Jay Leonard
Customer loyalty: It’s the Holy Grail of most businesses today. And yet study after study shows that loyalty is on the decline, especially as consumers grow ever more empowered, thanks to the surfeit of information, advice and opinions on the ever-present Web. Experts say most products and services will be commoditized in the next decade, making loyalty even more important as time goes on.
It’s become clear that nurturing customer loyalty goes way beyond issuing loyalty cards and rewards points. I believe a mindset change is in order that takes into consideration the psychological aspects of loyalty.
Simply put, customer loyalty – like loyalty to an alma mater, a significant other, your homeland — is an emotion, and like any strongly grounded feeling, it’s an emotion that is created over time.
Using a metaphor, customer loyalty is like an emotional bank account that every customer has for each organization or brand with which they interact. With every positive interaction, emotional loyalty currencies are deposited into the account. Conversely, negative experiences post debits to the account. With more and more positive experiences, additional currencies are deposited, until the account reaches a level where it pays back in terms of true customer loyalty for that organization or brand. Beyond that point, more deposits might result in customer advocacy, where the customer is willing to speak out on your behalf.
So, how do you ensure the deposits outweigh the debits? One way is to minimize and pay close attention to and rectify the negative experiences. These can come in the form of promotions that the customer finds irrelevant (a point-of-sale coupon for something he or she has just bought, for instance) or an error in a transaction (incorrect size or unexpected charges), or delivery of items arriving beyond the promise date.
A second way is to deliver personalized and relevant interactions across all channels of customer engagement. An example of this is The LEGO Group, which – through a single source of customer data – has a full view of every customer interaction across its Web site, call center and store. If someone looks at a certain LEGO collection on the Web site, for instance, and then visits the store, the point-of-sale screen or kiosk presents offers, discounts or further information related to that engagement upon entry of the customer’s loyalty card number. The customer feels “known” and invested in, and – cha-ching! – chalk up one more currency deposit in his or her loyalty bank account.
In addition to a 360-degree view of customers, it’s important that the entire culture of the organization be customer-centric – after all, if loyalty is an emotion, who better than another human being to help make that emotion a positive one?
What are your thoughts: Does loyalty have an emotional basis or a scientific one? Please share your thoughts and opinions.
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This article was written for Business 2 Community by Jay Leonard.
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Hello Bernard,
Do you think that an organisation’s security posture (i.e. “your personal information is safe with us”) can improve customer loyalty?
Kind regards,
Neira
Hi Neira, thank you for your question. I think data privacy is a basic expectation that customers have with most organization that they interact with. And typically customers only notice it if something does go wrong. Thus, I think the bar would have to be fairly high to create positive experiences with the data privacy topic. My premise is that its easier to create positive customer experiences on things that customers do not have high expectations for.
Great post, Bernard.
Your point about how nurturing customer loyalty goes way beyond issuing loyalty cards and rewards points really resonates. My decision to become loyal to your company, product or brand is an emotional decision – I have to FEEL something that compels me to return or buy in a repeating cycle. It is also a function of how easy your company is to do business with.
If you can deliver a great customer experience that combines those two elements, and gives me what I need or want from a practical standpoint, it is highly likely that I will not only want to come back again and again, but also promote your business when the opportunity arises.
Just look at Zappos or Amazon. The reason so many people are crazy happy about doing business with those companies is they deliver on all three elements (practical, emotional and low-effort) over and over and over again.
There is no loyalty card program in the universe capable of matching that power.
am skeptical about the extent to which loyalty programs (i.e., loyalty cards, point systems, etc.) are really effective in creating sustainable customer loyalty. My decision to become loyal to your company, product or brand is an emotional decision – I have to FEEL something that compels me to return or buy in a repeating cycle. It is also a function of how easy your company is to do business with.
If you can deliver a great customer experience that combines those two elements, and gives me what I need or want from a practical standpoint, it is highly likely that I will not only want to come back again and again, but also promote your business when the opportunity arises.
Just look at Zappos or Amazon. The reason so many people are crazy happy about doing business with those companies is they deliver on all three elements (practical, emotional and low-effort) over and over and over again.
There is no loyalty card or rewards program in the universe capable of matching that power.
Thanks again for sharing this article!
Bernard you are half right (but not half wrong) yes people are emotional beings and respond emotionally to brands and loyalty programmes. However they are also clever commercial calculators and can rationally assess a programme offer very quickly. The way to deal with this is to work at a total customer value propsition level – ideally segemented against different customer needs groups and then work out which of the marketing levers you need to pull for each audience between brand, product and relationship marketing benefits. Service and customer expereince you refer to is part of the overall proposition but lets be honest from research consumers make 85% rationale choices and 15% emotive ones so lets be clear on the core product proposition and build on that rather than ignore it and instead deliver only and exceptional customer service. Loyalty is the icing on the cake but it can’t be a poorly baked cake with low quaility ingredients in the first place.
Sturat from my opinion I believe Bernard is more right than 50/50 right. If you look at many purchase drivers practically from a retail point, they are emotive to a greater extend. Even experiential marketing and sampling projects that are sales focused get better results when they strike audiences and buyers right emotionally. There are a bunch of great products that offer incredible value but if they are not positioned and tuned to affectively relay these benefits, they end up being rendered mediocre. Affective influences precede the cognitive ones in many typical purchase situations and it is incumbent on the marketers/business person to employ total customer positioning to discourage switching.
I totally agree with, Stuart on experience being a part of the total proposition. Total product focus offering is easier said than done and with the ever changing market dynamics more efforts should be on the customer (experience & expectations) to drive product/market changes and improvements as opposed to product focused. Positive experience yields loyalty.
Customer loyalty begins with internal customers who can make those positive connections to external customers. Another point is unless customers are actively making referrals beyond the Net promoter question of “How likely are you to refer this business to your family and friends?” customer loyalty is not nearly as effective as it could be.
Leanne Hoagland-Smith