The Loyal Customer

As I sit here and ponder how to help our client build a better loyalty program, I find myself asking the question: What is customer loyalty?  There are a lot of loyalty points and rewards programs out there that do produce results, but are they producing loyal customers? 

It’s an interesting question because it forces us to define exactly what a loyal customer looks like.  What are the demographics?  What are the buying patterns?  What is the customer lifetime value?  There are so many factors, and sometimes it can be overwhelming for the average marketer.  However, I believe there is a simple way to look at it. 

Traditional rewards programs worked on the premise that the more you buy the more we will reward you.  It appealed to the self interest of consumers.  If your company had one and your competitor did not, then you could create ‘loyalty’.  It worked great until your competitor caught on and implemented their own rewards program.  Then you had to up the ante and create exclusivity and increase rewards bonuses.  But what happened to the customer?  The customer would gravitate to the one who could give them the best deal at the time.  So I ask, “Where is the loyalty?”

When I think of a loyal customer, I think about the laws of customer retention.  A bad customer experience will result in that customer telling 10-12 other people about it.  A good customer experience will result in the story being recounted only 5-6 times.  Yes, it is unfair, but nobody said that life was fair.  But maybe all we need to do is create a great customer experience.  Someone with a great customer experience is likely to come back.  So how do you do that? 

If you want to create a great customer experience, then you need to engage them.  You need to find out what they want and give it to them.  You need to offer a better service or a better value or a better experience.  You need to start having conversations with your customers instead of just throwing marketing jargon at them.  If you are willing to listen, they will tell you all you need to know.  Then you can start building a relationship based program instead of an incentive based program. 

Finally, loyal customers are loyal because they LIKE you!  They liked your product or service, or they liked the experience.  You do not necessarily need rewards to entice loyal customers.  However, loyal customers just want to be appreciated now and then.   Sometimes just a simple heartfelt ‘Thank You’ is all they need.  We all want to feel appreciated.

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