Thank You for your LOYALTY…
A word that means different things in our own lives, how can we expect to have a cover-all definition in the pursuit of selling more to our 'customers'? Let's get comfortable with the differences...
Firstly, excuse the way later than-usual nature of this monthly. I gave myself a week off last week and went to Canada (including a real bucket-list thing, Niagara Falls. I recommend it, especially the very wet boat trip with the fetching poncho). The week before was no good either, as there were a couple of massive projects I had to progress, one of which I had to deliver to deadline. Thankfully, despite remaining reasonably well deployed, I’ve a little more breathing space now. To warn you, this is a longer one again, but it is a topic that deserves it. So again, thanks for reading!
…Or should I say, thanks for your loyalty.
Sticking with me since subscribing, reading/scanning this every month, whether later, or at times when I had a one-off. It makes sense, you signed up, so the email gets delivered, or via the notification on your app. In a loose term, you are loyal!
But am I the only email you read? The only sources of your content? The only marketing source you look at? Of course not (I bloody hope not). You have a multitude of subscriptions, of preferences, of things you read, of things you wish to consume, to watch, to attend. Let’s lead with that thought. AND not OR. Believe it or not, this more than likely applies to what you are selling, and your customers’ mindsets and behaviour. Here are 11 observations and insights on the term and the market’s adoption, some of which may not play perfectly with the other, but that is kind of the point…
#1. LOYALTY IS… by definition, hardcore!
I enjoy the draconian, BC-esque Merriam Webster definition of Loyalty :
‘loyalty implies a faithfulness that is steadfast in the face of any temptation to renounce, desert, or betray’
Firstly, even by modernising and toning down the words above, it is invariably flawed in marketing and brands. Nobody cares enough. Unless you’re a fan of Sports Teams or a fast car/bike brand. Otherwise I am not typically a fan of the overhype of fanaticism, cults and fandoms, except in context. In the right space, with the right kind of brand and device. Many brands have tried to do it, a friend of mine has a Brewdog tattoo on his arm (I don’t get it at all, but each to their own; what a Punk apparently) and he gets 20% off a round of IPAs. But try signing me up to your Gravy newsletter? No thanks.
Despite this…
#2. LOYALTY IS - heavily attempted to be systemised by marketing
The concept of loyalty, and loyalty marketing, relationship marketing, retention marketing, customer marketing have all been fangled into the inevitable. In a hope that their customers will devote their true love to them, or at least they will delay the divorce proceedings and make a few quid. As well as acquisition and advertising efforts, whole swathes of work and even separate teams are devoted to the please don’t go cause, including a number of loyalty schemes.
The Chartered Institute of Marketing, of which I am a proud Chartered Marketer member and Fellow, are there to advance and educate marketers. But I’ll say this; some of the course content they quote leaves me with questions (in fairness they present alternatives, but some are wild). For example, they talk about the ‘Ladder of Loyalty’. Christopher et al 2002 came up with this canny visual to showcase an actual ladder . They even quote as saying the goal of relationship marketing is to help convert them to partners. However, I have yet to see this step ladder utopia come into play. The first 4 are realistic, but most get a nosebleed on these aspirational upper rungs.
#3. LOYALTY IS - important, but less so than new customers
From a marketing principal, one thing many can agree on as a fundamental is the need to bring on new customers. It would be remiss not to reference some of the Ehrenberg-Bass Institute Research originally shared by Dr Byron Sharp in How Brands Grow, but this is just a small part. (check out my January personal development from books post with more insights from this book) There’s a lot of things that are category specific, and some older as well as newer studies, but aggregated this is a typical example of buyer distribution :
Source : EBI - the unbearable lightness of buying as told by an old jar of pesto
Despite all the rhetoric of focussing on customers and loyalty etc, we need to be real. It is super important to companies with a bigger addressable volume of customers in particular.
It should also be a reminder of how fickle customers are, and despite the focus on the retention, many categories fit the above shape. ARR models, B2B, and the ‘ABM’ businesses may alter slightly, but there’s always a smaller amount of current or repeat customers than addressable market who likely buy, unless you’re an Amazon of the world, but even they have their skew not too dissimilar. Light buyers are usually where the volume is!
