Customer Loyalty and Retention

What is a loyal customer? To start off, ‘Loyalty’ is misleading…
• Heavy Consumption ≠ Loyalty
• A person who buys frequently from you may not be loyal.
• Loyalty ≠ Heavy Consumption
• A person who is loyal to your brand, may not buy frequently or in big quantities

Just a thought… are we in business for loyalty or for consumption?
Actually = BOTH are important and must be in balance. But today’s topic is on one side of the Equation (Loyalty) and we must be mindful of that.

OK…for today’s session, there are two definitions and therefore two types of Loyal Customers whom we have to treat differently:
Experience
Swing

What’s the difference?
‘Experience’ loyalty means that a customer is loyal to you because their Expectations are satisfied with their Expectations. What are their expectations?

1. Customer Intimacy - "Exactly what I need", Customized products, Personalized communications, "They're very responsive", Preferential service and flexibility, Recommends what I need, "I'm very loyal to them", Helps us to be a success
2. Product Leadership - "They are the most innovative", "Constantly renewing and creative", "Always on the leading edge"
3. Operational Excellence - "A great deal!", Excellent/attractive price, Minimal acquisition cost and hassle, Lowest overall cost of ownership, "A no-hassles firm", Convenience and speed, Reliable product and service

Those customers who fall under the Experience category are what we will call true LOYAL customers. They will most likely stay with in the long run as long as their expectations are continually matched by their experience with you.

‘Swing’ Loyalty means that a customer is so called ‘loyal’ to you because you happen to be the “Best alternative at the current moment until I find another alternative” situation. Swing Customers are ‘loyal’ because:
• Specific individual Relationships
• Convenience (at that point in time)
• Tied-up
• Product Uniqueness
• Promotions
• No better alternative
• No known alternative
• Psychologically lazy

As a summary – Retention strategies for these two groups would have to be different. So, our job is to find out who we are targeting, and tailor the proper retention strategies for them.

By the way, this whole lesson goes the same for Employee Loyalty and its related retention strategies.


What will you do next?

-TURD-