The Path to Loyalty
October 09, 2013 | 1141 Views
In the fall of 2008, classes were well underway for the semester at the Wharton School of Business of the University of Pennsylvania. On one particular evening, four friends that shared a computer lab together decided to meet off-campus. A handful of hours beforehand, they had been kicking around an idea in class that had sparked each other’s interest. Fate or frequent patronage led them through doors of Roosevelt’s Pub on the corner of 23rd and Walnut St. in Philadelphia. Over a beer, Jeff, Neil, Dave, and Andy discussed the framework of the business they were looking to create. The concept centered around making it simple and cost effective for people to buy eyewear. In addition to finding a way to provide consumers with less expensive glasses, they wholeheartedly wanted to “do good” in the world. As their conversation wrapped up that night two promises were made. The first was that they would work really hard on this idea. The second was that would do everything possible to remain friends. Before the company officially launched in February of 2010, the guys had to decide on a name for their new company. They one they eventually came up with was, “Warby Parker.”
At the end of July, I had the opportunity to co-speak on the subject of guest loyalty in the hotel industry at the CHART conference in Miami, FL. A good portion of the discussion was based on the results of a 2012 JD Power & Associates Annual Insight Study. The study showed, based on responses from more than 68,000 guests, that overall satisfaction in the hotel industry actually had dropped to its lowest point since 2008 and 2009. Almost every area of the guest experience was down including indexes that measured satisfaction with check-in/check-out, rooms, facilities, F&B, and services. There is some good news, though; two days after we gave our presentation, JD Power released the results of their 2013 study. It showed a dramatic 20 point increase in overall satisfaction from a score of 757 to 777 (based on a 1,000 pt. scale).
This increase was encouraging but not something to be disillusioned by. The 2012 study also showed that satisfaction by itself is not enough to drive guest loyalty. If you can imagine satisfaction on a scale of 1-10, it would be somewhere between the numbers 4-8. Loyalty really gets started around an 8.5 out of 10. It’s important to note that 63% of guests that give a perfect 10 out of 10 are a lot less likely to switch to a competitor based on price. The challenge is that there is still that 37% chance they may switch, even if they are giving you a perfect score. Being that 100% loyalty is nearly impossible to achieve, the goal becomes for all of us to reach and maintain the highest scores we can every day. Jeffrey Gitomer, celebrated author, speaker, and sales guru says, “You don’t earn loyalty in a day. You earn loyalty day-by-day.” JD Power shares at the end of last year’s presentation that four of the ways this can be done is through staff service, consistency, innovation, and strategic differentiation. When I saw those four items, a company that I thought was truly living and breathing them was Warby Parker. Could it be that in an industry that orbits around the world of hospitality we might learn a thing or two from an online purveyor of goods that help people see?
You will notice immediately that both the on and offline shopping experience at Warby Parker is different. Their physical stores resemble bright open book stores with a photo booth and library ladders at their flagship location in New York City. When you order online, you have the opportunity to try your glasses on virtually by uploading your picture or by using the model photos provided. The company also lets you pick five sample glasses which are shipped to your home for free. You can try them on in front of friends and family and then select the one you like best for only $95. Additionally, going back to the founders’ desire to be good social citizens, for every pair of glasses purchased, Warby Parker donates a pair to someone in need. Incredibly, this summer the company announced a milestone of donating over half a million glasses around the world. If all of this doesn’t seem like it would connect with people, then I’ll add that they beat their first year’s sales goals within the first three weeks of being in business.
Warby Parker is providing an online shopping experience that is exceeding people’s expectations. They are doing this by providing great service supported by a backbone of consistency and innovation. In part, they have differentiated themselves from their competition by offering products at affordable prices and a simple yet unique manner of acquiring them. Undoubtedly, they will continue to develop a growing base of highly satisfied loyal customers.
When looking at the studies JD Power & Associates compiles, it’s clear that the path to loyalty is fraught with challenge and uncertainty. One thing for certain is the way to get there only begins with satisfaction. For us in the hotel and restaurant industries we must go beyond the middle of the road by continually seeking to exceed the expectations of our guests. This doesn’t mean we have to be perfect as mistakes are bound to happen. However, we must be responsive to problems and issues when they occur. When my wife ordered her glasses online about a month ago the lens prescription she received was incorrect when they arrived. Once notified, the Warby Parker team was apologetic and swift in their response to get things right. How does your team respond when problems occur? Keep striving to be consistent, seek ways to be different, and never forget the basics of genuine hospitality. Guests will start seeing your property and company as one they want to stay with for many miles ahead.