Customer Loyalty is Great for Business. Is it Great for Customers?


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green_stamps.jpgLast week a post on the Access Perks Blog questioned whether employee loyalty is actually good for the employee.

In many companies the answer is no.

In those companies, loyal employees are underpaid, do more than their fair share of work, and stick out like a sore thumb when cutbacks come calling.

It got us to thinking about the same concept for customer loyalty.

Is customer loyalty good for the customer?

We know customer loyalty is good for us, the organizations. Loyal customers spend more, more frequently than others. They refer their friends, provide a stream of feedback, and are slow to defect in pricing changes or service issues.

But what’s in it for them? Do customers  benefit by being loyal to your organization?

Do they pay more for the same products/service over time?

Do they have a say in the brand?

Do they get a consistent experience every time?

These are challenging questions without easy answers.

Yes we expect loyal customers to pay more. But as the television and internet subscription models have shown us, consumers aren’t fans of regular price hikes. Loyal customers are willing to pay more for the brands they love, but the value still needs to outweigh the price.

Furthermore, your most engaged and loyal customers should have a chance to shape your offering. This article from Associations Now highlights a great example – you seek feedback from your most engaged and loyal customers (or members) because you want more of them.

And finally, a consistent experience is the baseline.

If you can maintain consistency from the first transaction through the tenth and beyond, that’s pretty good. You’ll earn a lot of loyalty with a tightly controlled experience.

But the more value you can add on an ongoing basis (between transactions), the more you’ll inoculate your brand against defections.

How to make Customer Loyalty Profitable for Them, Too

  • Create a loyalty program

It doesn’t have to be a big, complicated scheme. Even the humble punch card offers a basic reward for continuing transactions. But loyalty programs have many ancillary benefits beyond rewards, and they make it easy to identify loyalists.

  • Seek feedback and use it

Loyal customers feel as if they’re in a relationship with your brand. Healthy communication, the two-way variety, is a big part of a successful relationship. Give people a voice, and actively encourage them to use it.

Then, take their feedback, use what makes sense, and tell them all about it.

  • Be communicative about changes

Yes, every company has an obligation to maximize their revenue, and to see what the market will bear. But tread lightly with pricing and product changes. Give customers advance notice, and legitimate reasons why changes are being made.

For examples of what non-communicative price increases can do, consult your local television and internet providers about their call center volume.

  • Always stack the value in their favor

This doesn’t mean you give things away or heavily discount your services.

It means you let customers “win” the relationship. No matter how much you charge, they’ll pay it if there’s enough value.

It could be a world-class customer service operation. Or exclusive access to members-only forums where customers can plug into a likeminded community. You could give them access to tutorials and materials that makes them experts at what you do.

The bigger point is helping them to make the transaction irrelevant.

Example: For those with subscription and membership-based businesses, loyalty can be built by engaging people with value outside of their direct interactions and transactions. For example – discount programs don’t cost much yet can have a big return as a member benefit. Member savings will offset dues, making membership invaluable.

Throw a party for customer retention

Big gains in customer acquisition earn parties in the conference room, bonuses and high fives for all!

Customer retention? Your CFO may slip you a butterscotch candy at best. At least in most organizations.

Retention only gets attention when things go bad.

And that’s how most organizations treat their customers.

For most consumers, there are no rewards for sticking with the same product or brand for years. It’s almost a disservice to not browse around and try other products/services/organizations.

You can make sure your organization comes out on top of those consumer excursions.

You do it by daily tilting the value in the consumer’s favor, and making each transaction a little more rewarding than the last.

(Stamps image courtesy of)

Post originally appeared on the Access Loyalty Blog

Brandon Carter
Communications pro with Access Development, a loyalty and rewards leader with the largest discount network in the world. Expertise in public and community relations, copywriting and strategy. History of service with technology, sports, consumer products, non-profits and more.


  1. In his training, selling expert Zig Ziglar always used to preach the mantra of giving the customer more in use value than what he/she gives up in price, and/or other tangible and intangible investment. It’s a simple Golden Rule-type equation, but the concept holds up. If a customer sees more perceived value with one vendor over another, then retention behavior can occur. If perceived value is at a high enough, consistent enough level, advocacy behavior can occur. It’s up to the vendor to identify, and optimize, those value elements that drive behavior.

  2. Great post Brandon – my perspective on this is that it often does NOT pay to remain loyal to a company- the bigger the company, the more likely this is to be the case. The reason comes down to a principle I was taught many years ago as an employee of General Electric.

    Commercial organisations today are generally pretty good at determining bow they are going to FIND new customers. They create a whole manner of initiatives to WIN these customers once they find them. Yet what too many businesses then fail to do is determine a strategy to KEEP customers once they have them.

    A brilliant example of this is in the UK is with pay TV – the dominant player in the market is Sky – they constantly promote very attractive deals to WIN new customers. Very often, what they are offering new customers is supremely better than would ever consider doing for their existing customers. The only way a loyal customer can access the same kind of deal is to cancel their contract.

    The fundamental problem is that organisations are subconsciously (sometimes intentionally) turning loyal customers into hostages. A hostage will eventually plan a way of escaping. If only companies would consider some of the things you suggest in your post – loyalty should be something that is earned – something that should be cherished. Right now, loyalty is not recognised in the way it should be by far too many!

  3. Hi Brandon – great questions! I’m glad that you point out that they are challenging and defy easy answers.

    Loyalty is often misunderstood, because the word has positive connotations. Marketing executives use longevity as a proxy for loyalty, which is a mistake. How many times have we seen, “Loyal customer since . . .” in a communication? Often, longevity happens because switching costs are too high, or, when a product is just good enough, the effort to change vendors isn’t worth the trouble. It’s hard to call that ‘loyalty’ – though that doesn’t stop the self-congratulatory fist bumping over on the vendor side.

