Power to the people - customer loyalty might end up deciding CEO pay

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According to a recent article in The Economist, UK politicians are proposing to enfranchise the millions of members of company loyalty programs, giving them voting rights on the top managers’ remuneration. Crazy stuff? Or could it be the most pioneering idea for bringing customers into the heart of business?

After all, there's barely a brand strategy deck in the world that does not boast a slide on empowering the customer. Most modern marketers have some sort of customer mantra – think of Amazon’s 'The earth’s most customer-centric company'. And the people who run loyalty programmes always claim they’re about championing loyal customers, rewarding closer affiliation to the company’s commercial success.

Inviting Mrs Public to cast her vote on Sir chief executive's pay package is surely as customer-centric as any business could get.

But whether you think that would be a bold innovation in economic democratisation or just a cynical election gimmick destined to bring the economy to its knees, the fact is that customer power is something that demands a lot more than PowerPoint lip service.

Whether we like it or not, customers have more clout than ever. More power to compare and choose. More power to complain and share their criticisms. More power to allow access to their data or close it down completely. More power to build brand reputations or destroy them.

And it’s salutary to remind ourselves that it’s the customer who pays all the bills. As business guru Peter Drucker, the inventor of the term “profit centre”, realised later in his career: “the only profit centre is a customer whose cheque hasn’t bounced”. Everything else is a cost.

Expensively built brands are meaningless if customers don’t allow companies to make money from them.

At its best, loyalty marketing is a responsible and positive response to the reality of growing customer power. By encouraging customers to become members of a brand by joining some sort of structured loyalty or benefits programme we can:

  • acknowledge their status in the business
  • agree a mutually beneficial “contract”
  • gather personal data on the basis of explicit permission
  • bespoke products and services to the individual
  • listen and respond to customer priorities
  • recognise, reward and share business success.

And there are many exciting ways that progressive marketers are helping to empower their customers and bring them into the heart of their business.

Consider how Tesco successfully beta-tested home delivery by inviting Clubcard members in trial stores to road test the service, report on their experiences and help design the solution that was ultimately launched nationally.

Think of the membership programme of The Guardian newspaper, where readers are invited to support the mission of the paper to “keep our journalism free of a paywall, so it remains open and accessible to everyone. With your support, we can give a voice to the voiceless, pursue the most complex or time-consuming stories and hold the powerful to account”. Patron members get exclusive access to journalists and in-depth insight into subject areas that most interest them, with opportunities to participate in debates and events throughout the year.

Then there’s Naked Wines who invite wine buyers to become Angels, essentially seed investors who support adventurous new winemakers in exchange for early adopter prices and a “sense of relationship with the winemakers, that is beyond the purely commercial”.

Growing customer power is a fact of modern marketing, and also an exciting opportunity for marketers to innovate and differentiate their brand. It’s a theme we will return to in the future.

In the meantime, how about writing that board paper recommending that your customers get a say on your CEO’s salary? Just a thought.

Terry Hunt, founding partner, The Future Customer

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