Customer Loyalty Definition
By: Ellen Goodwright
The True Meaning of Loyalty and Customer Service
Although customer loyalty is often achieved through offers, discount coupons, rebates and other kinds of rewards, long-term customer loyalty can only be created by making your customers feel that they are your number one priority.
My Definition of Customer Loyalty
If I were asked to define customer loyalty, my definition would look
something like this:
"Customer loyalty is when an organization receives the ultimate reward for the way it interacts with its customers. Loyal customers buy more, buy longer and tell more people - that's true customer loyalty."
Competitive advantage can be achieved through customer loyalty. This is the way to gain the best kind of customers, repeat customers. Repeat customers tend to spend more money and provide the best word-of-mouth advertising.
Organisations that use loyalty schemes such as Staples and American Airlines are constantly looking at the customer lifetime value (LTV) and other customer data. This information combined with providing customer service excellence can lead to long term loyalty.
One of the latest schools of thought is concerning Net Promoter. NPS is calculated by subtracting the percentage of customers who are detractors from those that are considered promoters. This simple concept is now being used across many companies both large and small.
Another way to create customer loyalty is through branding. One of the world's largest retailers, Carrefour, uses a far reaching customer loyalty program in order to help it achieve competitive advantage by focusing on high customer experience standards.
An entire industry has evolved to help others achieve your customers. Ipsos generates millions of dollars in revenues, helping companies achieve customer and employee loyalty and satisfaction.
One important thing to remember is that not all loyal customers are profitable. Complex loyalty schemes, discount coupons and offers can sometimes cut into the bottom line. Careful analysis of profitability is advised.
It is often thought that the 80/20 rule applies to customer loyalty and customer profitability. For example 20% of your customers can quite often provide 80% of your profits.
Call centres have a part to play in building customer loyalty. The better rapport call center advisers have with customers, the more likely customers are going to be loyal to that organisation and its brand.
In summary, customer loyalty can be achieved by communicating well and caring for your customers on a consistent basis, and putting them at the heart of everything that you do.