Loyalty Overview

An outcome from a set of customer experiences

Introduction: What is Loyalty? Preference vs. Convenience

When we think about loyalty, we immediately shift our mindset to think about repeat purchases and rewards programs. But is that what loyalty to a company, a product, a service, or a brand really represnts for a customer? I think we all know that there is a lot more to it than that.

Loyalty is an outcome from a set of customer experiences. And loyalty can be measured in many ways because there are many aspects to what loyalty represents.

What’s challenging about loyalty is that it happens between the consumer and company through so many experiences during the decision-making process, purchase, and product use. Each touchpoint has an element of loyalty building. So, measuring repurchase or engagement is only one indicator of loyalty and there are so many other expressions of loyalty during the entire customer lifecycle. So, what other measurements exists? And what’s loyalty anyway?

Again, loyalty is based on a relationship between your company and its customers during the customer journey and relationship lifecycle.

It all starts because people buy a product or service to solve a problem. But they may not come back to buy your company’s solution again. Customers return because they had a great experience that they want to repeat. And that’s loyalty. And it is reciprocal. Customers love a company so much and the company loves its customers so much that it creates this respectful, compassionate relationship that benefits both. These customers not only connect to your brand emotionally; they see themselves as being part of it. And to top it off, when customers have a good experience with your company, they naturally want to share the value you provide with friends so they can have a good experience too. We need a way to measure those types of loyalty aspects of a customer’s relationship that correlates with revenue throughout the customer lifecycle.

I’ll provide some ways to measure loyalty in other videos but in this video, I’d like to get into more depth about a different view of loyalty. To start, let’s take a step back and talk about two key elements of purchase decisions: preference and convenience.

If all factors are equal for a commodity solution, we decide to buy a solution if it is easy to access. If factors are not equal, then we may look for a preference in a solution like a product feature, an additional service, or a specific quality in the experience that someone wants to have. So, here’s an example: 

Let’s say you decide to get Starbucks coffee every day because there is a Starbucks café in your building. When you work in a building without a Starbucks, you stop your café habit because it is no longer easy to do. This is convenience

Preference can be illustrated by deciding to drive 30 minutes to Starbucks every day because you prefer Starbucks coffee made in the café. To you, nothing tastes better than freshly made Starbucks coffee. You have a coffee maker at home where you could brew your own Starbucks, but it just doesn’t taste the same. You may try the alternative brand coffee shop in your office building, but somehow for you, it falls short in flavor.        

The motivations behind the two habits can make them lasting or fleeting, based on your personal situation. Once you change jobs, the convenience habit mentioned will most likely change. However, your preference habit may not change. In fact, if you prefer a brand for its product quality or other factors, you may go out of your way to access that brand’s products and become loyal because you have an emotional attachment to that product.

It’s almost as if product or service preferences kick off a customer relationship lifecycle or customer journey, and factors like convenience encourage repetitive purchase activities that create rewardable habits. Depending on the activities that you reward, your company can develop different types of relationships with that customer. For example, some skincare products will provide a discount to customers who purchase a specific skincare regimen to encourage that behavior. Companies that value the purchase transaction will treat dollars as points. Airlines sometimes take into consideration the number of miles traveled as an indicator of loyalty. This has mixed effects. Do 20 500-mile flights on the same airline indicate a stronger or weaker loyalty relationship compared to 5, 2500-mile flights? It may depend on the airline, the available competition at the departure and arrival airports, and flight purpose. In any case, convenience becomes tied to brand preference, not always product benefit. Without this combination, you cannot get a customer to form a habit. You may have a great product, but if it is difficult to purchase, then you won’t get people to continue buying it and develop that behavior. You may have a product that is easy to purchase but isn’t effective. So, you may get tremendous first time-buyer numbers, but little activity after that because they were disappointed. That won’t build a business community or deep customer relationships. Deep customer connection and community-building comes from a balance of preferences and convenience. 

Why do you go back? Convenience, preference, or reward?

Now, preference and convenience can come together with a reward to seal a habit. How does this work?

As we said, preference happens when a customer chooses a solution to their problem that they believe will help them best. The customer is identifying features and functions that the product needs to have.

Convenience is about access. If a product or service is easier to access, then it is easier for people to interact with it more often to build that loyalty. It may not be the best solution, but a more accessible solution allows those experiences to happen.

A reward comes from two angles: what the customer gets from the experience itself and what the company offers to keep someone coming back and repeat a specific behavior. A loyalty program includes an incentive to keep coming back—it’s a reward for specific behavior.

So, what makes this interaction a habit? Why do you go back? Convenience, preference or reward? Strong loyalty comes from preference, but your preferences can shift if the product or service isn’t convenient to access. Rewards or incentives are nice, but they don’t always create great behavior – and may instill a transactional approach to the relationship, which we’ll discuss in a bit. The true reward of the product or service experience is the experiencce itself and that tis what keeps someone coming back—not just the physical experience, but the emotional experience of the customer solving his or her problem and the feeling during the entire experience. If there is no personal reward from the product, or service then the incentive will produce weird results.

Here’s an example… some executive elite flyers or executive hotel reward members will only frequent their selected brands to earn points. I’ve had countless conversations with such road warriors and their motivator to choose the specific brand is purely the reward, which they perceive to be the same as cash. If faced with a choice between their reward brand or a new brand, the motivator to stay with the current reward brand is typically the perceived cash equivalent reward—most likely not based on the product experience quality, emotional attachment to the brand, or brand preference as a representation of product quality. Although the quality of the product experience or preference may have been a factor when initially deciding which brand to be loyal to, it is possible that such a motivator declines in influence over time. I have observed too many reward members who stay committed to a brand because of this. It’s not that they haven’t found anything better or they don’t want to try something new because it may not meet expectations. Their view is: Why not get a free trip or night’s stay for my troubles? It is worth researching this factor for your company brand and product to better understand why loyalty members continue to support your program. The motivating factor for their loyalty may not be what you expect.

