As marketing has shifted towards something more relationship-oriented, loyalty remains one of the most debated, documented and sought-after measures of success.
The definition of loyalty in its purest form is: “A feeling or attitude of devoted attachment and affection.” Yet, in the marketing world, many brand owners view loyalty as a key driver of repeat purchase. Conversely, some view repeat purchase as a measure of loyalty – and here lies the problem.
Attitudinal v behavioural loyalty
Too often, attitudinal loyalty is confused with behavioural habit. People are creatures of habit – repetition and shorthand rituals dictate our daily routines and our purchase decisions. The truth is, people will typically buy what they bought last time.
The fixation on achieving attitudinal loyalty means that our goal and the strategies that support it are misguided. A loyalty strategy by definition is any strategy that rewards loyal behaviour, which as outlined above, is often incorrectly defined.
Loyalty programmes don’t change behaviour
A traditional loyalty programme uses purchase behaviour as a measure of success. But let’s ask the following questions: does a loyalty programme really change behaviour? Does it result in shoppers buying more of a given product, more of the time? Does it ensure they buy one brand in a particular category and no other? Does it contribute to growing a brand’s share of the market? Probably not. More often, a traditional loyalty programme simply mirrors and reinforces existing behaviours among existing customers.
What’s more, it’s probably focused on retaining just a small volume of people who are defined as “loyal”. Those customers are rewarded for their affections with freebies, discounts and other offers simply for making a purchase – a behaviour perpetuated by a retail environment saturated with promotion. Given the high costs of such programmes, this can directly impact the commercial interests of the business, diluting profit and draining resources.
The value is in the data
A preoccupation with an unrealistic goal of attitudinal loyalty – accompanied by a misguided strategy to support it – means that many brands are missing a trick. If behavioural loyalty is largely influenced by habit, understanding how these habits are formed and, more importantly, how to disrupt them is a better place to start.
What a good loyalty programme does provide you with is an abundance of rich customer data that can supercharge your customer strategy, free from the trappings of benevolent acts. All too often, data is wasted as brand owners view their customers in blunt, general groups divided into points-based bandings, forgetting the fact that these bandings are rarely static.
So forget love and ask the smarter questions:
- Do you use data to inform communications that influence behaviour change?
- Can you identify the moments that matter – the times when people are most susceptible to changes in habit?
- Can you profile your data to identify other sources of customers who share the same attributes?
Posing these is the first step in stripping away the confusion that can surround loyalty.
Nathalie Mahedy is a planner at MullenLowe Open
This article was first published on guardian.com