The Burden of Loyalty

"Think you’re loyal – then prove it!" A loyalty obstacle course is not a strategy.

"Retained customers are always far more profitable than newly acquired customers. They have a better understanding of the brand’s benefit and value, and they are easier to find and communicate with."
– Christie Nordhielm, Professor, University of Michigan Ross School of Business

Most customer loyalty programs suck.

Well, maybe I was a bit harsh. Let me restate that.

Most customer loyalty programs are backwards.

Loyalty should be about the loyalty of the company to the customer, and not the other way around. Actually, commercial loyalty is mostly reciprocal. The repeat business and loyal customers that you seek will come your way…when you put a program in place that also keeps you loyal to them. The sad thing is that most loyalty programs don’t take into account this principle of reciprocity.

More to the point, the burden of loyalty rests with the company and not with the customer. Don’t give me some program where I’m the one doing all of the work all of the time, such as clipping UPCs over the period of a year or watching for when and which points will expire so I can get enough for a pair of socks. Make it so easy for me to do repeat, rewarding business with you, that you keep track of in your own system so that all I have to do is show up, buy something and feel the love.

Better yet – make purchase an optional component in your loyalty program. Loyalty is a behavior, not a transaction and it’s about time we treated it with more respect.

Think loyalty is for "some other company"? You’re leaving money on the table. (found in the sources listed below in Where Else to Look)

• On average, existing customers spend 67% more than new customers
• Acquiring a new customer can cost up to 5 – 10X more than retaining existing customers.
• A 5% increase in customer retention results in 25-100% increases in profit.

Q&A | QUESTIONS & ACTIONS

Here are a few things that you might consider to up your loyalty to your customers, and theirs to you.

1. Think of the ways that you exhibit loyalty to your customers. Short list? Work on that first.
2. Don’t make purchase the only indicator of loyalty. Facebook recommendations, word of mouth and other non-cash interactions illustrate the loyal behavior that you’re seeking as well
3. Make it easy and keep the burden of tracking data and points on you.
4. Use the data wisely. Your loyal customers are a gold mine. Use that data strategically and you’re set for life!

Where else to look?

Customer Loyalty: How to Earn It, How to Keep It >> by Jill Griffin

The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value >> by Frederick F. Reichheld

Evidence that Facebook Works as Marketing Tool >> by Jeff Cornwall [ARTICLE]