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The Difference Between Loyalty and Habit – and Why It Matters! 

Andrew Rudin | Apr 23, 2017 544 views 6 Comments

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If you ask me to define a word, I usually start by describing what it is, or what it means. “A screwdriver is a hand tool used for turning screws and bolts. Also good for opening paint cans. Also, a cocktail made from vodka and orange juice.”

Loyalty and comfort are different. These words are better understood by grasping what they are not. The way William Gass described comfort in a 1986 New York Times book review of Home, by Witold Rybczynski:

“. . . . comfort means . . . the absence of awareness. The air is perfect when it isn’t noticed; in tepid water my finger cannot distinguish the water from itself; in a comfortable chair, without being numb, I enjoy the lack of feelings in my back and rump. Each performance, like virtue, is an unconscious habit. In the zone of the mind, an idea I can serenely take for granted, which seems certain and remains unchallenged, is like a custom recliner where the mind may snooze. My spirit, likewise, prefers familiar surroundings; it is at home and without anxiety in its own neighborhood and country. I go out of doors there as calmly as I go to bed. In addition, comfort, ideally, has no consequence but continued comfort; the padded chair is not supposed to postpone our back pains until tomorrow. Finally, if I become self-conscious about my comfortable condition, the snug swiftly becomes the smug while mind and spirit turn arrogant, dogmatic and parochial.”

In other words, concentrating on comfort makes us less comfortable. Loyalty, a form of mental comfort, has similar properties. Loyalty is a reflexive choice, absent insight. Loyalty enables consumers to bypass circumspection, reach for their wallets, or to strait away click on the Buy Now button. When we dig into reasons for loyalty, we become less loyal. For example, when we understand that we buy Product X because it’s bigger, faster, stronger and cheaper, we start to wonder, which alternatives have superior attributes to Product X? That sets off a deluge of comparison shopping, which makes marketers tear their hair out and scream for help.

Consultants to the rescue!
Experts sell executives on a panacea for the problem:  keep fixing, improving, tweaking, and changing their products. And when those tactics sputter or stall, they hawk the merits of implementing the mother of all projects: transformational change. This assures another few years of steady, billable work.

Unfortunately for companies, these investments can be self-defeating. Anything that causes habituated customers to stop and think imperils the probability of repeat purchases. “Without a value proposition superior to those of other companies that are attempting to appeal to the same customers, a company has nothing to build on,” A. G. Lafley and Roger Martin wrote in a Harvard Business Review article, Customer Loyalty is Overrated (January, 2017). “But if it is to extend that initial competitive advantage, the company must invest in turning its proposition into a habit rather than a choice.”



If you’re a habit, then someone stopping to think becomes your arch enemy. “We don’t claim that consumer choice is never conscious, or that the quality of a value proposition is irrelevant. To the contrary: People must have a reason to buy a product in the first place,” Lafley and Martin say. The problem is, once consumers have made a choice, vendors don’t usually nudge them to a marketer’s holy grail: ingrained, reflexive action. What Lafley and Martin describe as “an ever more instinctively comfortable choice for the customer.”

Oddly, vendors seem resolute on forcing their customers to stop, and think. An example: Don’t Market to your Customers; Educate Them Instead. Or, “we’re excited to announce some major changes to our product line.” Why do marketers give customers such easy chances to reappraise their preferences? I’m not sure. Maybe they don’t know when it’s a mistake. Maybe they don’t believe in the competitive power of sameness. Or, maybe they don’t expect that in their zeal to change things up, a measurable amount of revenue will sail out the window.

Buying into Lafley and Martin’s ideas requires recognizing that ultimately, driving customer habit, rather than loyalty, is key to sustainable revenue. “If consumers are slaves of habit, it’s hard to argue that they are ‘loyal’ customers in the sense that they consciously attach themselves to a brand on the assumption that it meets rational or emotional needs.” That pithy sentence upended a ton of why-you-must-build-customer-loyalty hype that I’ve read online in the past 12 months.

