From the perspective of any business, customer loyalty may be defined as their efforts to: identify, maintain & increase the yield from best customers & best potential customers through long term, interactive, value added relationships.
As consumers, however, we tend to think of loyalty simply in terms of our relationship with iconic brands like BMW, Apple, Harley Davison & Amazon whose customers go out of their way to buy, advocate & defend their products.
But consumer loyalty is not binary, an ‘either/or’ proposition for making our purchasing decisions.
Instead it manifests itself in many different ways; from a passive opportunist purchase – say the only product immediately available or at a certain price – all the way to deeply engaged & emotional loyalty that is the hallmark of consumer devotion & advocacy for brands such as Apple.
At the most basic level, we need to differentiate between consumer loyalty & habitual purchase decisions.
Loyalty is a conscious decision by a consumer to purchase or use a product or service that meets a rational or emotional need. In comparison, habit is an unconscious decision based in the most part on convenience. The customer chooses a product or service because that choice is the easiest thing for them to do – the purchase decision contains within it the least amount of ‘friction’.
Habit can still result in ongoing competitive advantage. Habit may also represent a good way for a challenger brand, or new market entrant, to begin a brand relationship with their consumers based on the principle of loyalty.
For example; a customer who purchases a particular brand of chocolate because it is conveniently located by the till point may well be a repeat customer, but they are not a ‘loyal’ customer. They are making a purchase out of habit and if the store places a different brand of chocolate in the same location the customer may well reach for this as an alternative. But if that same customer who initially bought out of habit happened to see an exchange of value – a code to unlock an experience or a financial benefit – then they may well start on their journey to a more connected relationship
Today consumer loyalty is about forming ongoing relationships based on the experience, interaction & engagement consumers have with a particular brand. Loyalty only becomes truly powerful when the consumer has an emotional connection with the brand and becomes an advocate for that brand.
To create this type of ‘connected’ loyalty it is best to start with a loyalty Strategy, not a loyalty Program. At the Customer Strategy Network, we view customer loyalty as part of this continuum. We find this useful to see the transition of customers from a habit-oriented relationship to a deeply connected state of loyalty.