What is a loyal customer? What kinds of loyalty are there? Are there different degrees of loyalty?
These are all great questions, and of critical importance to businesses that rely on repeat sales from returning customers. A loyal customer is someone who tends to shop consistently at a certain place or for a particular brand, as well as someone who speaks positively to others about the brand.
Attitudinal vs. Behavioral Loyalty
A person who shops at the same place regularly is “behaviorally” loyal, while a person who tells others how great a product is, or simply feels really positive about the brand him or herself internally, is “attitudinally” loyal. Yes, in many cases a person can be one without the other; in fact, very frequently this is the case. Some people grudgingly shop at a place because they have no other choice, or where the costs of shopping elsewhere just aren’t worth the effort. In other cases, a person might love a particular business and rave about it to all their friends, but then rarely shop there themselves (like if they can’t afford it, or it’s too inconvenient).
Behavioral loyalty is critically important for a business because it means customers are buying, and without buying there are no revenues. However, unhappy customers can be easily enticed to shop elsewhere, either by existing or future competitors, plus they can deter other potential customers through negative word of mouth.
Attitudinally loyal customers on the other hand are great for businesses because they add strength to already positive brands, plus their word of mouth promotions can be invaluable in attracting other customers. If the attitudinally loyal customer isn’t behaviorally loyal too, however, meaning that they don’t put their money where their mouth is so to speak, then even though that customer has promotional value, he or she contributes very little or no direct revenues to the business. A business with lots of people who like the brand but never spend money will not be in business for very long.
Why might a person rank high in attitudinal loyalty but not behavioral? There are many reasons. A person might like designer brand clothing, for example, and tell their friends how great the brand is, but then have to settle for no-name brands or clothing from Walmart because of the cost and money constraints. Similarly, many people would love to drive hybrids and eat nothing but organic produce, but not everyone can afford to do so.
Another common example of attitudinal vs. behavioral loyalties involves credit unions. Everybody (or at least many people) feel very loyal and proud to “bank” with their local credit union. Credit Unions are great; they’re ethical, they’re democratic and they’re just all round great institutions, so lots of people feel good about using them. Many people are consequently both attitudinally and behaviorally loyal to their credit union. However, very often, when it comes to investing their “real money” and making “real investments,” many credit union users tend to park their more serious investments with the major banks or other kinds of investment firms. Many credit union users also love their credit union debit and credit cards (especially the no-fee kind), but then make their purchases using their CIBC Aerogold, or TD Infinite, or MBNA or Capital One credit cards because of the value of the rewards.
The challenge for all kinds of businesses – whether they be credit unions, local grocers or multi-national megastores – is to make their existing and potential customers as both attitudinally and behaviorally loyal as possible, make unhappy customers more happy, and make loyal but low- (or no-) spending happy customers spend more.
How do they do this? They need to implement a solid customer loyalty strategy, of which a reward program can be a part. However, they also need to identify their ideal customer, recognize they can’t be all things to all people, and acknowledge the fact that nobody can (or should) try to make everyone happy.
(Copyright PR Loyalty Solutions, 2012)