In a meeting with a long-time client, I learned how pleased they were with their repeat business, which they saw as loyal customers coming back for more. However, when they showed me the repeat business stats, what I saw wasn’t loyalty; it was inertia. I knew these customers would leave my client when the competition had a good enough offer.
Now, some of you might be scratching your heads, wondering what I am talking about. After all, don’t loyal customers bring you repeat business? They do; that’s not the problem. The problem lies in the assumption that ALL repeat business is motivated by loyalty. It isn’t always. Sometimes, it is inertia, and recognizing the difference is what we will talk about today.
Let’s begin by defining customer loyalty and inertia. Loyal customers buy from you on purpose because they have an emotional relationship with you. They know exactly why they buy from you. By contrast, inertia is automatic and habitual. In other words, it was a decision made on autopilot, and people might be unable to tell you why they bought from you.
Take a moment to consider to whom in your life you feel loyalty. Usually, people will say family and friends. These are emotional relationships that form attachments. Surprisingly, it’s these same emotions that you have with brands to whom you feel loyalty.
Most organizations don’t have a way of measuring loyalty, but they do have a way of measuring repeat business. The problem is that they see both inertial and habitual buying in the same way they see loyalty without distinguishing between them.
If you want to distinguish, it is essential to measure additional behavior in addition to repeat business. Then, you can separate the loyal from the habitual customers.
I realized recently that I sometimes fall into this lot as well. I thought I was a loyal Delta customer. I have flown them for years, and I have millions of miles in rewards with a Diamond status. Most times, I don’t check other airlines when I need to go somewhere—that is, until my friend mentioned how he flies JetBlue business class for a lot less than Delta.
So, I checked the prices and agreed that it was less expensive. What’s more, I decided I would have to try them out. And then, I wondered if I really was loyal to Delta. Perhaps all this time, I hadn’t distinguished between loyalty and inertia, either.
Loyalty Programs Rarely Build Loyalty
Regarding distinguishing between loyalty, inertia, and Delta, many organizations do not realize that their rewards programs do not build loyalty. The rewards program becomes part of the offer.
For example, Delta recently changed its rewards program. Now, customers have to spend more money to get rewards, which makes financial sense for Delta. Customers felt like they had lost something that made flying Delta valuable to them, that, in effect, they had lost their rewards. After announcing the changes, the backlash was significant, which led Delta to walk back some of the changes.
The confusion is understandable at one level. The airline sees it as a loyalty program for frequent flyers. By contrast, frequent flyers see it as an exchange, meaning “I give you business, and you give me free flights.” When that exchange changes, it changes the offer’s value and makes it less attractive. People that are not loyal will look for a better deal.
How to Tell if Its Loyalty or Inertia
Loyalty isn’t financial; it’s emotional. Loyalty means the customer is willing to sacrifice something to stay. Moreover, that goes both ways; the company should also sacrifice something to keep you.
Let’s suppose that something went wrong in the relationship. Someone who isn’t loyal to a company will want a pound of flesh to make it worthwhile to continue doing business with them. However, it can also be the disruption needed to shake a customer out of their inertia and look around for another company to buy from moving forward.
By contrast, loyal customers are more into give and take. Please make no mistake: they are not infinitely accommodating, but they usually offer a company a chance to make it right and repair the relationship. Their relationship with a company is deeper than transactional; it means something to them.
I compiled a list of things that are the telltale signs of loyalty. Before I tell you what they are, it is essential to recognize that none of these items is enough to measure loyalty. Instead, it should be a mixture of them.
With that in mind, the following customer traits might indicate customers are loyal to you:
- Customers have a higher degree of brand attachment to you. You can measure this by asking about recommendations. If a customer is willing to recommend you by name to their friends and family, they are loyal to you. By contrast, a customer who buys based on inertia would list their reasons for buying from you rather than telling people to choose you because you are the best.
- Customers have a deeper emotional connection with you. Loyal customers have a relationship with you based on a feeling the interaction creates. However, to identify this quality, an organization needs to measure emotions and not just be satisfied or dissatisfied. These emotional assessments should get down to specifics like customers feel cared for and valued or that customers trust you to deliver what you promise.
- Customers buy from you across multiple categories. When customers use you for everything you offer, it’s a good indication that they are loyal. However, converting inertia customers in one product offering into loyal customers who buy multiple offerings is tricky. Once you introduce the idea, you could inadvertently convert a loyal customer, who buys for intrinsic reasons, into an inertial customer, who buys for extrinsic reasons.
- Customers talk about you on social media. Look at what your customers say about you on social media, as well as the types of conversations that are happening about you.
- Customers spend more on average than your other customers. Loyal customers buy more than your other customers who return to you based on inertia.
- Customers are not susceptible to the competition’s attempts to woo them. If a customer sticks by your side even when the competition has a pretty good offer, they are probably loyal to you. By contrast, a customer motivated by inertia will check them out.
- Customers, forgive your mistakes. As I mentioned, if a customer is willing to forgive your mistakes and sacrifice a little to keep doing business with you, you know you have a loyal customer.
So, What Does This Mean for You?
The key takeaway here is that you must determine what motivates your customers. If you know that a customer is loyal, you can look for ways to encourage more of it. If they aren’t, you can look for ways to build loyalty. Either way, you are getting more of what you want: customer loyalty.
Another critical point to remember is to avoid mistaking a rewards program for a loyalty program. Things like Delta SkyMiles reward loyal customers, but they also serve customers motivated by inertia. So, remember that they are an excellent incentive and reward for doing business, but they don’t create loyalty. Only emotional connections can do that.
In addition, it is critical to recognize that you build these relationships during your Customer Experience. A lot of the reason that people are loyal is because of the continued good experience they have with your products and service. Getting people to become loyal requires managing experiences.
Remember customer segmentation, too. Grouping customers by their shared values is essential to managing the experience to foster customer loyalty. Anything you see likely has loyal customers and inertial customers. Knowing what type you have in front of you, as well as what customer segment they belong to based on their values, allows you to encourage a loyal customer to deepen the relationship and build loyalty with a customer who doesn’t feel that yet.
It is essential to put some of these metrics in place around brand attachment and emotions. When you know who your loyal customers are, you can leverage that relationship to determine what will keep them loyal. Moreover, you can decide what might make other people feel loyal, which is essential in the disruptive times in which we live.
What you don’t want to do is get caught out. You might have loads of repeat business, but if the customers aren’t loyal and aren’t emotionally engaged with you when a new technology comes to town, they will move on and take their repeat business with them.
Colin has spoken at hundreds of conferences, including some of the world’s largest brands. Talk to Colin about how he can speak ‘in person’ or ‘virtually’ at your conference. Click here.
