Loyalty is dead, long live loyalty!

Greyfriars Bobby & Loyalty

In a November 2017 interview with Mad Money’s Jim Cramer, Salesforce.com CEO Marc Benioff declared that “Loyalty is dead.”

At the time, that comment caused a lot of kerfuffle and was used by many in the retail industry to validate their own claims that loyalty was dead.

However, if you listen to the interview, when Benioff says that loyalty is dead he is referring to the idea of loyalty as a program.

He suggests that loyalty is changing and is now more associated with a customer’s whole journey, their experience and, in some cases, dependent on being part of a community.

That is not new.

In my 2016 book, How To Wow, I explored this idea and quoted research by Clickfox that was published in 2012 that found that the most critical times for generating loyalty were at the point of purchase or when a customer had an issue that needed resolving. Their research found that:

  • 49% of customers said that their loyalty was earned at the point of purchase/service; and
  • 40% said that loyalty was also earned when they had a problem or issue that needed to be dealt with.

But, have things changed over the last 6 years?

Well, InMoment recently released their 2018 Retail CX Trends Report which takes an updated look at the state of loyalty and trust in the experience economy.

Here’s some highlights from the report:

  • 88 percent of customers stated that trust is “extremely important” when deciding where to shop.
  • To build trust, by far the most popular driver (55 percent) was that retailers must “deliver what they promised”.
  • If they don’t, 67 percent stated that this was the “biggest deal breaker” and would be the biggest reason that they would lose faith with a brand.
  • Nearly 50 percent of customers said they are willing to spend between 11 and 50 percent more with brands they trust a lot.
  • 61 percent of customers said they would go out of their way to buy from brands they trusted and felt loyalty towards while 60 percent said they would buy from those brands more frequently.
  • Finally, as a reminder that feedback is also part of the customer’s overall experience, the ability to give ratings quickly and easily was highlighted by 88 percent of customers.

A quote from a customer, that participated in the research, sums up the implications for firms that want to earn and keep the loyalty of their customers:

“I’m treated with respect, and I’m not just a “customer number” to them. They train their employees to care about me as a person, and they offer their best support when things don’t go right. Even if things go wrong often, I won’t change my loyalty to them because I can trust that they will always work with me to make things better and that they will always care for me as a loyal customer and friend.”

What is clear from the research is that loyalty is no longer (and possibly never was) about loyalty programs but rather it is a broader construct, one which, at a fundamental level, is about some very simple and very human things: consistency, respect, value and reliability.

Loyalty is a whole business game not just a program. If brands deliver on their promises and do so consistently then customers will have no problem being loyal to them.

Loyalty is dead, long live loyalty!

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This was originally published on Forbes.com here.
Photo Credit: wandering architect Flickr via Compfight cc

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