Innovate, and die! MySpace versus Facebook illustrates this contrast. To grow its social network platform, MySpace tinkered with what Bloomberg Businessweek called “a dizzying number of features: communication tools such as instant messaging, a classifieds program, a video player, a music player, a virtual karaoke machine, a self-serve advertising platform, profile-editing tools, security systems, privacy filters, Myspace book lists, and on and on.” I never used Myspace, but I gather that if I logged on four times each day, I would have needed to re-learn the website’s navigation each time. Facebook, on the other hand, studiously avoided building habit breakers into the user experience. The rest is history. “The real advantage is that to switch from Facebook also entails breaking a powerful addiction,” Lafley and Martin said.

“The essence of brand loyalty is, customers have to remember you and what you stand for,” Sampson Lee wrote in a blog, Stop Trying to Eliminate Customer Effort . When it comes to brands, he might be right. But for product purchases, I don’t care that people remember what I stand for as much as I care that people just remember my product.

Still, I find loyalty and habit hard to tease apart. In formulating a working definition of loyalty, I made two categories.

Category I – Sincere, genuine customer loyalty. The kind of loyalty that’s unencumbered by noodling numbers on a spreadsheet, less bothered by “justifying the business case” and “Show me the ROI!” The kind of loyalty that just oozes, “Don’t think – buy!” Call it haboyalty or loyit – whichever you prefer. It contains these essential elements:

Memory. Whether through a capability, design, packaging, acquisition experience, or something else, repeat purchases only happen when customers remember a unique attribute associated with the product or service.

Habit. Growing and deepening buying habits will improve the probability of follow-on revenue.

Inelasticity. Loyalty is not loyalty if bonds are easy to rip apart. In the words of an actual consumer: “I drive a 2016 Lincoln MKX. I only look at Fords [Lincoln is a Ford Division]. My dad worked at Ford, and I have deep loyalty to the Ford Motor Company. I look for a car that’s a little nicer and has got enough room for my golf clubs but isn’t sloppy big. The MKX is sort of a mini-SUV, though it’s not an SUV.”

If you know which famous person said this, give yourself a pat on the back. It was Microsoft’s Steve Ballmer. Not exactly your consumer every-man, but he could be. I sense that his loyalty involves commitment. Love, maybe? Regardless, Ford can reliably forecast selling at least one unit of this ugly car next year. Ballmer’s not a candidate to jump from Ford to buy a Cadillac Escalade  – or any other brand.

Category II – Contrived loyalty. I use this term in deference to marketers who still like to think of their practices as loyalty-inducing, even when they are not. Some examples:

Switching costs. The blog, Switching Costs: 6 Strategies to Lock Customers into Your Ecosystem offers a helpful list for developers tasked with building shackles connecting them to their customers. “If you look closely at companies like Adobe, Salesforce, Google, or Rolls Royce, you’ll see that their dominance is no mere coincidence. Customers stay because they are locked into their ecosystems through high switching costs.” Check out the article if you want to learn more about “Base product and consumable trap,” “Data trap,” “Learning Curve trap,” Servitization trap, and Exit trap.” Trap was possibly coined by a clever content marketer, now jobless.

Loyalty clubs.
Frequent buyer points. Rewards. Discounts. Exclusive events. Lapel pins and fan gear. Nothing wrong with offering any of these to customers. But they’re marketing expenses – perks designed to mitigate the risk of customer churn. To test whether customers are true loyalists, claw back these benefits, or squish them down. Then, see what happens.

Contracts. “Terms of service are two years. Early termination subject to penalties and fees.” It’s a stretch to regard adherence to contract terms as loyalty. But the customer-retention metrics look great on the marketing dashboard!

