Is Customer Loyalty Good for the Customer?

Last week a post on the Access Perks Blog questioned whether employee loyalty is actually good for the employee.

In many companies the answer is no.

In those companies, loyal employees are underpaid, do more than their fair share of work, and stick out like a sore thumb when cutbacks come calling.

It got us to thinking about the same concept for customer loyalty.

Is customer loyalty good for the customer?

We know customer loyalty is good for us, the organizations. Loyal customers spend more, more frequently than others. They refer their friends, provide a stream of feedback, and are slow to defect in pricing changes or service issues.

But what’s in it for them? Do customers  benefit by being loyal to your organization?

Do they pay more for the same products/service over time?

Do they have a say in the brand?

Do they get a consistent experience every time?

These are challenging questions without easy answers.

Yes we expect loyal customers to pay more. But as the television and internet subscription models have shown us, consumers aren’t fans of regular price hikes. Loyal customers are willing to pay more for the brands they love, but the value still needs to outweigh the price.

Furthermore, your most engaged and loyal customers should have a chance to shape your offering. This article from Associations Now highlights a great example - you seek feedback from your most engaged and loyal customers (or members) because you want more of them.

And finally, a consistent experience is the baseline.

If you can maintain consistency from the first transaction through the tenth and beyond, that’s pretty good. You’ll earn a lot of loyalty with a tightly controlled experience.

But the more value you can add on an ongoing basis (between transactions), the more you’ll inoculate your brand against defections.

How to make Customer Loyalty Profitable for Them, Too

• Create a loyalty program

It doesn’t have to be a big, complicated scheme. Even the humble punch card offers a basic reward for continuing transactions. But loyalty programs have many ancillary benefits beyond rewards, and they make it easy to identify loyalists.

• Seek feedback and use it

Loyal customers feel as if they’re in a relationship with your brand. Healthy communication, the two-way variety, is a big part of a successful relationship. Give people a voice, and actively encourage them to use it.

Then, take their feedback, use what makes sense, and tell them all about it.

• Be communicative about changes

Yes, every company has an obligation to maximize their revenue, and to see what the market will bear. But tread lightly with pricing and product changes. Give customers advance notice, and legitimate reasons why changes are being made.

For examples of what non-communicative price increases can do, consult your local television and internet providers about their call center volume.

• Always stack the value in their favor

This doesn’t mean you give things away or heavily discount your services.

It means you let customers “win” the relationship. No matter how much you charge, they’ll pay it if there’s enough value.

It could be a world-class customer service operation. Or exclusive access to members-only forums where customers can plug into a likeminded community. You could give them access to tutorials and materials that makes them experts at what you do.

The bigger point is helping them to make the transaction irrelevant.

Example: For those with subscription and membership-based businesses, loyalty can be built by engaging people with value outside of their direct interactions and transactions. For example - discount programs don’t cost much yet can have a big return as a member benefit. Member savings will offset dues, making membership invaluable.

Throw a party for customer retention

Big gains in customer acquisition earn parties in the conference room, bonuses and high fives for all!

Customer retention? Your CFO may slip you a butterscotch candy at best. At least in most organizations.

Retention only gets attention when things go bad.

And that’s how most organizations treat their customers.

For most consumers, there are no rewards for sticking with the same product or brand for years. It’s almost a disservice to not browse around and try other products/services/organizations.

You can make sure your organization comes out on top of those consumer excursions.

You do it by daily tilting the value in the consumer’s favor, and making each transaction a little more rewarding than the last.

(Stamps image courtesy of)