Do concessions foster loyalty?

In an age where brands are becoming more socially aware and engaged, and traditional market norms are blurring the lines with social experiences what can brands do when the two worlds clash? What action should be taken where an unhappy customer has the potential to publicly embarrass a brand / institution?

The immediate thought is, ‘concessions’, ‘just get them to be quiet’ and ‘do anything to make them happy’. It may work in the short term but does it work in the longer term?

The problem, as I see it, is that this is a reactive attitude to problem resolution. Perhaps a more proactive and open strategy could work more effectively.

Using the example of penalty fees on an everyday transaction banking account – instead of penalty fees every time a consumer overdraws on their account, what would happen if the customer was given the power to use two free fee waivers every 12 months?

Employing this strategy, both the financial institution and the customer know where they stand, and it gives the power to the consumer to make the choice about whether they want to cop the penalty or not. There would almost certainly be a small percentage of consumers who would call up asking for a fee waiver after they’ve used their two free passes, but the financial institution could quite reasonably respond by reminding them they’ve already actively chosen to use their two concessions already.

Giving power to consumers is a powerful tool. One reason why many consumers get so angry is due to a lack of power in the relationship between them and the company in question.

This proactive approach could be adapted to telco’s, insurance companies, sporting organisations, gyms and many other organisations – and may well foster more loyalty than a reactive concession which only comes in when someone has suffered a bad experience and the both sides know the resolution is a hasty one to temporarily keep someone happy.

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