#4. LOYALTY is - actually dangerous for sole focus - ESPECIALLY for small businesses
However loyalty will want to mean more to those in smaller businesses, those who don;t have aggressive resources to deliver, or sales and marketing fat. You of course want to keep your customers, but one thing you cannot change is relative consumer behaviour. It is also a very risky game. Double jeopardy denotes the exponential downside of being the little guys. Another visual I remember well from How Brands Grow (and when you think about it, it's kind of obvious) is that the number of defectors/changers is pretty much a market constant, versus the size of the brand :
As I have attempted to show above, the switcher %ge will be bigger for the Smaller businesses, hence a bigger impact on their business. Category leaders benefit from swelled coffers, fame and the double jeopardy.
#5. ‘LOYALTY’ IS however, more pertinent to certain businesses
Especially if there is a much lower volume of potential customers in your addressable market, and lock-in / competition is fierce. B2B you’ll probably find more anecdotes. If I am a manufacturing systems business working with booze brands, I only have so many companies I can target, so adding value and innovating and educating drives the ‘loyalty’. If I am Rolls Royce, Airbus and Boeing Matter to me. Airlines are an interesting one too. I took the hero image from Heathrow's BA/One World lounge in Terminal 3 a few months ago, and seeing those 2 tail fins together got me thinking. I haven’t flown Virgin for years. I don’t dislike them, I’d love to try them again, but collecting Tier Points and getting status/upgrades etc with BA is a loyalty perk for a purchase that takes time, money and discomfort, so being an Exec club fan makes sense, though I’ve no plans to get the Speed bird logo tattooed on me anytime soon!
#6. LOYALTY IS often really just indifference, inertia and logistics
There are examples of huge addressable markets that drive less switching, but that is usually because of the pain of moving. When I worked with Samsung, they knew that Apple users were more loyal, mainly because it is what they are used to, so other Android users would be much easier to convert. If I am on O2, the faff of switching impacts churn. Even if EE has a better deal, I personally cannot cope with the faff of switching etc. But as you can probably see, a lot of this isn’t loyalty in its truest sense, it is just life. Inertia, obligation. Faff. Indifference. The shifty back way around loyalty is to create lock in. The tech and Telecoms companies have been good at that.
#7. LOYALTY SCHEMES ARE - not loyalty per-se
I would like to focus on a bigger semantic difference here. Remember : Buyers care less about your brand than you do. Buyers also generally care about their own needs and definitely not a relationship with a brand, unless there is something in it for them. So offering something extra to value loyalty helps a bit of average customer value, but the value exchange is the expectation of a perk e.g. a VIP early access, a discount, a freebie. These are the fundamental principles of loyalty schemes. I always wish however that the language was more around ‘buyer perks’, not even customer perks. The wording Loyalty Scheme is ill informed and often feels like a self deception language in-house. I’ll collect a bean at the Costa Express machine at the BP garage on my long journey, but make no mistake, if there is only a Starbucks at the services and Shell for Unleaded, they are getting used. Unless physical and mental availability is uniform, which of course it never will be, how can one expect true dogmatic, draconian loyalty?
A snapshot of my penny-pinching, over organised personal life, but I don’t think I am alone.
As above, I have a section devoted to shopping apps. My own self employed savvy mantra is, if I go somewhere, and there’s a scanner, I am scanning. I am loyal to Starbucks as much as the local coffee house RWRD app. I am loyal to Nectar as much as Clubcard. I am loyal to me and my wallet! Cost of living challenges and the app-for-everything world has created an abundance of apps and ideas. ‘But they have your data!’ So what, doesn't everybody? I may as well get my fix. Unsubscribe buttons are good too btw. I don’t need emails from Lidl.
#8. LOYALTY REALLY IS often preference, or convenience
Props to marketing consultant and experienced loyalty guy John Lyons for this fun AI creation above. The duplicitous Coca-Cola lover cheating on Pepsi. But is that loyalty? Or just preferences? Or a good old beverage orgy that we all enjoy from time to time?
Physical and mental availability drive memory structures, driving quick thinking, driving obvious shortcuts. If I go to the chilled cabinet in the local shop, I home straight in on Coke Zero. I know it, I like it, I trust the brand, I know it's ubiquitous. If I am in a pub and I asked for a coke (a bit of a joke and a meme too) and a landlord goes, It’s Pepsi, is that OK? then I will have it. I am not disloyal to Coke, I am loyal to the preference. I like the taste of Coke better. But some products, e.g. hummus or penne, I am much less sensitive. A spade is a spade for me whether Lidl or Tesco (though I have to say M&S food has some good stuff!) Coke is a curious example; many years of distinctive brand assets, consistency, availability, advertising and market leadership (more on that another time) and Pepsi less so.
