The underbelly of loyalty and what it tells you about the value stored in your brand

24 Feb The underbelly of loyalty and what it tells you about the value stored in your brand

Reading Time: 3 minutes

When organisations talk about customer loyalty, what do they mean? Mostly some mix of how frequently and over what period someone buys a product or service. In all cases there is some kind of (usually) monetary trade happening.

And modern definitions certainly focus on faithfulness as the cornerstone attribute. Earlier meanings were more complex “a matter of both principle and sentiment, conduct and feeling; it implies enthusiasm and devotion”.

Seems a world away from the transactional choices which mark its use today. Not sure about you, but my “enthusiasm and devotion” and even faithfulness exist in other realms that don’t involve money. While I may favour certain shops or products, labelling those choices as loyalty somehow cheapens where mine truly lies. Family, friends and colleagues. Maybe a beach or two.

Perhaps favour is a better term for what organisations seek and hits both aspects of the trade. To favour something is to place it above others, and speaks to both the purchase and a state of mind. My continued favour means I like what I’m buying and will keep doing it. For as long as it suits me.

Which exposes the underbelly of loyalty. It’s about the customer, not the company and highlighting the insanity of trying to cultivate or manage it. Swirling self-interest and convenience will always trump what you think matters about your products and services. Sure for a while they might intersect in your favour. But circumstances can shift. And fast.

For example, a strike by workers in distribution centres of a major Australian supermarket led to empty shelves and emptier car parks. Less than a kilometre away the major competing store experienced a boom in customers. Bread, milk and toilet paper trumped loyalty.

The reality of favour is why I dislike so-called loyalty programs. Perhaps reward is more accurate. Yet even that feels off. Surely my reward is a product or service suitable for my needs, that keeps the promise and fairly trades money and experience. So long as those things are true you have my favour. No incentive needed.

A colleague has so many Qantas frequent flyer points they fly with them even though they’ve had terrible experiences. More hostage than happy customer. People stay unhappily in jobs, with banks and energy providers for decades because switching feels too painful. Time served isn’t loyalty. Although companies would track both examples as loyalty.

Certainly once someone is a customer you are generally better to hold onto them. I say ‘generally’ because some people should go elsewhere. Customer whisperer Cindy Solomon breaks it down, “there are 2% at the other end of the spectrum who are your “customerzillas” or the serial killers as I call them. These are the people who you simply cannot make happy. You build your product sideways, you package it in green wrap not clear, you ship it in different way, you do it on different timelines. What ends up happening is those 2% of your customers end up costing you up to 40% more to sell to than the 96% in the middle who are your bread and butter.” If they come with a side of angst about every little thing, then perhaps it’s time to encourage them to take their favour to the competition.

Conduct a Google search on customer loyalty and you’ll find an endless scroll of people ready to tell you how it’s the most important thing for your success, reflecting your brand’s strength. Which feels like a no-brainer when frequency and time are the markers. If I buy more from you over a long period, then yes, I’m more valuable. And brand is a store of value.

Which is perhaps the one worthy reason to pay attention to people’s favour. It’s a useful measure of how well you’re storing value and a canary in aisles for when it begins to erode.

Thanks for reading.