what Apple was offering at the time.

Within the IT profession, loyalty has definitely become multi-dimensional. It’s not only customers remaining loyal to one particular vendor, and across the complex world of partnerships that underpin any successful vendor, partners expect their vendor’s team of professionals to be loyal to the platform as well. But again, in the harsh reality of today’s economic climate, I am seeing less and less loyalty on all sides. The new paradigm for IT vendors where teams, divisions, and whole business groups can be let go for just a short term quarterly bottom-line boost, no one can expect even the longest-serving professional to show much loyalty these days.

My dogs have been great pets. And to me, they showed a sense of loyalty that was unconditional. But was it? Of late I have begun to wonder how loyal they would have remained if I had stopped feeding them? What if a neighbor offered them food and spent more time with them – how loyal would they remain? Is there really any unconditional loyalty anywhere?

Is loyalty today just a one-deal term? And is this necessarily a bad thing for the IT community? Could misguided loyalty hold a company back if it’s IT staff just keeps hanging on to the same mix of products without looking further afield? What happened to all the loyal Burroughs, Honeywell, Nixdorf, Wang users? More confusing? What happens when IT decides to swap out IBM for HP, but stays with IBM Global Services, for instance? It would seem on further consideration that perhaps it is a very good thing that there are no loyalty programs for IT professionals.

After all, the IT industry’s strength draws from the speed with which new technologies and products can find a community and solve real business problems. I guess we just all have to come to terms with this fickleness and realize that benefits from retaining a degree of independence has outweighed anything loyalty programs could possibly have provided.

And perhaps, knowing that, our loyalties really are tied to the IT industry itself. After all, whether we work for Chase, Exxon, CNN – we are foremost IT professionals!


Robert said...

RE: Corvette Loyalty

Part of the problem is that these programs aren't free. The cost is covered somewhere. So if that makes the purchase price higher, people inevitably go where it's cheaper (see: Walmart vs local stores).

With airlines, while I won't say they collude on pricing, they are very similar so the programs can be a differentiator.

But it would be interesting to have a frequent buyer program (of course being Government, I couldn't join) and see how that worked.

Richard Buckle said...

I think Robert that there is still so much the IT industry can learn and I think that this is true even among the users of the largest systems. These days, our loyalties should never be assumed to lay with just a limited number of vendors.

Having said that, I am a bit like you - I would be interested to see how it could be structured and to watch how it may work. But someone creative should be able to figure it all out and put something together ...