The Model Loyalty Experience

For our entrepreneur community: Last week we had a post up about How to Maximize The Real Value of User Reviews, and this week we have another guest post that further discusses customer loyalty and how this relates to the customer experience. 

Often marketers and marketing consultants confuse customer loyalty with experience. Individually they do not equate to the loyalty experience customers receive through rewards technology or other loyalty avenues. They are separate concepts and when combined, the analysis of your numbers can be heavily miscued.

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Let’s start with loyalty. Loyalty is a concept based purely out of relationships. While this is abstract, the concept can be tangible in the form of loyalty behaviors. These are the actions by which a customer expresses their loyalty and creates value for the company. This value can be expressed in the form of continuing sales, increased sales, added value to a sale and recommending the company to others. A strong referral means they are advertising for you and the investment in loyalty was worth it.

Companies that want to connect with the rational and emotional sides of a human’s decision making processes need to cultivate a sense of loyalty. This increases the likelihood that customers will continue to display the same behaviors and maximizes the share of lifetime customer value.

Every customer experience, customer touchpoint and customer interaction opens up an opportunity to deliver on the company’s value to reinforce the relationship. It also offers the risk of failing to deliver on a customer’s expectations. The experience matters because one bad experience can affect the overall loyalty experience of a customer. It is not the same as the relationship though. They loyalty is more of a sum of all the customer experiences.

Customer experience can be a small transaction like a stop at an ATM to something more complex like a trip to a supermarket. The experience is the link in the relationship chain. Companies must be aware of every aspect of even the simplest transactions and attend to every sense. It is important that a customer knows that every part of the transaction is solid and made to fit their needs. When a customer sees this type of transparency in your experience program, they’ll feel an immediate thankfulness for the effort. Thus loyalty is built.

More and more, companies are focusing and investing on individual customer experience as a way of increasing the loyalty experience. The reason for this is to create great brand advocates. Great customers that go through great experiences can be the key difference between gaining new customers through brand advocacy and spending almost 10 times more money getting new ones. Firms must understand that loyalty and experience add up to overall loyalty experience.

Article courtesy of loyalty program analytics company, Kobie Marketing.

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