Customer Relationship Management: What is Customer Loyalty?

Customer behaviour is a science in itself. While all businesses strive towards cultivating customer loyalty, there is simply no magic word to make your customers loyal and dedicated to your brand.

Yet try we must, and understanding how customer loyalty works helps a lot to formulate the right customer relationship management strategy.

So what exactly is customer loyalty? It can be defined as a predisposition, both concerning attitude and behaviour, towards favouring one brand over others. This can be attributed to satisfaction with the performance of a product or service, believing it is more convenient than others, or (usually) a sense of familiarity and comfort with the brand.

Loyal customers is self-perpetuating, in a way, as they are already positively inclined when buying the product or service, which promotes another positive experience, and so on. And because the experience is pleasant, they tend to shop more consistently and promote your brand via word-of-mouth.

And that’s why you need to keep them loyal. You need to reward your loyal customers and win new ones. You need a customer loyalty programme.

To formulate a successful loyalty programme, you need to understand the nature of the loyalty of your customers.

It is rare for a customer to be 100% loyal to a brand. It is more likely that a customer will have two or three preferred stores, and then in a preferred order. This is the difference between monogamous versus polygamous loyalty. While the first is possible, the latter is more realistic. But just because you have to “share” your customer with one or two others, you can make sure that you have the majority of their loyalty.

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Most loyalty programmes reward customers on the basis of behavioural loyalty – the more they spend (in other words, the more often they shop there), the more points they earn. This is a strong motivator, but depends on a worthwhile customer loyalty programme that rewards spending in more than one way, e.g. points for purchases as well as special offers and discounts on bulk buys (the famous “buy three and only pay for two” comes to mind).

There is also an attitudinal aspect to customer loyalty. This refers to the strength of the customer’s psychological commitment or attachment to the brand. It is not that simple though – while customers might promote the brand by positive word of mouth and professions of loyalty, it can happen that they themselves do not buy the product or service themselves anymore, for whatever reason.

Customer loyalty, it seems, is a wonderful thing to cultivate and use to boost business, but it can be fickle. You need to take all the above into consideration when developing a strategy to create customer loyalty.

While there is no sure-fire way to hold onto your customers, you can go a long way with effective customer relationship management. Use a customer loyalty programme to encourage and reward loyalty, and you can win a customer for life.