Loyalty

Every business has to define what loyalty means for itself

I was reading about the difference between conservative and liberal worldviews, and the author classified loyalty as part of the conservative worldview. That makes sense, but I think it speaks to the traditional definition of loyalty as a sort of tribal value. 

Loyalty in a business sense is about an enterprise including in its long-term plans a commitment to recognizing and rewarding its supporters. Supporters will include customers and many other types of people who want the business to thrive. Loyalty leads to increased profits, or improved operating margins for a nonprofit. Loyalty is provided by people, not by 'customers' or 'vendors.' If we want our businesses to survive, we have to plan to allow people to show their loyalty. 

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Consultant Bill Hanifin notes that when Forrester Research analyzed what business leaders want from their loyalty technology providers, 3 of the top 6 were

  • Understanding the client's business
  • Strategic contribution to the client's business
  • Ability to design and execute innovative and differentiated programs

Loyalty Truth: What the Forrester Wave report on Loyalty really tells us, 2015-Apr-23 by Bill Hanifin

...while every company needs a well planned customer growth strategy, not every brand needs a “loyalty program.” As customer behavior trends continue to evolve, the highest mandate on brands is to deliver innovative strategies that engage customers first and establishes a foundation of trust through repeated interactions. Doing this successfully comes through working a carefully executed planning process whose outcome is to frame and define a company’s customer loyalty worldview.


Recognizing which customers can become advocates

Whenever I become the customer of a new web service, I'm often offered the opportunity to get reward points or even discounts for promoting the service on social media or for recruiting my contacts to join. While it's not offensive, it's usually pretty useless. 

  1. It's too early for me to recommend a service I just joined.
  2. I'm not the "advocate" personality type. 

Customer advocates are one of the very cheapest and most credible ways to promote our businesses. Unfortunately, satisfying customers and creating advocates are very different processes.

A 2010 case study from Harvard Business Review found NO overlap between the heaviest users and the heaviest advocates of a service. Advocates have different motivations than users.

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Over and over again, I meet with business owners who tell me: "I don't need a loyalty program because I make my customer so-o-o happy, my customers recommend me." WRONG. A good loyalty program covers all the different types of rewards that your supporters need.

The Hub: Return on Referrals: Advocates and buyers are two very different kinds of consumers, 2015-Apr-28 by Liz Crawford

Why do some shoppers advocate, even when they may not, in some cases, use the brands much? The reason is that they want to be in-the-know rather than simply seeking product benefits. According to BzzAgent’s Field Guide to Brand Advocates (2013), 61 percent of advocates claimed that “it is important to me that people view me as a good source of information.” This compared to only 24 percent of general web users. These sharing mavens see dispensing information as a source of social capital and self-esteem. In fact, according to the same study, “recognition for my efforts” is twice as important to advocates as compared to all others.