Kanika Datta: Cream-wise, pie-foolish

SWOT

Once, soon after a family bereavement, the marketing chief of a hotel, which was part of a national chain, sent me a condolence card. Was I touched? Not a bit. In fact, I was slightly appalled. I didn't really know the lady who signed the card with its synthetic message set out in a maudlin poem. This was nothing more than a marketing ploy of extreme cynicism. This didn't mean I stopped frequenting the hotel in question, but the incident certainly detracted from my opinion of the group in some indefinable way.

That somewhat tasteless incident is just one example of the extremes to which service providers can go to stoke notoriously fickle customer loyalty. No doubt retaining customer loyalty is crucial in these competitive times. According to one study, a 5 per cent increase in customer retention rates leads to a 25-95 per cent increase in profits*. The question is, where should the purely functional approach to customer loyalty, with its unconscious cynicism, end?

These days, thanks to ever-sophisticated CRM tools and software, corporations are learning new ways to talk to the customer. But here's the rub. How much of it is genuine? Should you feel touched if the phone company sends you a birthday greeting even as it messes up your billing? Should you feel loyal to a hotel that sends you flowers on your anniversary only to deliver execrable service the next time you stay there? Or what about the airline that offers you a gold card only to lose your luggage?

It does not require a management guru to tell us that no loyalty exercise and no evolved CRM programme in the world will work if service is sub-standard. But there is another reason I wonder at the nature and efficacy of customer loyalty exercises. That is the rub-off it has on the corporations that practise them. Among the truisms to emerge from the collective punditry on the subject is that customer loyalty has a direct equation with employee loyalty. These days, it is often regarded as Rule One of the customer loyalty bible.

Easy to achieve? Not quite. HR departments in India may have evolved way beyond their somewhat limited jobs in the seventies and eighties of processing salaries and attendance rosters. Indeed, the term "HR" itself marks an evolution from the days when the function was baldly labelled "Personnel". But chats with younger employees today suggest that the same unconscious cynicism of customer-hungry marketing departments is being extended to the employee loyalty exercise.

Indeed, as employee attrition grows, companies are marketing themselves with increasing vigour to their employees. It is strongly evident in the peppy language of today's HR manuals. Apart from the standard monetary inducements such as stock options and bonuses, corporations have also been working hard at building the "touchy-feely" aspects of the business. Thus, HR departments find themselves having to dispense birthday cards, anniversary cards and get-well-soon cards, organise family days, the occasional "fun day" and annual picnics, design internal awards and so on and so forth. In particular, these are being applied with growing energy in such high-attrition industries as ITES and IT.

To be sure, these are not pointless gestures. On balance, they make life at a company so much more pleasant, often leavening the tedium of long hours or odd working hours, which appear to have become the norm in corporate India today. The question is whether they actually encourage employees to stay on. On balance and as the evidence of growing attrition shows, the answer is no.

The same explanation that applies to the fickle consumer applies to the employee. Do birthday cards make such a huge difference if your organisation is riven by politics or if your boss is a bad-tempered tartar? Does a "fun day" do more than induce fuzzy memories of fun if salaries are regularly banked late? Would the annual picnic make a difference if the office atmosphere were unpleasant?

The answers here are obvious, but it is surprising how many organisations overlook these essentials in the interest of the Big Gesture. The answers, in fact, are evident year after year in the Great Places to Work surveys both in India and the US. Every year, they clearly suggest that employees look to other factors such as the work environment, opportunities to learn and grow""powerful influencers in the Indian context""and, most importantly, robust systems and processes. In other words, and to mix the metaphors a bit, Big Gestures can merely be the cream on the pie. It's the pie that must taste good first. And it's a good pie that keep will keep customers consistently happy.

*Loyalty Rules by Fred Reichheld (Harvard Business School Press, 2001)

The views here are personal.