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Posted by Ashley Autry on Feb 13, 2018 8:31:00 AM

What causes customers to disengage from brands? 
 
Conversely, what causes them to fall in love with a brand and never defect?
 
Do loyalty programs matter anymore? Are people just looking for freebies, handouts, and the lowest possible price?
 
These are questions we're all seeking answers to. 
 
We're here to help, and we're bringing data with us!
 
Just as we've done over the past several years, we're compiling every relevant piece of customer engagement and loyalty data publicly released this year. We'll add new data weekly, if not more frequently, so bookmark - or subscribe to our weekly email, which will highlight the most interesting and topical stats.
 
Of course, these stats plus stats from recent years can be found on our Ultimate Collection of Loyalty Statistics .
 
As always, we'll provide a link back to the original source of the data. If you have research you'd like us to include, feel free to drop it in the comments.
 

Customer loyalty can be defined in several different ways.

Primarily, customer loyalty is when a person transacts with a brand (or purchases a specific product) on an ongoing basis.

However, loyalty can take many different shapes and forms.

Some argue that customer loyalty is when a customer only purchases from specific brands. For example, you will only buy groceries from one store, even when it isn’t convenient or the cheapest option.

Others say loyalty doesn’t always manifest itself in purchases, but in behavior such as social advocacy. A customer may only buy one Toyota in their lifetime, but they may be an outspoken advocate of the quality of Toyota vehicles to friends.

It’s up to each business to decide how it defines loyalty, whether it’s transaction size or frequency, fidelity, evangelism or just devoted engagement.

For every action, there’s an equal and opposite reaction.

For instance, it was fun eating the Halloween candy you should’ve been handing out to trick-or-treaters.

But, a rumbly tummy and eggs all over your house are natural parts of the reaction.

Among those of us in Customer Success and customer loyalty, the same thing applies.

If acquiring and thrilling customers is our main action, then finding and dealing with bad customers is just as important.

It’s not fun. In fact, it stinks. Bad customers are still customers after all, and they’ve willingly agreed to give you their money.

As profitable and valuable as loyal customers are, bad customers can be equally as damaging. They're costly to service in both dollars and hours, and in the end they’re likely to damage your brand and reputation.

So someone has to deal with them.

In this day and age, when consumers have more choices on where to spend their money, and more economic incentive to be overly selective about those choices, having a throw-away benefit is risky. It leads customers to question where their dollars are going, and gives them no reason to continue engaging beyond an initial perusal.

Here's why member benefits are so important: unless an organization makes great smartphones, computers, televisions or automobiles, chances are their customers aren't interacting with the brand every day. There's a good chance they've totally forgotten the organization entirely. This makes for an awkward conversation when bills come due or the customer is asked to make another purchase.

An Example of How Not to Benefit Your Customers

A mid-sized company looking for a discount program benefit contacted us about a year ago. After a few meetings and demos, they were totally seeing the positives of a quality program. Then when the time to make the decision came, they went with a freebie solution - a compilation of affiliate deals that drive small amounts of transactional revenue back to the organization.

It didn't matter if people wouldn't actually use or benefit from the program, they explained, because the company just needed to check the "discount program" box so their benefits could match what their competitors offered.

Stated simply, customer engagement is the depth of the relationship a customer has with a brand.

It’s a fair question that’s being asked with more frequency, as businesses are realizing that customer loyalty is largely a result of frequent positive engagement. As the typical consumer wields power with more information and choices, engagement has become the primary channel to ensure that a brand is “top of mind” when a purchase needs to occur.

Customer engagement is built and rebuilt (or destroyed) with every brand interaction, whether that’s making a purchase, reading a Tweet, joining a loyalty program, receiving an email, passing by a billboard, stumbling onto an online review, having a conversation with a friend, or any other exposure to a brand.

Each of those interactions hopefully connects the brand with the customer’s needs and preferences. Create those relevant messages with frequency, and that’s how customer engagement is built.

There’s a longtime adage in business that says it costs five times more (or even more) to acquire a new customer than to retain an existing one. It’s cited all over the place, but no one is quite clear on its origins. Don Peppers attributed it to a Harvard Business Review article “from a couple decades ago.” Ipsos Loyalty says it’s outright untrue.

The truth is, there are a number of cost variables every company has in play that muddy the waters between retention and acquisition. There are complicating factors on each side of the equation, but in general, it’s going to cost more to bring a customer in than to keep one in the fold.

That makes it sound so easy. Combine it with the Pareto Principle (80% of sales will come from 20% of customers) and you’ve got yourself a simple game plan for untold fortunes.

What those adages don’t mention is that customer retention is harder than acquisition.