#9. LOYALTY IS - often a tactical campaign - it isn’t real
We need to focus on retention. I hear it a lot. As it is seen as tantamount to greater profitability etc, and of course it is easier to sell to existing customers (well they usually mean database) than it is to new. Only last week it was announced that struggling Bloom & Wild will focus more on retention for profitability. Short term yes, cheaper to retain than acquire a particular customer. But longer term you must consider, what is the true cost of not acquiring new? With no new customers, your customer base, despite your greatest ‘retention’ efforts to slow it, will always decline. No canny marketing will stymie that inevitable loss that no company in the world is immune from. Bloom & Wild from what I see have always been big in performance advertising and perhaps less so as brand investors, maybe they caused this themselves,
#10. LOYALTY IS - not just painful, repetitive CRM.
It has become a by-word for painful comms. Light buyers whose data was offered up on signup/purchase getting bombed in the pursuit of increased money. Good email/loyalty comms are important and drive value, but you have to consider the audience, the buying persona and what you are selling. I always have a laugh at some of my emails. (Going back to the Unsubscribe point). Why do the car parking apps email me? Well, this one made me smile but I get the whole ‘win your fine back’ vibe isn’t going to work for everyone. I don’t need a relationship with a bit of concrete and white lines I throw my Hyundai on a few hours a week.
And then there are the over-content calendarisation and scheduling of the sale events. Especially Black Friday. The last week of November is the death of my intended inbox zero, with every brand you ever bought from emailing you every day. Then Cyber Monday. THEN deciding they haven’t sold enough so carry on emailing you anyway. I touched on this in November, but you have to think of the collective impact on a consumer's inbox as well as attrition of own margin. A friend of mine summarised the feeling…
#11. LOYALTY IS - proactively transactional, but cannot be forced
When people say they are driving loyalty, they are driving more spend from a customer. You can count the AOV, not emotions. When a customer is actually loyal in the business mind and spends more money, they are simply ‘using that product/service again’. We need to remove some of the language's grandiosity. E.g Evian, they are selling water, not actual survival. They should be called ‘Life’ by these rules. (sidenote, I love that Evian is Naive spelt backwards, now that does make me loyal!)
SUMMARY : LOYALTY IS misunderstood. But the level of importance? IT DEPENDS!
It has become a byword for frustration, but I go back to the ‘It Depends’; mantra here. First thing is to debunk the language. If we can all agree that in the proper sense of the word, loyalty (in the main) barely exists and it is naive to think you can drive actual emotional commitment, then that is a sound start. However, we know all is not lost, and there is tangible solutions, lessons and ways to think about these and driving what you in industry would call loyalty :
-Loyalty is the code world used by brands to basically get more money out of people who have bought before or tend to buy = Increasing Customer Value and Revenue.
-Loyalty can manifest by obligation, inertia, locking or logistics, from iPhones to jet engines = Long term customer relationships.
-Loyalty schemes can work but there needs to be a tangible value or journey. A meaningful value exchange, a flight upgrade. = Buyer perks.
-Loyalty in the marketers’ sense mean more customers buying more frequently, so category leaders can boast this = ongoing consistent brand assets and marketing.
-Loyalty is the fantasy of small businesses especially those who thrive on relationships, but solely focussing is dangerous = source new and existing revenue streams.
-Loyalty as a buyer outcome varies by sector = I am monogamous to BA, I am bigamous to BP and Shell, I am polyamorous to Starbucks, Costa, Nero and Local coffee shop) = know your customer personas, habits, audience and competition.
Thanks to the scientific, anecdotal, social and artistic sprites supporting this post.
Thanks for reading, I of course, value your loyalty!
SA
P.S. I really hope you are getting a semblance of value out of this. If so, and you think any other marketer or business owner would, feel free to share/forward this to them. Also, follow me on LinkedIn, The place formerly known as Twitter, (albeit less on socials now), or even my company page. If you want to discuss working together, you need some marketing advice, or simply something I’ve said, drop me a line. Thanks and happy reading/marketing!