In another swipe at a sacred marketing platitude, Lafley and Martin wrote, “The death of sustainable competitive advantage has been greatly exaggerated. Competitive advantage is as sustainable as it has always been. What is different today is that in a world of infinite communication and innovation, many strategists seem convinced that sustainability can be delivered only by constantly making a company’s value proposition the conscious consumer’s rational or emotional first choice. They have forgotten, or they never understood, the dominance of the subconscious mind in decision making. For fast thinkers, products and services that are easy to access and that reinforce comfortable buying habits will over time trump innovative but unfamiliar alternatives that may be harder to find and require forming new habits.”

Habit versus conscious choice. The boundary between Category I Loyalty and Category II Loyalty is not as crisp and clean as it sounds. There’s fuzziness and overlap. But marketers should not allow themselves to become confused. The former involves de-emphasizing rational choice. The latter means repeatedly reminding customers to stop, think, and decide.

Longues habitudes de vie! ¡Viva los hábitos! Long live habits!

The post The Difference Between Loyalty and Habit – and Why It Matters! appeared first on Contrary Domino.

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6 Responses to The Difference Between Loyalty and Habit – and Why It Matters!

  1. Michael Lowenstein April 24, 2017 at 5:56 am (1323 comments) #

    We find that true customer loyalty is based on perceived emotional and rational experience value. Over time, if the emotional and rational experience delivers perceived value that is considered superior to that of a competitor, it can become a ‘habit’ for the consumer. In terms of value, this can be good for both the customer and vendor. That said, purchasing habits can be broken or modified by a number of factors, reducing perceived value in the mind of the consumer. Vendors need to make certain that they don’t become complacent or assumptive regarding the delivery of value.

  2. Andrew Rudin April 24, 2017 at 2:31 pm (243 comments) #

    Hi Michael: thanks for your comment. I’m unclear about what you mean by ‘true customer loyalty is based on perceived emotional and rational experience value.’ I think what you’re saying is that when vendors focus on habituating customers to buy their products, they shouldn’t overlook ensuring that value is delivered, too.

    That’s probably not impossible, but it’s a hard-to-execute funambulism, because reminding customers about value delivered targets the rational mind (“stop and think about the great things we’re providing to you . . .”) versus habituation, which aims to bypass the rational (don’t think – just buy Product X). When and how do you make the switch? The HBR article doesn’t reveal much about this.

  3. Gautam Mahajan April 25, 2017 at 8:15 am (175 comments) #

    Andrew, excellent article.
    is there something truly called loyalty, or is it make believe.
    Is loyalty like love, constant and never changing. I think not. Loyalty is at a point in time, and changes with every experience, and also depends on competing offers. So you could be loyal, and a better offer comes along, and you switch. And often you appear loyal but you are not changing because of inertia (comfort?) etc

  4. Andrew Rudin April 25, 2017 at 8:37 am (243 comments) #

    Hi Gautam: thanks for your comment. I agree – cultivating buying inertia is something many vendors overlook. It’s partly brought about by preserving the quality that a product is ‘good enough’ for a consumer, and making sure they’re always comfortably habituated in buying. That objective is at cross purposes when vendors are bent on improving, changing, tweaking, and then stopping customers in their buying tracks by messaging them with invitations to break their inertia – or habit. “Hey! Look what we’ve done to improve . . .”

    I’m not suggesting that improving products is a bad thing to do, but for executives to recognize the risks associated with getting customers to stop their buying habits, and to think.

  5. mr2ndopinion April 30, 2017 at 5:07 am (1 comment) #

    Loyalty to our habits can mean the end of a company. I thought this article was quite the bite!

    In my opinion it’s good you always recap what’s happening in your business or when it comes to products. I strongly advice people to make this part of their lifestyle and habits. Consistently recap what happens around you. If a stick is lodge in between a wheel a wheel wont turn anymore but we’ll still be sitting on a bike. Be sure your bikes still driving.

    Thanks for this healthy bite of information.

  6. Gautam Mahajan April 30, 2017 at 5:34 am (175 comments) #

    I agree with the second opinion…in todays time this is even more dangerous

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