There are two common beliefs about customer loyalty. The first is that loyal customers are important to a business. The second is that loyalty, in today’s world, is pretty much dead. The first is true. Loyal customers are indeed more profitable, talk about you more, and stay longer. The second belief, however, is not true. Not by a long shot.
We hear the ‘customer loyalty is dead’ refrain quite often from executives lamenting the increasingly transient nature of consumers. Some blame Millennials. Others blame the digital age, or aggressive pricing created by cheap offshore labor and production. We look everywhere, it seems, but the mirror.
The Essence of Real Customer Loyalty
When you think of real loyalty – the loyalty we have to friends, to country, to groups – there are three factors:
Humans are social creatures. We want to feel like we belong to something
We are attracted to things and people that reflect our ideals, values and principles
We like and trust people who care about us and value us.
These are the three things organizations who are serious about customer loyalty should be focused on. But that’s not the approach most companies take.
Bribery and Entrapment Do Not Equal Loyalty
Instead of doing things that create genuine loyalty, most organizations resort to things such as financial incentives for long-term contracts, or points-based schemes that they call “customer loyalty programs.” They are effective, but that effectiveness has waned significantly over the last decade or so. People are becoming fatigued with points programs, and our wallets will only carry so many cards. Consumers are avoiding long-term contracts in droves.
Incentives for contracts and points programs are designed to manipulate behaviours. They are, respectively, bribery and entrapment. (see the video) They have nothing to do with loyalty. They are simple, quid-pro-quo strategies designed to hang on to a customer as long as possible. The problem, of course, is that there is no reason for customers to stick around the moment someone else offers a better deal.
Want To Create Real Customer Loyalty?
Forget the quid-pro-quo. Focus on creating Belonging, Resonance and Caring. Yes, it’s hard to sell to a quarterly-driven CEO, or the board he or she reports to, but there are some great examples out there: Harley-Davidson owners have a palpable sense of belonging. Google’s “Don’t Be Evil” mantra resonated with a generation cynical about big business. Amazon and Rackspace are examples of companies that built empires around relentless caring for their customers.