Marketing Frontier

Strategies for a data-driven marketing world

Loyalty — A behavior or an attitude?

Posted by marketingfrontier on November 17, 2006

Often companies get confused about loyalty.  Everyone knows that loyalty is important to their business at some level — they have read The Loyalty Effect (Reichheld) or at least read the dust jacket :), and they understand that loyal customers help a business to grow.

The question is how many loyal customers do you have, and how to you identify them?  In my previous post, I identified loyalty with an expressed preference for the brand/willingness to recommend, and also with “share of wallet” — the percentage of total category dollars that are spent with that company.

Loyalty is therefore both an attitude and a behavior — but let’s examine the attitude for a moment.  Loyal customers are defined with an expressed preference and a willingness to recommend, but what causes that condition to exist? 

Every customer knows at some level what is most important to them in terms of performance in your category or industry.  The list will always include price (how could it not?), but it also usually includes a series of “service-related” benefits such as timely customer service, knowledgeable salespeople or frequent contacts.  Those customers also know how your company is performing on each of those attributes.

When you examine your most loyal customers, pay particular attention to the factors where what those customers value meets what your company delivers.  Those are the factors that drive loyalty.  When you examine less loyal customers, notice the areas where the gap between what is important and what you deliver is the largest — those are areas to improve to gain those customer’s loyalty.

Loyalty is both an attitude and a belief, but the attitudes drive the beliefs — determined by what attributes customers value and how you deliver on them.  Reduce the gap between value and delivery, and increase loyalty and profitability.

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