Quite often the topic of “customer loyalty” pops-up in the classes that I teach at EIT. It is interesting to see the strength of conviction in some students that “customer loyalty” is a valid phenomenon.
My input into such conversations remains unchanged from occasion to occasion. That being that the concept of “customer loyalty” is actually a fallacy.
Why ? Customers are not loyal to brands or businesses. Rather, they (we) are creatures that are driven by the pursuit of wanting to have our needs met. Customers will ultimately pursue and engage with those businesses that best meet their needs…not because customers feel some innate sense of loyalty towards the given business.
There are many different providers of “loyalty” programmes around the world. All of these programmes claim to influence an increase in customer loyalty. Actually, what all of these programmes strive to do is (only) provide some form of incentive that creates sufficient influence so as to cause the customer to return to the given business. “Loyalty” is not created through such programmes. Rather, customers are “bribed” to engage – and then re-engage – with the given business.
So, to state an objective such as “To strengthen customer loyalty during the ensuing Financial Year” in a Strategic Plan, is creating an expectation that can neither be achieved nor measured – because “customer loyalty” can’t be created (see above). Instead, the objective should simply be to increase the number and frequency of customer engagements. The pursuit of “loyalty” per se is a flawed objective. You cannot instill a sense of “loyalty” in other people…you can only influence them to have their needs met via your business instead of by a competitor’s business.
As long as you continue to meet/ satisfy the needs of customers as/ when they arise, the chances are good that they will keep returning to have their needs met by your business. But this still does not make them “loyal” to your business. Their engagement with your business is primarily motivated by their perception that your business will meet their needs. And it doesn’t take much for a customer to change their perception of your business the moment your business ceases to be able to meet their needs.
So my parting words of wisdom are “customers are fickle creatures” who are not beholden to any business. As a business owner, the best that you can hope to achieve is to influence customers to engage with your business versus competitors’ businesses by effectively communicating your value proposition. And when they do decide to engage with your business, make every effort to provide a compellingly positive/ favourable experience when satisfying their needs so as to cause them to hold your business in their “consideration set” for when similar needs arise within them in the future.