Loyalty Marketing and the Stockholm Syndrome

Some of my friends have helped me to a better understanding of the difference between loyalty and satisfaction.

They live in a mid-sized city in the mid-West. For a long time their city has been primarily served by Northwest Airlines, so they are frequent fliers on that airline. By many measures they are loyal customers of Northwest.

But when you talk with them you quickly learn that they are more trapped than loyal. They don’t have alternatives, and to them the airline is “Northworst.” Loyalty may be high, but satisfaction is not. If there was another carrier, my friends would switch in the blink of an eye.

I’m sure you know instances of customer loyalty being more the lack of alternative vendors than of a favorable opinion. So how do you think a company should operate when many customers who appear to be loyal are really trapped?

It might milk the situation for all it’s worth. This may generate the most near-term revenue, but the backlash could be ferocious when alternative vendors appear, and they will appear. The other extreme is to treat these captive customers as grandly as their frequent patronage warrants. This could lead to a better perception, and may be worth the cost.

But what if there is a third alternative, less costly than the red carpet treatment but yielding the same results? Suppose the Stockholm Syndrome applies to these captive customers? (It’s been a long week, and I’m feeling audacious.) The Stockholm Syndrome is a psychological response seen in hostages when token acts of kindness by their captors leads to an emotional attachment by the hostage to the hostage taker. Think Patti Hearst. In marketing, the hostage is the trapped customer and the captor is the vendor with extremely large market share.

I think it is entirely possible the syndrome applies to commercial situations. If it does, then token benefits for the captive customers could elicit favorable reactions similar to those from truly loyal customers, for significantly lower cost. Am I being totally cynical, or is this really worth a test?

First of all, a company has to have the corporate will to admit that their loyalty numbers are an illusion. On the positive side, captive customers represent a terrific opportunity. You know who they are, and mathematical marketing gives you a chance to convert them to truly loyal customers at a modest cost. Unfortunately little of what you do will show up in the loyalty metrics until your monopoly is broken, but you can’t sit back and boast about your loyalty numbers until then. You need to understand the dynamics, face them, and build on the advantage you now have. The Stockholm Syndrome says your chances are good.

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