Why Customer Loyalty Shouldn’t Be Your Goal and What You Want Instead

Loyalty has become a goal of many companies. Many consultants claim that they will help companies achieve this goal. However, it is important that we correctly define our goals as they represent where and how we will direct our efforts. So consider, is customer loyalty what he’s really after?

What is Loyalty?

The problem that exists is with the definition of “loyalty” that is generally used. Loyalty is generally considered a situation where customers return to the same business repeatedly over time. If they regularly use the same business or buy the same product, they are said to be “loyal.” If that is the definition you are using, the goal you have set for yourself, then you have misdirected your efforts.

Let’s make a Deal

Reach into your pocket or bag right now and pull out your keys. If your keychain is like many, it has a plastic card with a scan bar that you can use at your local grocery store. You scan it and they give you a discount for entering. It’s supposed to keep you coming back. In fact, these little plastic contraptions are called “loyalty cards” in the industry.

Customers use them all the time, so if you have one, you probably keep it on your keychain to keep close at hand. And it’s probably right next to a card from a competitor supermarket chain that you also use all the time. Now, if any of the supermarkets are tracking your visits (which, of course, they are), they know you come back repeatedly. But are you really loyal or are you just taking advantage of a deal? This is not to say that there is anything wrong with “loyalty cards” to initially attract and retain customers. However, you have to ask yourself if this concept of “loyalty” based on repeatedly attracting customers just because of special offers is what your ultimate goal should be.

The only game in town

Let’s say a young couple moves to a small college community. When they first get there, they tend to use certain stores and go to certain restaurants because these are the best that were available. They may not particularly like the local discount store, but they keep coming back because it’s better than any other option at the time. They frequent a certain Mexican restaurant, again, because it is the best available locally. From the definition of a long-term relationship that involves a repeat purchase, we would say that they are “loyal”. But what will happen when new, bigger and cleaner discount stores come onto the market? What will this couple do when tastier and more interesting restaurants come to their town? Will they stay with the companies with which we have established this so-called “loyalty”? Of course not. would you do it?

Therefore, the term “loyalty” is frequently misused because most “loyal” customers are not really loyal, at least not in the way we would like them to be. Customers who return repeatedly because they are bribed with free stuff or special discounts or because they have no other real options are really just temporary visitors. They are tenants, not owners. They are renting, not buying. They are biding their time, not investing it in a way that will grow their business. Since the term “loyalty” is often misused, it can be a big mistake to make it an indication of your success.

The tie that binds

What is missing from the common definition is an emotional attachment to your business. Do customers really get excited about a business? Hell yes! In the same way that Harley-Davidson owners talk passionately about their bikes, people can love, or at least like (ie have an emotional attachment to) their retailer, business professional, or supplier. These are the people who come back to the business again and again, not because they have to, but because they want to. They don’t walk away when a competitor offers a slightly better deal. They talk to the business owner about their likes, dislikes, or concerns because they want the business to be successful. And they tell others that the business is becoming an unpaid sales force. These are not simply “loyal” customers. These are devoted customers. It is the creation of these devoted customers that should be your goal because they have the potential to truly grow your business.

Create customer devotion

The steps to create customer devotion are as follows:

1) Recognize the difference between devotion and loyalty as stated above so that you can properly set your goal.
2) Develop an understanding of your customers’ needs in relation to your business, including the emotional needs you can satisfy.
3) Listen to your customers. Ask for frequent feedback and respond accordingly.
4) Train your employees properly to interact with your customers. It is the interaction of you and your employees in a way that shows care, respect, and appreciation for your customers that will help instill an emotional bond and create devotion to your business.

Can all customers be made devotees? No Unfortunately. Some are only interested in price or location or may want variety. However, given the impact dedicated clients can have on your bottom line through their spending and ability to attract other clients, it’s worth developing as many as possible.