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Customer Loyalty is Not a Transaction

Loyalty is not a transaction. In fact, you earn it over time; one customer experience at a time, and it is the most valuable result that your brand produces. One visual analogy that I use in our One Day Strategy Workshop is to think of loyalty like a ladder. Each and every customer interaction functions as a rung on the ladder and provides an opportunity to either move up or down.

Every phone call, face-to-face or digital transaction that your customer has with your organization creates an opportunity to incrementally improve or degrade your customer’s loyalty to your brand. Research shows that if a customer is forced to switch between mobile and desktop in order to resolve an issue, their loyalty decreases about 10% with each interaction.

There are four factors that contribute to building loyalty for your brand:

  1. Being consistent and trustworthy over time
  2. Reducing your customer’s effort
  3. Handling service disruptions efficiently and effectively
  4. Providing a human touch at exactly the right time

Look at every transaction and experience point in your customer’s journey. Are the four factors that contribute building loyalty for your brand reflected in each aspect of this journey? How can technology be implemented or experimented with to improve that experience?

With enough good experiences, your customer crosses the advocacy threshold. This is the point at which they are willing to, and they do, publicly recognize their relationship with your brand. That may come in the form of a referral, an open offer to be a reference account, an unsolicited Facebook like, or a LinkedIn endorsement. The key here is that they have been intrinsically motivated to align themselves with your brand. Getting your customers to cross this threshold as quickly as possible should be the most important job in your business development efforts.

I’ve seen customers offer all kinds of financial and marketing incentives in exchange for “likes” or endorsements, but I argued that these are more manipulative marketing tactics. They are short lived and don’t do anything to produce long-term loyalty or real advocacy. The real valuable endorsement is the one that is inspired by great experiences over time.

Once your customer crosses that advocacy threshold, they have made an investment in your brand that indicates the following:

  1. It is the best marketing that you can possibly get. They will be a referral and will help you to grow your business.
  2. You have a self-identified community of passionate customers who will help you improve your product or service. If you do focus groups or user studies, this should be a key pool of resources to consider leveraging. These customers should also be your beta population when it is time to roll out new software experiences.
  3. They are much more likely to forgive your shortcomings. The rungs in the loyalty ladder get farther apart once a customer crosses the advocacy threshold. Since they are personally invested in you, and some part of their reputation is on the line, these relationships are much more resilient. Don’t take that for granted.

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