Customer Loyalty is a Misguided Target
I've been a long time fan of improving the customer experience to improve customer loyalty.
But, there's a material difference between loyalty and what I'll call TRUE loyalty.
AND... there's a real danger of underestimating the distinction.
To use the three types of loyalty articulated by Judd Marcello, EVP of Conexium (http://rb.gy/ydu9t):
Habitual Loyalty - We buy because of habit - the gas station was on the way home.
Transactional Loyalty - These customers appear loyal and have loyal buying behavior. We buy and even make repeat purchases, but for non-emotional reasons. Let's use my subscription to Xfinity for my home internet service as an illustration. I have purchased internet services every single month since I've lived in my home. We look like a loyal customer, but we would switch to another provider if we found a better deal.
Loyalty programs can work in much the same way. Customers demonstrate loyal behavior, but if they don't have the emotional connection, they'll leave for a better loyalty program.
Emotional Loyalty - This occurs when consumers are deeply connected to the brand because of an emotional bond which is created through the brand’s ongoing value creation. I think about Chicago Cubs fans who went 107 years without a World Series ring but stayed loyal. They buy the caps, the shirts, and attend games, not because of their winning record, but because of their emotional connection.
What Marcello describes as emotional loyalty I would call TRUE loyalty because it reflects customers who stay with you through thick and thin.
Last week, I had the incredible opportunity to be a guest on The Net Promoter System Podcast with Rob Markey and we talked about this third type of loyalty and its relationship to trust.
I believe that brands that earn the trust of their customers have TRUE loyalty.
Rob pointed out that habitual and transactional loyalty can mask themselves as true loyalty, until...things go wrong. And that's when forgiveness really matters. (I'll share the link to the episode when it's released.)
Because, as he said, "we will always mess up at some point."
Truly loyal customers equate to more referrals, better retention rates, lower cost to serve, more share of wallet, etc.
One good way to delineate between loyalty and true loyalty?
Think about your favorite brands.
Which brands do you trust the most?
Which ones will you go out of your way for?
Which one will you pay more for?
Which ones do you tend to forgive more?
Clients I work with are often struggling with how to more intentionally earn that level of customer trust and the corresponding TRUE loyalty it brings.
There's no magic bullet.
CX leading organizations use proven frameworks and methodologies and customized programs to uniquely fit that company's situation.
I'm really intrigued by the role trust plays on customer loyalty and will be exploring it more.
What about you?
Photo: Wearing your "gear" is an example of the emotional connection associated with TRUE loyalty.