The different types of customer loyalty
Not all loyalty is the same. In fact, some loyalty isn’t even loyalty! (Wait… what?).
Let’s just take a look at loyalty you have for brands that you probably interact with on a day-to-day basis... You shop at your favourite supermarket most likely because it’s convenient, and prices are relatively competitive. Maybe it’s around the corner, and even if they’re more expensive than other places, it’s probably only a few pence so not worth quibbling over. The problem is, if you move house, or if the prices rise enough that you think it’s maybe worth an extra 5 minutes in the car, you’re off somewhere else! The supermarket thinks you’re loyal because you’re back there every week, whereas in reality you’re ready to go at a moment’s notice.
On the other hand, let’s imagine your favourite coffee shop, maybe one where you’re friendly with the barista who makes your flat white just the way you like it. Not only will you go an extra 30 minutes out of your way just to get a coffee on the way to work, but you’ll rave about them to your friends. “You should come and see Jo at Bean-2-cup, honestly she makes the best flat white, I won’t go anywhere else!”. This is loyalty most brands only dream of.
Maritz's loyalty quadrant (which we're lovingly re-creating with our colours!) organises different loyalty into four types - true, cult, inertia and mercenary. These are then split on two axes by whether the loyalty you’ve built is relational or transactional (are you focused on price, or offering an exceptional and emotional relationship?), and whether the customers are passive or active in their interactions with your brand and with their loyalty.
1. Inertia loyalty – “I’m here because it’s too much trouble to go elsewhere.”
This type of loyalty almost isn’t loyalty at all. Sure, the customers keep coming back for more, but that's only because there is a barrier to exit, not because they love your brand and have an emotional connection. It could be that they're not aware of an alternative product or service, so buy from you for ease, or it could be that the price is within their budget. It’s unlikely that these customers will recommend you to other people. The risky thing about this type of loyalty is that there's a high chance of them being influenced by your competitors. All your competitors would need to do is run a decent promotion to convince this customer it’s worth an extra 5 minutes out of their day to switch and BAM - they've nabbed them from you! So how can you encourage true or cult loyalty with this group? A lot of the activities will need to focus around education and reward. Educating them not only about your products and the value of them, but also about your business values and beliefs in the hope that they relate with them. As they start to learn more and are rewarded for their time and loyalty, their opinions may change.
2. Mercenary loyalty – “I’m loyal because you pay me to be loyal.”
Like inertia loyalty, this type isn't exactly ideal for your business. To put it bluntly, they are loyal because of some sort of bribe. These people love shopping around for the best deals, discounts and rewards, therefore are easily influenced by your competitors. If you are continually trying to attract these customers from your competitors, you’ll get trapped in a race to the bottom. You need to be very cautious of this type of loyalty as they're only attracted to your offers, and not your products, services, beliefs or values. You can alter their mindset from being "money driven" to "value driven" by educating them on the value of your products so they can see what they're getting for their money, rather than promoting the discounts on offer.
3. True loyalty – “I’m here because I’m emotionally connected.”
First up, we have true loyalty. This type of loyalty means customers have an emotional connection with your business, like believing you share some of their values. They are very happy with the products or service you offer and are unlikely to be influenced by your competitors. Although they respect and admire your business, they aren’t quite ready to be recommending you to everyone they meet! These customers are already very happy with what you offer, but you should still continue to reward their loyalty and reinforce that behaviour. You should try and introduce ‘wow moments’ and extra special VIP service for special customers, and maybe start to encourage them to tell their friends by rewarding referrals.
4. Cult loyalty – “I’m in for life. The brand reflects my values and identity.”
The customers that show "cult loyalty" are your brand evangelists, and your brand forms part of their identity! Like true loyalty, as discussed in the point above, they have an emotional connection with your business and share your values and beliefs, but more importantly, they think your brand represents their values and beliefs to others. These customers are very unlikely to shop elsewhere and be disloyal. These customers are almost an extension to your sales team, and LOVE to rave and shout about your products, service and their experience to their friends and family. They know you won’t let them down, and might make them look good to their friends toboot! Be careful though, if you drop your service levels and make bad on a recommendation they’ve made of you, there might not be any coming back…
Although you may think you have a bunch of loyal customers, as we’ve shown, it's worth taking the time to understand your customers, and what sort of loyalty you’re encouraging. If it's not the right type, you should think about an action plan to move them to the next step. Did you know we happen to be loyalty specialists, and help our clients to inspire the right loyalty all the time? 😉.
You can find out more about our loyalty methodology here, and if you’re ready to have a chat about how we can help you generate more rewarding relationships and real loyalty, you can either book a demo or get in touch!