    You make some good suggestions, but I differ with a couple of them for anecdotal (not research-based) reasons:

    1) I question whether a ‘loyalty program’ truly brings value to customers or vendors. Most of the ones I see are a glorified way of helping a vendor better market to me. Most of the time, I simply turn down the opportunity (though I use that term loosely). Point: as long as I like the product or service, loyalty programs are often superfluous. My refusal to sign up for a program doesn’t reduce the probability that I will continue to buy from the vendor.

    2) When I like a product, and repeatedly purchase it, I don’t see that as having a ‘relationship’ with a vendor. I think assigning that expression has led to false assumptions about customers and what they want. Many times, when I’m happy with a product, I just buy it again. I’m not seeking a relationship. I’m not ‘committing’ to an image or feeling, or looking to influence the brand or to co-create anything. I guess what I’m saying is Keep it Simple, and everyone will be fine. No need to overbake.

    3) Companies should not consider revenue maximization as an obligation. As the article in your link points out, revenue maximization and customer loyalty are not congruent goals. Notoriously, Volkswagen sought to maximize revenue, and we all know how that worked out. Similar to the Newsweek article mentioned in your link, I would caution any company that if ‘extracting a higher price from customers’ is a goal of the loyalty program, the company will expose itself to many ethical and operational risks, and should nix the idea.

    In the long-term, maintaining high customer satisfaction, customer retention, and preserving value delivered and received are much better objectives for loyalty programs.

  4. What customer loyalty should mean to businesses is a combination of retention (repeat business over time) and a positive attitude (which can lead to word of mouth).

    But I’m afraid that too often it’s dumbed down to mean just retention.

    I’ve had mixed experiences personally. With my bank (Wells Fargo), loyalty has been mostly reciprocal. As I’ve been more loyal I get more value (better service, reduced fees), which over the years has motivated me to put a larger share of my funds with WF. That’s the way it should work.

    I can’t say the same for cable service and most consumer services, where new customer acquisition still dominates. I could save money on my cable service by continually switching back and forth from TWC to ATT. Maybe I’ll just cancel instead.

    We ran a consumer study a few years back and asked customers what they expect when they are loyal. I forget the exact statistics, but basically it ranged from tangible rewards (discounts, points) to simply saying “thanks, we appreciate your business” and some personal attention.

    One thing I’d like to question is whether loyal customers are really willing to pay a premium for products/services. This isn’t consistent with the expectation that loyalty will be rewarded with better pricing. I’m curious if anyone has seen any formal research on this.

  5. These are great responses. I love the thought the CustomerThink community always puts in. Loyalty is such a nebulous topic to wrestle with, because as you’ve all alluded to, it takes on so many different forms.

    I think the point with loyalty programs is to have some sort of way to reciprocate value to long-time customers. Whether it takes the form of a loyalty program or not, I think it’s important to have some way to recognize your loyalists beyond the same “thanks” that other customers receive. But, as Andrew points out, most people are content with a consistent product and consistent pricing. No surprises, just keep your promises!

    Unfortunately, I think we’re all stuck in the shadows of the cable/data providers, who have truly punished their most loyal customers.

    I’m at this very moment filled with dread as I have to play the threaten to cancel game with both my TV and data providers. Talk about a model ripe for disruption…

  6. The underlying assumption is that Customers are loyal….they will keep coming back. Loyalty has to be won before and during every sale, by creating value, and not just assuming a customer is loyal because he re-buys. Is he an advocate? See my article on Loyalty, Real or Fiction:

    The second question is on whether the company is loyal to the customer. if not, the customer gets nothing. See my article, Are Companies Loyal:

  7. Great thoughts Brandon, and I agree with Andrew’s comments on loyalty. Traditional ‘Loyalty programs’ are really more about bribery and entrapment than loyalty. They miss the essence of what real loyalty is.

    In the 70’s, for example, people shopped at Sears because the company had created a real sense that they valued the relationship as much (or more) than the customer. Your Craftsman tool got run over by a bulldozer? No problem, here’s a new one. Fred in the menswear department would call you because a new tie came in that would look terrific with that suit you bought nine months ago. They were among the first to have a truly ‘hassle-free’ return policy.

    That all changed in the late 80’s – and so have their fortunes ever since.

    A big part of customer loyalty is centred around trust – trust that a company has your best interests at heart. Our company is fiercely loyal to our printer because they always deliver, even with the occasional crazy deadline. They also make us better, by catching things we should have caught. Conversely, I’m not loyal to United Airlines, despite their Star Alliance program, because I have yet to see them make a decision with my best interests in mind.

  8. Love the personal touches you mention Shaun. I used to make calls like that back when I was a sales associate at Gap in college. We’d notify our high-volume customers by phone before a big sale, or when new styles came in. Anything those people wanted (even a late return), we’d usually let them have.

    Ideally, more companies should be moving more toward this.You’d think it’d be easier with technology and data.

    Shouldn’t we be at a point where scaling personal touches is easier?

    Good stuff to chew on. Thanks for commenting!

  9. Customer retention costs very less than gaining new customer’s trust but most of the businesses working hard to gain new customers. There are very less eCommerce stores who are working on loyalty programs to retain them.

    Customers are looking for a store which provides best customer service, affordable pricing and easy to use website not loyalty programs i guess. So, if your store has all these qualities, they will come to your shop again and again.


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