Creating customer loyalty: lessons from Apple

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Interesting article from Inside CRM about the reasons-why Apple creates customer loyalty. Some of the reasons attributed are:

Retail Strategy: when you have an Operating System that is unfamiliar to 95% of the world’s population, the last thing you want is to consider buying it from a salesman who is clueless about it. My brief encounters with Apple salesmen at re-sellers and multi-brand outlets only confirmed this. At eZone the other day, I happened to notice a row of laptops on display, including a lone Macbook Pro. All the other laptops were turned on, except this. When I turned it on, I noticed that the screen was covered with thick cellophane thus making the glorious Apple display a dull grey. On the screen were several shortcuts, thus defeating the purpose of the Dock. Clearly, the machine was operated by someone who knew only Windows. At iStore, the Apple reseller, when I asked if the multi-touch Macbook Pro had come, I was asked what multi-touch was. In contrast, Apple Stores are friendly places where users are encouraged to play & explore the products. They are manned by Mac enthusiasts who are trained to be ‘experts’. That’s one reason why Apple Stores are such an important part of the brand’s success in the US.


Contrast this with the experience of buying high-end phones in India. All you get is a clunky handset replica often clasped to a chain at the back. Even in the flagship Nokia stores, if you want to experience the handset – sorry, all you get to do is lift a dummy handset.

No wonder that Apple Stores are a success by any measure in the US. According to a this report, the average per-square-foot sales of Apple Stores is US$4,302. Compare it with Saks – $362; Neiman Marcus – $930; Tiffany’s – $2,666. The nearest number is almost half! One reason could be that Apple competes in the high-end categories. Reports say that while Apple has 14% retail market share, its share of $1000+ machines (desktops & PC’s) is 66% in the US.

Apple Stores were meant to fail, according to industry experts. The success of the Apple Store comes from great planning and looking at the business from the consumer’s point-of-view. Apple hired Target’s merchandising chief, Ron Johnson, who first built a prototype by renting a warehouse. When they designed it, it occurred to them that the computer was evolving from a productivity tool to a hub for video, photography, music, information, and so forth. The sale then, was less about the machine than what you could do with it. They redesigned the store (a delay of 9 months) and when the first store opened only a quarter of it was about product. The rest was arranged around interests: along the right wall, photos, videos, kids; on the left, problems. And then the Genius Bar – a masterstroke – was Johnson’s idea. Talking about its genesis, he says, he asked about the ‘best service experience in the world’. A lot of people said ‘hotel’ and there was the idea: Let’s put a bar in our stores. But instead of dispensing alcohol, we dispense advice.”

Contrast this again, with our cellphones. I remember hunting for the nearest Nokia Care (after being shooed away from the Nokia store), figuring out that this would mean standing in a queue, getting a token, sending my driver and waiting for 2 days. Phew. Even with PC’s the guy who are going to approach if you have a problem, could be anyone from the person who assembled it to the manufacturer. Not the store. Ditto with the fancy, high-end fashion retail outlets. The ads will wax eloquent about the quality of yarn and the style of stitching and the salesman at the outlet will dumbly point you in a general direction when queried about the brand.

Complete Solutions: my cellphone service provider is Airtel. But my broadband is from BSNL (even though Airtel provides the same service). Airtel has my number but have not called me once to push their broadband services. My AC is from LG but given the service record, they figured I am a customer after one year when they had to clean the filter. They make other consumer durables but I don’t own any of those. Where am I going with this? You guessed it – bundling of services. Even in a single product (the PC or laptop), Apple bundles its own applications. This provides control over the entire user process, from hardware to software, strengthens customer loyalty. Apple also builds its own ecosystem, as it were. The Mac OS system, the iPod, iTunes and iPhone are all meant to work together and they do. There are several brands in India with this kind of potential. Do they live up to it? You decide.

The CRM article goes on to talk about outstanding products, consistency, effective PR, attractiveness and products that deliver as the other reasons. For me, the above two reasons highlighted the areas where we could improve.

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