Let’s consider another loyalty example….hair stylists, hairdressers, and barbers. Most people are very attached to the person who cuts and styles their hair. When they find someone they like, typically they won’t make an appointment with anyone else until that person dies or moves out of drivable distance. The stylist could switch salons and their clients will move with them. The salon or shop itself where the individual works doesn’t matter. The individual’s preference is based on the relationship with the stylist or barber personally and the quality of their work.

What about the stylist or barber makes their customers loyal? The clients don’t get rewards or prizes. Often, it’s not convenient to go to a specific stylist or barber. Preference is based on service quality, but the relationship includes more than that. If the relationship were based on service quality and preference only, then someone could go to an equivalent professional within the same salon or barbershop and be just as satisfied with the end result. But that’s often not true.

People continue to go to the same stylist or barber because there is an emotional bond with that person. First, hair is very personal. Anyone can get a haircut, but people want to feel good about what’s on their head. It represents their personality. They want to work with someone who isn’t just talented, but also who understands their personal sense of style and can find a way for their hair to complement that. When we get a bad haircut, we are experiencing what it’s like to visit a stylist or barber who doesn’t understand you as a person.

Second, people share a lot about their personal lives with a stylist or barber. This creates tremendous vulnerability between them both. Sharing intimate personal stories builds bonds between friends. This vulnerability will keep people returning and continue the relationship.

If we transfer this idea to other types of businesses, it is easy to understand why people go out of their way to support a brand or person or company. 

Loyalty and Emotions

True loyalty is based on an emotional bond. You are choosing to work with a specific company or service because you connect with their brand and how they operate. You feel that the brand understands you—who you are, how you think, what you feel. You think the product or service is high-quality. And you are vulnerable with this organization. The convenience factor is present, but the convenience may lie in a feeling rather than a physical trait, like location. You may admit to the store managers that you are willing to drive across town to get a specific pastry, treat, or coffee drink because it makes you feel “like home.” Or you may admit that you had a bad day and this object or activity makes you feel better. You are willing to share parts of yourself with that company’s experience through marketing or sales activities from social media to email and more to build a relationship. If you get a reward for buying from them, that’s a bonus, but that’s not the motivator. The motivator lies in the relationship, the trust, and an individual’s self-image and identity.

When customers are emotionally bonded with a company, they see it as an extension of themselves. And when you feel that a brand understands you, you are also defining yourself by choosing the brand. There are aspects of the brand that may reflect your personality, making almost a recursive reference between the company and customer.

This is also why you may be loyal to a brand but not choose it every time. It’s like being loyal to a coffee place because you like the coffee, the atmosphere, and the people, but you choose to go somewhere else to try it, have an adventure, and see how the experience feels to you. There’s an element of self-discovery when experiencing another brand. You may be loyal to three or four coffee places because you learned how they all reflect your personality in some way. If this is your attitude toward the brand, then it would logically follow that you view loyalty rewards as just that: a thank-you gift for your purchases. It’s not an incentive for your choices or behavior.

In companies, we sometimes forget that customer behaviors change due to circumstances beyond their control, but that doesn’t mean that their loyalty changed. Customers may not purchase products from a specific brand because they live where the brand isn’t sold, or they have no need for a product’s solution anymore because their children grew up, or they gained or lost weight, or they bought a different car, or changed jobs. Their lives may have changed, but those factors don’t impact one’s loyalty to the brand.

One example is Girl Scout cookies. Most of us adore Thin Mints, Tagalongs, or Samoas. We may not directly know a Girl Scout to buy the cookies from and it may not occur to us to find a site online that sells the cookies, but that doesn’t mean that we don’t still jump to purchase a box of cookies when we see them being sold at a grocery store or by a colleague’s daughter at the office.

Another example that’s more complex is children’s clothing. Let’s say you had children and you loved the clothing from OshKosh B’gosh. You bought your children almost everything from that brand. When your children outgrew those clothes, you needed to find new brands and styles for them, so you stopped buying the brand. They literally grew out of little kid clothes and styling. However, that doesn’t mean that you aren’t loyal to the brand. There was simply no reason for you to purchase from that brand anymore for your children.

After 20 years pass, let’s say that your neighbors had a child and you want to give them a gift. Most likely, you would buy that child OshKosh B’gosh clothing or recommend it to their parents. If anything, this shows that you are still loyal to the brand, but in a different way. If we reference the role relationship chart that I’ll review in a separate video, you may realize that you would now be considered an influencer rather than a buyer.

There are eight signs that your customers see loyalty as part of your relationship and these include:

  • Customers see rewards as a thank-you gift, not just a benefit that rewards a purchase with points.
  • Customers think about your company first to recommend solutions to their problems.
  • Customers support your company by promoting its ideas and views.
  • Customers always know intimate details about your business.
  • Customers connect to your brand emotionally and see a part of themselves in your company and product.
  • Customers want to see your business succeed and they do what they can to help it grow.
  • Your customers don’t always agree with you, but they want you to do what’s best for your business.
  • Customers have such a good experience with your company that they want to share the value you provide with friends so they can have a good experience too. 

And these eight can be combined and summarized into 4 aspects that can have related measurements to indicate customer loyalty. They are:

  • The customer sees the brand as an influential factor in his or her life, a problem solver of sorts.
  • People loyal to a brand also see the brand as an extension of themselves.
  • They love the brand experience and want to repeat it and share it with others.
  • To sum it up: loyal customers want to see your company succeed.

And we’ll explore these in the next videos.

I hope today’s video was helpful! Thank you so much and have a great day!