Customer loyalty is a two-way street
Loyalty itself is a strange concept. Jill Griffin, Customer Loyalty author describes it as “an intangible, sometimes unpredictable, and two-dimensional attribute; an individual or an institution can engender loyalty within others, or loyalty may manifest an innate commitment to an individual. In the business context, loyalty is delivered when properly inspired, and it is received when properly earned – a two-way street”.
This holds true when we talk about delivering on price, value and customer service. As Jill describes, “Customer loyalty is earned”, it’s not created. It’s a “two-way street”.
Why customer loyalty matters
Essentially, a business only has two functions: (1) getting new customers and (2) keeping the old ones, and sometimes winning repeat business. But for some reason, most business focus on customer acquisition. Despite, the cost to acquire a new customer being 6 times greater than the cost to retain one.
Those that opt to focus only on new customers often suffer from a poor customer experience. As a result, today’s buyers will quite happily migrate from one vendor to the next in search of satisfaction.
What brands do to earn loyalty
It would be hard to believe customers would want to buy a car, health insurance or an airline ticket from brands that haven’t gained customer trust. Great brands spend hundreds of thousands of dollars ensuring they have a trusted brand. When we think of great brands which display such trust we think – Toyota or Air New Zealand.
The big guys spend up large ensuring:
- They form a connection with their customers
- They deliver on promises
What these brands have that others don’t
“Organisational strategy can be concentrated on three value disciplines” as Treacy & Wiersema describe. These value principles are operational excellence, product leadership, and customer intimacy.
Businesses at best can be great at two of these principles, but struggle to be competitive and earn trust when trying to balance all three. Understanding where your business and brand is best and delivering on the promises you give to customers should be your focus.
Toyota for example focuses its efforts on operational efficiency and customer intimacy. It’s in no way a product leader compared to brands such as Tesla or Porsche.
In contrast, Apple focuses more effort on innovative design and product leadership, which separates its brand.
The importance lies in knowing where your focus is and delivering on the intangible promise you give your customers. Remember - it’s a two-way street and customer loyalty can only be earned.