“54% of consumers identify as Mercenary Loyalists - addicted to the bribe. Brands who want to stand out should foster Cult Loyalty instead.”
-Barry Kirk, Martiz Motivation Solutions
Over the years customer loyalty has evolved from “buy 10 get 1 free” punch cards to personalized, tailored shopping experiences. The world of consumer loyalty has dramatically shifted into a 4D landscape; transformed by technology, social media, political/environmental factors, and the Millennial generation. Customers expect more from their preferred brands than they did in the past, but how do we adjust to keep up with customers' increasing needs? First we must rethink our loyalty approach. We need to go beyond habitual shopping and move towards an emotional connection. We must shift from inertia loyalty, and foster a stronger relationship with consumers that turn them into brand advocates.
Inertia Loyalty. This type of loyalty can be described as a habit. Customers shop at your store because it’s the most convenient location or you’re the only place who has what they want. The buyer doesn’t quite feel a connection with your brand, but instead goes to your store because they can trust you have what they need. This type of loyalty is commonly seen with cable companies or cell phone service providers, where there is no real connection but continued patronage. Inertia loyalty is easily manipulated by competition or price, but does not mean that true loyalty can not be established down the road. Effective loyalty programs can establish a sense of true loyalty with the right techniques and program design.
Mercenary Loyalty. Mercenary loyalty is based solely on the transaction. These customers are sure to find where the lowest prices are, even if it means going out of their way to get it. They are enticed by discounts and perks, but if your competition starts offering a better price, it’s probable that you’ll lose these customers. This type of loyalty can be seen with airlines, hotels, and banks that simply offer perks or low rates to those who choose to do business with them. Think about your own shopping habits: have you left a company or program because something better was being offered elsewhere?
True Loyalty. True loyalty cannot be influenced by price or convenience, instead customers feel a sense of trust and shared value that can not be altered by a price tag. An experience is what’s important to these customers, and establishes a connection with your brand and reinforces their choice. You can usually see this type of loyalty with Starbucks customers. People will go out of their way to purchase Starbucks coffee even when there are cheaper or closer alternatives, but continue to purchase these products because of the consistent experience that makes them feel connected to the brand’s value.
Cult Loyalty. At the Cult level of loyalty, the customer and the brand start to merge. This type of loyalty cannot be created artificially, instead happens organically and is fostered through effective marketing techniques. This type of attachment to the brand turns customers into brand advocates, continually telling their friends and family about the products and services they’ve purchased. This shared identity comes from the feeling that your brand aligns with their values. Unlike the 1 on 1 relationship a customer has with a brand in True Loyalty, Cult Loyalists also identify with other consumers that make the same brand choice. An example of Cult Loyalty can be seen by those who purchase Harley Davidson motorcycles. Loyalists personally identify with Harley Davidson’s value of personal freedom and the open road, bringing riders together across the world for exclusive membership events and social gatherings.
The 4D loyalty landscape offers us new perspectives for effective marketing techniques and a chance to develop lasting relationships with our customers. In the past, views of customer loyalty were limited and marketing suffered because of it. Now with a better understanding, brands and marketers can use this information to form lasting relationships with customers to build true, authentic loyalty. Where do your customers fit in?
This article was written by Loyal~n~Save, an omni-channel customer loyalty solution for retailers looking to increase customer retention and new customer acquisition.