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How Do You Define Customer Loyalty?

Loyalty is a concept we use in our lives to determine our relationships’ strength. In business, loyalty relates to the relationship between organization and customer base. Loyalty is more than how much the customer likes a brand, instead, it is a concept which businesses can use to increase profitability and gain more customers when managed correctly.

Definition of Customer Loyalty

Customer loyalty can be defined as a customer’s faithfulness and commitment to a business. The measure of loyalty is often based consumer preferences, the degree of satisfaction, the frequency of purchase, fidelity, price sensitivity, and brand advocacy.

Most loyal customers have what is considered polygamous loyalty. As opposed to monogamous loyalty, meaning that consumers spend most of their time and money at one location and only that location; polygamous customers shops at a few locations that offer similar products, but only those few locations. Although monogamous loyalty is ideal, polygamous loyalty is not bad for business. In fact, it is better.

Better, in the sense that it is easier to attain. Gaining one hundred percent of shoppers’ loyalty is rare. One objective of business should be to make their customer’s loyalty as high as possible. If an organization focused strictly on monogamous loyalty instead of focusing on customers that may be very loyal to them and other competitors, their chances of growing their customers’ loyalty may decrease because they do not take advantage of polygamous customers.

How do You Define Customer Loyalty

How do You Measure Customer Loyalty

Customers’ loyalty is a predictor of business success, so learning to manage it is crucial for organizations to understand. Managing this type of loyalty is done by knowing how to accurately measure the demographics of loyal customers.

Observing and recording customers’ behavioral and attitudinal loyalty can help a company recognize when customers are truly loyal, opposed to being loyal to your brand for convenience or another factor which would not signify a loyal relationship. Customers can easily switch providers when another, more convenient provider, becomes accessible; it is important to assure that data is based on the correct behaviors and attitudes.

Measuring loyalty through behaviors suggests that a customer continually purchases products or services from your business. A great way to record this type of loyalty is by using rewards programs where customers are rewarded for their spending. On the other hand, attitudinal loyalty is instead measured by how customers speak of your brand, products, and services, not the behaviors that they exhibit like repeat purchasing.

This can be recorded by having customers answer one question, on a scale of 1 – 10: what is the likeliness that they would refer your company to a friend. Scores of 9 – 10 make your customer a promoter, which is beneficial For example, the Apple brand has a large base of promoters who are likely to recommend their products.

Loyalty Program Resources

These are just some skills and aspects that measure customer loyalty and put the loyalty of a business’s customers in perspective. Listed below are links to loyalty program and rewards program resources including best practices, case studies and much more around the implementation and management of successful loyalty programs.

  1. Check out these Loyalty Infographics
  2. Schedule a Custom Loyalty Workshops
  3. Read our Loyalty Blog
  4. Download Loyalty Article