Most companies are indeed confused about what is customer loyalty. Most metrics regarding loyalty are simply tracking behavior and not intent.
For instance, you can be a “captive” customer because there are limited options, yet data describes you as a loyal customer. As noted in the linked article, many companies buy a more frequent customer through discounting. As soon as the deals stop, so does the buying from this particular customer.
Any definition of customer loyalty has to include attitudinal issues. “Will they buy when there is direct competition?” “Will they buy without some sort of deal in place?” “Do they sway their friends to visit your business versus the competition across the street?” “Do they actively want to learn more about your business?”
Harvard Business Review has noted that the most profitable brands have the highest concentration of customer referrals. “How are you measuring that?”
Check out this article http://www.reveries.com/profitable-loyalists
Amanda Kirkland
April Voris
Guest Relations Marketing
Michael Tyre
Sarah Crytzer
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July 25, 2009 at 5:22 am
Rudy Vidal
you bring up a good point. this is one of the reasons why so any have moved to “willingness to refer”. you can also speak of loyalty as a function of satisfaction level. in which case about 3% of customer who are not satisfied will pledge loyalty, for the very reasons you state.
thanks for the post. I think it is a good point that is not really being addressed “head-on”.
Rudy V