The primary definition of customer loyalty is the history of past actions combined with the customer’s feelings and intentions toward a brand or commercial business. In 2015 there were 3.3 billion loyalty program memberships in the US, an average of 29 per household. And those numbers have only grown in the years since.
Based on industry date, it’s safe to assume at least every individual is at some level a loyal customer to a brand or business. Businesses who want to take advantage of customer loyalty to grow their customer base need to understand the differences in types of loyalty and how it drives a customer to make their purchase decisions.
A customer who buys from the same shop or same place on a regular basis demonstrates behavioral loyalty. This customer repeatedly purchases from a location with little to no changes in their shopping habits.
Behavioral loyalty is important because it results in real revenue for a business. Customers who demonstrate behavioral loyalty are making actual, consistent purchases that drive a business’s bottom line. What’s more is that behavioral loyalty doesn’t have to be at 100% to provide value to a business. Even if a customer shops at one business for only 75% of the time, the business is still obtaining a greater share of the customer’s loyalty that its competitors, who only receive the remaining 25% of the customer’s attention and purchases.
The negative side of behavioral loyalty is that customers who demonstrate behavioral loyalty are often driven by outside factors — convenience, cost, or lack of other options. Just because a customer shops somewhere frequently does not always mean they are happy. If any outside factors change, the customer can easily choose to purchase somewhere else. Negative experiences can also drive customers to find alternatives, even if those options are not as easily accessible or convenient. Behavioral loyalty is important to recognize and measure, but businesses also need to be aware of why their behavioral customers are buying from them, and what factors may change their customers’ minds.
Attitudinal loyalty is when customers genuinely feel good about purchasing from a business. These customers feel positive about the brand and its products and frequently act as enthusiastic endorsers of the brand to their community. The ability to identify attitudinal loyalty among a brand’s customers is a great indicator of potential success because these loyal customers can be valuable in attracting other potential customers. They believe in the brand and brands who put effort into supporting these feelings of goodwill can expand their reach.
The downside is that attitudinal loyalty does not always result in direct revenue for a business. Customers may love a brand, but if purchasing the products is inconvenient or too expensive, then the only value the customers provide is promotional. Many individuals would rather be purchasing organic food options but consistently doing so does not fit into their household budgets. Similarly, an individual may love purchasing clothing from a far away specialty store, but make do with closer options. Even if customers do not feel the same amount of emotional attachment they will choose options better suited to their lifestyles.
Businesses who garner large amounts of support and goodwill may struggle to stay in business if those feelings don’t result in actual revenue. What businesses must understand is how to transform those positive feelings into purchase behavior.
True loyalty happens when customers who purchase regularly also experience an emotional connection with the business. These kinds of customers include the brands as part of their identity — when they think of themselves, the brand comes to mind as part of their identity.
True loyalty is fostered when businesses enable their customers to be both behaviorally and attitudinally loyal as possible. Every customer wants to purchase from a business because it makes sense from a practical point of view and also because it brings them genuine pleasure. The customer is loyal because they enjoy the product. The customer is also loyal because the business meets their internal moral and ethical standards.
This is the most difficult level of loyalty to achieve, primarily because 100% loyalty in customers is rare. A business’s ability to create an equal balance of rewarding experience with practical use is an ongoing stretch goal. The success rate can vary on a multitude of factors – products, target customers, location, accessibility, etc. This is why implementing a customer loyalty strategy — where the goal is to make customers as loyal to a business as possible — is critical to maximizing overall profitability and continued growth.