What customer loyalty is – and isn’t

Marketing in a nutshell“Customer loyalty” can be a misused expression, with an emphasis on tying customers in to a contract or simply rewarding transactions. Not necessarily bad things but they ignore the potential for developing the emotional connection from which real loyalty stems. There are benefits in a system that allows you to measure customer behaviour, so why not find a way that combines the best of creating a good customer experience with a system that allows you to better understand their needs and wants?

I dare say that many of us have got a purse or wallet stuffed full of various cards, collecting points or stamps, or a phone full of loyalty apps, which we might – one day – get round to redeeming for something. They’re presented as a customer loyalty scheme but do they make us feel any more loyal to the business that issued them?

“Loyalty” can be a misused word in the drive to squeeze another sale out a customer. Too often it is simply about driving one transaction after another rather developing a long-term preference for that business over its competitors.

What customer loyalty isn’t

You can’t really call it “loyalty”…

  • When your customer has a contractual arrangement with you and simply sticks to it.
  • When it costs them money or effort to change suppliers and it’s easier to stay put.
  • When they are seeking an alternative supplier and you just don’t know about it yet.
  • When you are so cheap they’d be silly to change.
  • When the relationship is with an employee, not your business, and the employee is the one they’d follow elsewhere.
  • When it is just pure habit.

In these situations it won’t take much for a competitor to poach your customers because there is no real feeling of loyalty there.

What customer loyalty is

Your customers are much less likely to chop and change suppliers, are more likely to make repeat purchases, and more likely to recommend you…

  • When your customer believes that your product/service is and remains their best option.
  • When they make that choice whenever faced with a purchase decision.
  • When they forgive problems because of past excellent experience.
  • When they reject competitors’ approaches.
  • When the relationship is based on an emotional connection, not transactional deals.

A transactional loyalty scheme tends to be easy to run – but that makes it simple to replicate by competitors, giving you no differentiation. It rewards specific behaviour – but only that behaviour, meaning you have little scope to build on customer loyalty in changing circumstances.

A better approach is to focus on creating a better customer experience that is in line with your business values. Better still, do this without losing the benefits of measurement that a sound loyalty scheme can bring.

  • To support a brand positioning of fun and sociability why not gamify your loyalty scheme?
  • Aspirational customers? How about a tiered system?
  • Match your customers’ loyal behaviour with contributions to a cause that resonates with their ethics.

So think about how you can improve the customer experience that your business offers – sometimes it is the little things that make a big difference. And, if you really want to run a loyalty scheme, why not apply a little more imagination and incorporate a better experience into that?