Some believe that you can earn loyalty by ‘delighting’ customers. Some say a ‘positive emotional experience’ works best. Others say we shouldn’t use the term loyalty at all, because it’s misleading, and no-one can ever really be ‘loyal’ to a brand anyway. Is the truth out there?
When you join The ROBIN Program, one of the first things our Expert Coaches do is introduce you to our ‘Three Principles of Great Customer Service’.
Rooted in strong, commercial business logic, these principles help team-leads manage stakeholder expectations about where customer service should (and shouldn’t) be focusing. They help identify where service can add the most value. And where it can have maximum financial impact.
As you might expect, the word loyalty crops up a lot in those principles. Down below is six things we think everyone should know about customer loyalty.
1. Customers cannot actually be ‘loyal’ to a brand
“From the perspective of consumer psychology, the notion of customer loyalty
makes almost no sense” — Philip Graves, author, Consumer.ology
In this report, consumer behavior expert Philip Graves explains that in psychological terms, being loyal is just not something you can apply to humans and brands.
Loyalty is an emotional restraint that keeps humans within the ‘safety of the herd’. When we don’t act in accordance with social ‘rules’, we feel shame and guilt. Without shame and guilt, loyalty cannot exist. And no one should ever really believe that consumers feel so emotionally bad at leaving your brand that they will experience shame and guilt.
So, while customers can indeed keep on using your products, this is not actually ‘loyalty’. Graves believes that repeated use is basically about how good your product is.
All this is worth keeping in mind. The word loyalty will not disappear from the business lexicon any time soon, but it is always good to be clear on what we are actually talking about.
On that note…
2. Loyalty is best broken down into two separate buckets
Most people think of loyalty as one single big thing. But if you are serious about impacting it, and want to employ the right strategies to do that, it is best to think about loyalty in two distinct buckets:
- Positive loyalty gains: reasons people stay with your brand
- Disloyalty (also called ‘churn’): the reasons people leave your brand
3. Poor customer service is the biggest cause of disloyalty (churn)
While online shoppers buy from you because of your product or brand, they most often leave because of poor customer service!
Yes, it’s true. Customer service is typically the single biggest contributor to brand disloyalty. This is why the most fundamental role of customer service should always be to prevent customers from leaving.
And this is also the first priority of The ROBIN Program is to address your service team’s speed, friendliness and effectivity in meeting shopper expectations. Without this in place, your marketing department could be fighting a losing battle.
4. Satisfaction and high spending are not indicators of loyalty
"Between 60 and 80 per cent of customers say they are ‘satisfied’ or ‘very satisfied’… just before leaving” — Harvard Business Review
Many retail brands see customer satisfaction as a great indicator of customer loyalty. But as Frederik F. Reichheld, the inventor of NPS (Net Promoter Score) established himself many years ago, satisfaction is not an indicator of loyalty. That is not to say that satisfaction is unimportant to measure. Satisfaction measures a customer’s attitude towards their latest interaction with your brand — nothing more.
Oh, and your highest-spending customers are probably cheating on you, too. Many retailers believe that a high average spend is an indication of brand loyalty. But as this 2014 study found, close to half of spending of disposable income by a company’s best customers goes to other retailers in the same category. Meaning: your high-spending customers are not necessarily loyal.
The lessons to take from these examples are:
- Correlation is not causation. Be wary of making connections between actually unrelated data
- Do not use historical transactional data, on customer’s behaviour on your website or their purchase history (such as you might find in your CRM) to predict future consumer behaviours. The past is not a reliable indicator of the future!
5. Exceeding customer expectations will not get you loyalty gains
Sure, everyone loves to be treated nicely. But aiming to exceed a customer’s expectations does not make great business sense.
Plus, by aiming to ‘delight’, you run the risk of raising expectations for their next interaction with you, which will make them harder to meet! Instead, focus on understanding and meeting basic expectations — this is both tough enough in itself and it offers excellent return on investment.
6. Reducing customer effort is the clearest way to make loyalty gains of all
The bottom line is that, above everything else, customers want their shopping made easier — and customer effort and loyalty benefits are insanely correlated.
From all the data we have seen, reducing customer effort is the single most beneficial thing a retailer can do to meet customer needs — and generate loyalty benefits.
So … think carefully, for example, before redirecting all customers en masse towards self-service and FAQs. That may just be killing loyalty at source.
How is your customer service department contributing to loyalty?
Today, retail brands are facing serious competition. Shopper expectations are still rising. And many brands are still optimising their mix of bricks and mortar and online, and refining their business model and operations as business grows.
In this context, the difference between the cost of acquiring a new customer (versus the cost of making sure existing customers stick around) comes sharply into focus.
With The ROBIN Program, we make sure that customer service plays its full and proper role to maximise its contribution to your company’s growth.
Like to know more about our Program? Contact Laurens, our Sales Director. He’ll be happy to help.