Is Customer Loyalty Still A Thing?

Is customer loyalty still a thing? Like, is it dead or?

It depends on who you’re asking. Thanks to the ever-expanding presence of e-commerce, consumers are faced with more choices than they know what to do with.

This overabundance of choice has created a more knowledgeable and demanding consumer base. Because of this, there’s a divide among marketers and e-commerce consultants about whether or not customer loyalty is dead and what will rise/is rising to take its place.

It’s Time For A Brief History Lesson About Customer Loyalty

To better understand where customer loyalty is at today–and why it’s there–we have to go back in time and trace its journey up to this point:

• Loyalty programs are said to hail back to the 18th century when shop owners provided customers with copper tokens for application to later purchases. In other words, a delayed discount program.
• By the late 20th-century loyalty strategies shifted focus to rewarding customers for showing up repeatedly. An example of this would be Delta’s SkyMiles program which came on the scene in 1981.

With this new strategy of rewarding consumers for repeating behavior businesses of all kinds hopped on board–bakeries, hotels, auto repair shops, airlines–and soon after that the plastic cards that cluttered everyone’s keychains were replaced by apps on their smartphones.

But this type of strategy had an Achilles heel no one noticed until it was “too late”.

• Constant discounts turn into bribing consumers who want bigger savings and better deals every time you try enticing them to come back
• Everyone’s doing the same thing so consumers can download multiple apps from companies that are known competitors with each other and be “loyal” by obtaining discounts from everyone

This is when loyalty programs began to give way to membership programs.

Unlike traditional loyalty programs, which were free for customers to join, membership programs ask consumers to pay to receive discounts and special swag. Some examples you’re probably familiar with, or a member of yourself include:

• Amazon Prime
• Costco Gold Star Membership
• Dollar Shave Club

All of which have been extremely successful because these companies are the best at providing value (i.e. attractive exchange) beyond special deals and discounts.

So, Yeah, In The Traditional Sense Of The Term, Customer Loyalty Is Dead…

but it ain’t dead as a doornail. A new form of customer loyalty program/strategy is emerging which focuses on engagement, emotion, and relevancy to create long-lasting relationships with customers.

At this point, everybody knows it costs more to acquire new customers than to keep old ones. Outpacing your competition depends on how loyal and happy your tribe of customers are at any given moment.

A quick Google search will return a variety of research that shows today’s customers prioritize receiving great service from the brands they deem worthy of their business.

According to this report by Bond Brand Loyalty, the percent of members satisfied with their membership program is 2.7X higher among members whose program reps make them feel special and recognized.

Businesses that focus on building strong relationships with customers, rather than focusing on just providing discounts, are the businesses that reap the rewards of customer loyalty. As the Bond Brand Loyalty report also pointed out:

• 81% of consumers said loyalty programs that focus on relationship building make them more likely to continue doing business with the brand
• 73% of consumers are more likely to recommend brands with good loyalty programs
• 75% of consumers say that loyalty programs are a big part of their relationship with brands

But don’t let these stats fool you. On average, consumers are members of at least 8 different loyalty programs. The real question you should be asking isn’t, “is customer loyalty dead,” but rather how do I build a reputation for developing amazing customer relationships?

Small Business Success Is Dependent on Satisfied Customers

Let’s be real here. As small business owners, we can’t beat the big boys when it comes to things like low prices and out of this world specials.

But we can beat them by providing a level of service to our customers they just can’t compete with.

Consumer data from a Peppers & Rogers study revealed that: 81% of companies with strong capabilities and competencies for delivering an excellent customer experience are outperforming their competition.

As marketer’s, we’re guilty of getting so wrapped up in lead conversion that we forget what happens next is more important than anything else. How we maintain our relationship with customers once they’re customers.

If you read our post, Explaining the Marketing Funnel and How It Works, you’ll remember that if you’re always looking to make the buyer’s journey as simple as possible for prospective buyers, you’ll convert those prospects into customers and you’ll be just fine.

That’s when your focus needs to shift to providing an ongoing top-notch experience. Because if you don’t somebody else will and you’ll never maintain the loyalty from customers we all need to survive.