Loyalty: What is it and How Do You Cultivate it?
I have been meaning to write about this for a while, but it wasn’t until I answered a question for someone yesterday that I had some words that actually made sense to me!
Old School Loyalty
When we think of loyalty, especially when we consider it in the context of gamification, we tend to think of loyalty cards , air-miles or other point collection systems. You spend £X and we will give you points that can go towards other goods or discounts. When I was a kid, we used a petrol station called Texaco. There were two reasons for this. The first, it was on the way home from church on a Saturday evening and two, it was cheaper than other local options. Something they started to do, was give you stickers based on how much petrol you bought. These stickers were used to fill up cards. These cards could then be traded in against goods – the more cards, the better the goods you could get. Using this method, my Mum and Dad managed to kit out our kitchen with new mugs, new glasses – I even got a Swiss Army Knife out of it!
All of that makes it sound like we were loyal customers of Texaco. The truth of the matter really, it was convenient and cheap. The sticker scheme was a nice extra, but if we were not near home we would not go out of our way to find a Texaco garage for petrol, we would go where ever was near or cheap.
Real Consumer Loyalty
Loyalty in the consumer market is seen when people will go out of their way to just use a particular product, service or brand. This is irrespective of convenience or price. Take for example our Christmas Turkey. Every year we buy our Christmas turkey from Graham Turner. He used to run a very local butchers. In the last couple of years he moved to a new area, making his butchers no longer all that convenient to go to. However, we still go there to get out turkey (and any decent joints of meat we need). We have a butchers less than a 2 minute walk from us, we have two super markets less than 5 minutes drive from us, but we always go to Graham. Why? Because he has cultivated loyalty in us. He and his staff make every visit feel special. They treat us as old friends, greeting us by name or as Sir or Madam. The quality of their products is second to none and their customer service should there be an issue is unparalleled. Christmas eve a few years ago, we got our Turkey and found out once it was home that it was not big enough. We called Graham to complain, he told us to come straight back and he would keep the shop open for us to sort out a replacement – Christmas eve and he kept the shop open just for us! With service like this, I don’t need to collect points to want to keep using Graham!
It is this kind of personal touch that keeps people coming back time and time again, the feeling that you are special and important. Big brands like Amazon know this as well, making every visit to the Amazon website a more personal experience. Items are recommended that their algorithms have predicted will be of interest to you (and they are normally pretty spot on). You are greeted by name in a friendly manner. Emails you get from them have some kind of relevance to you, offering tailor made (or seemingly tailor made) deals that will interest you.
Tesco have begun to do the same, using their standard looking loyalty scheme to personalise the offers you get. Their website even states The more you use your Club-card the better we can understand the sort of coupons you might like to receive”. They are being honest, keep using us and we will make sure the service you get will become more and more personalised to what you want. It is the difference between getting vouchers for DVD’s when you really need them for nappies.
Big brands like these can do this, because they have huge amounts of data about you. You keep hearing about Big Data, well this is what it can offer the loyalty market – personalisation of everything. Amazon knows what I buy, so can tailor what I see. Tesco knows what you buy on-line and in store, because we scan our Club-card after each shop and they can then identify us. It may sound creepy, but it begins to build a picture that allows these brands to make us feel like the centre of the experience.
Consumer loyalty is now about finding out who your customers are and what drives them and giving them what they want or need.
In the enterprise, loyalty is important as well, loyal employees are valuable. They work harder and they are more likely to stay. However, many mistake loyalty for obligation or even lack of other options. A loyal employee is one who will stay even if they are offered what on the face of it looks like a better opportunity, because they feel that they are valued and are valuable to the company they are with. Some may stay because they feel some level of obligation, gratitude towards their employer for employing them. This won’t last though. Unless they feel valued they will soon walk.
In much the same way as Graham Turner makes people feel they are at the centre of the experience when they are in his shop, employers need to make employees feel that they are at the centre of their experience in the company. If they feel like just another cog, they will feel no loyalty to the company at all.
4 Types of Loyalty
Barry Kirk from Bunchball has a really neat way of categorising loyalty.
Inertia Loyalty: This is where people stay with something because it is too much effort to leave or change. Think of people in jobs who are just their going through the motions, but it is convenient for them to stay and would be risky or too much effort for too little reward to leave.
Mercenary Loyalty: Old school loyalty schemes fit here. Buy from us, collect points, get free stuff. My Consumer user type sits here and the Texaco stickers are a great example of this.
True Loyalty: This is where my loyalty to Graham Turner fits in. I go out of my way to use him because of the service, the quality and the experience. He may be more expensive and harder to get to, but that won’t stop me! This is what you should be striving for.
Cult Loyalty: This is a strange one and one that can’t really be made – it just happens. As Barry says, this is demonstrated by those who tattoo a brand logo to themselves, or will only buy a Harley because that expresses deeply who they are. The closest I have seen to this kind of loyalty being manufactured is when Apple created the iPhone. Steve Jobs was often described as a cult leader with is Reality Distortion Field. The iPhone was a bit of leap of faith for Apple, it had to work. They started by making people feel that this was the future, to not have it would be to miss out on the future (Loss Aversion). Once people started to buy them, they made everyone else feel that if they didn’t have one, they were missing out and a bit of loser (Social Pressure). This social pressure and loss aversion style cycle has been continually cycling since the first iPhone was released. It has kept people buying the iPhone even though it was considerably more expensive than any other phone on the market – and did considerably less than many other phones!
Creating loyalty is not easy, but a good place to start is to put the person whose loyalty you want, back into the centre of the experience. Make them feel that you as a brand or an employer or whatever, care about them directly and that you value them and understand them. Don’t try to bribe them!
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