The Truth Behind Customer Loyalty - SendGrowth Blog

The Truth Behind Customer Loyalty

A popular mistake is thinking that loyalty is all about improving your customer's satisfaction..

What makes customer loyalty such a mysterious creature?

I think customers are harder to reach and impress than they used to be. Many traditional marketing channels have been weakened as consumers pursue various “market of one” activities: ad-supported social networks, video games, movies on demand, and YouTube even allows skipping for some ads.

In the hyper-competitive Internet age, customers also have more pricing information and buying options than ever before.

But a number of misconceptions about loyalty have also led businesses, start-ups, and marketers down the wrong road.

The idea that loyalty is only about improving customer satisfaction is the most typical mistake. The frustrating truth is that what customers say about being satisfied turns out to be a poor indicator of loyalty. It's about action.

Another misstep is thinking that a loyalty program is the only thing a company can do to improve customer loyalty.

Loyalty programs are one part of an overall loyalty strategy, but they lack the nuance that gives companies the ability to target the most profitable segments.

To attract and retain the most loyal and profitable customers, a firm must first understand the true drivers of loyalty—the customer attitudes that drive the different types of behaviors that must be understood and nurtured.

1) Interaction/Engagement with the Product or service

How interested are your customers in the products and services you offer? Seek out the ones who deeply understand the pain your solving.

Do they actively engage in loyalty programs? If your customer typically isn't a fan of loyalty programs, think about alternatives.

Are they typically heavy users of the category? It's best to focus on the bigger fish.

And are they enthusiastic about the category in general? Brand enthusiasts are just that- enthusiastic.

2) Brand Devotion

Do you know how passionate your customers are about the brands they buy? If not, find out.

Do they identify themselves with your brand and start to self-identify with it? If not, find out why not.

Are your customers willing to pay a premium for a brand they love? If not, consider alternate ways to monetize.

Are they advocates for your brand within their family and social networks? If it solves their pain, they should be proud to help others with their pain.

3) Likelihood to Reevaluate

How likely are customers to re-evaluate their current buying choices? Look at things like churn rate.

What are the most important shopping triggers to your customers? Do your best to get inside their head, and understand what motivates them.

What hassles exist by switching brands? Make your customer love/use/need you so bad that it's not easy to leave you.

By analyzing the behavior and attitude indicators of this framework, different loyalty segments emerge. Each with its own distinct loyalty drivers.

Brands that recognize their segments can improve their market focus and positioning, simply by identifying previously unseen "markets within markets".

By taking this approach, you can help your business better understand what their customers are thinking and what motivates their purchasing decisions.