The case for customer loyalty

Healthcare Financial Management, Sept, 2004 by Arthur C. Sturm, Jr.

How does customer loyalty grow? Through good customer experiences. Yet some organizations seem to genuinely fail to understand that they can keep or lose a customer in the proverbial blink of an eye. And in this era of increasing customer demands across all industries, it's important that healthcare financial managers understand the correlation between customer loyalty and customer experience.

By relating several recent experiences--with Marriott Hotels, United Airlines, Hertz, and the medical treatment of my son's viral meningitis--I hope to illustrate that healthcare organizations, must meet customer standards and expectations just as other well-run, profitable, and customer-oriented businesses do.

Marriott Hotels: Platinum Customer Service Marriott has always been high on my list of hotels because of its strong commitment to customer service. Despite this, it still didn't get all my hotel business for one reason or another. In fact, if my calculations are correct, I spend on average about $5,000 a year with Marriott not a huge sum by any measure. My approximate lifetime value to Marriott over 25 years: $125,000.

But Marriott surprised me earlier this year, when I got a letter announcing its 25th anniversary and telling me that, as a charter member of Marriott Rewards, I was being given lifetime status in Marriott's highest level of recognition, Platinum Elite. I was even more impressed when, on my next stay, I flashed my Platinum Elite card and the desk clerk said, "Gee, we hardly ever see these!" I was treated like royalty.

Marriott's strategy was to reward me for longevity rather than economic experience--an interesting twist, especially when compared with our next case. And sure, I'm now booking Marriott with greater frequency than ever.

United Airlines: Not Very Friendly Flying

United also sent me a letter at about the same time regarding the renewal of my stares as a Premier Executive, its second-highest reward status. United had always been my first choice for air travel; over my lifetime with the airline, I have traveled just short of i million miles and spent somewhere in the neighborhood of $50,000 a year with it. My approximate lifetime value to United over 30 years: $1.5 million.

Most of my travel in 2003 was close to home, so I knew my status would go down. Actually, it crashed. United said I didn't qualify for any status until I flew a certain number of miles in 2004. Although I was irked about that, I went ballistic when I took my family on an international trip and found that our seats has been "reassigned" to the non-Premier areas of the aircraft with less legroom, etc. Then, and on subsequent flights, I was pretty much treated like baggage.

With its actions, United was informing me that loyalty was something I had to demonstrate every year--an interesting contrast to Marriott's "thanks for your support over the years."

After a round of nasty letters, I got my status restored. But today United does not automatically get my business. I have alternatives. I exercise them.

Hertz: Trying Harder--and Succeeding

A few months later, I wrapped up a business trip and scurried to the airport to catch the last flight out. My rental car was from Hertz, and I found myself at the off-site location about 35 minutes prior to flight time. Tight, but possible.

In my rush to get to the courtesy van, I locked my briefcase--and the car keys--in the vehicle. No problem, I thought; I'll just get Hertz attendants to use their "master" key and I'll be on my way. My flight was now 25 minutes away.

Imagine my surprise upon learning from the attendant that there is no such thing as a "master" key. But another Hertz employee literally popped out of nowhere, wrote down the vehicle identification number, and zoomed out of sight to make a new key.

He returned yes, in the blink of an eye--and the key didn't work. Flight time: 20 minutes.

"Try the trunk," said a coworker. And soon the young man was in the trunk, punching down the back seat. All of this for my briefcase. Impressive, I thought.

The bag was in my hand in less than a minute, and as I started to sprint to the courtesy bus, the manager said, "Forget the bus--we'll drive you over." I was at the gate with a full eight minutes to spare. All of this for a rental fee of less than $150. My approximate lifetime value to Hertz over 30 years: $90,000.

Doctor A and Hospital X: Should Try Harder In early June, my 15-year old son was diagnosed with a "mild" case of viral meningitis. We were cautioned to watch for certain symptoms, and if they appeared, we were to take him to the emergency department (ED) immediately. Those symptoms appeared, and my son was on his way to the ED at Hospital X.

Fortunately the tests came back negative; our son was apparently suffering from some flare-up of the virus. He was discharged. This story should end here on that somewhat happy note, but the experience with the hospital staff once again demonstrated that outcomes are not necessarily the measure of satisfaction.