Business relationships

Loyalty programs versus earning loyalty

- August 21, 2014 2 MIN READ

It has frequently been said that the basis for business longevity is developing and maintaining a loyal customer following. Interestingly enough, as important as this concept is, a number of recent research studies have shown that customer loyalty has been decreasing in recent years.

Loyalty programs

Although many business owners see loyalty programs as nothing more than bribery, the following statistics (published in late 2013) show there is much room for debate:

  • Consumers will use loyalty programs 33 percent of the time in order to purchase different brands.
  • If a good price promotion is offered by your competitors, 96 percent of your customers will be tempted to try the competitor’s brand or product.
  • If your competitors offer a better loyalty program than you, 20 percent of your customers will not remain loyal to your brand or business.

The reality is that a loyalty program will not guarantee that your customers will stay true to you.

We all know that consumers love freebies or paying less and getting more, but the problem is that many of the loyalty programs out there do not really create loyalty.

If everyone in the marketplace continues to “out-discount” or “out-loyalty program” all their competitors, eventually there will be nothing left. So to create customer loyalty, loyalty must be re-defined and re-examined.

Want more articles like this? Check out the business marketing section.

Earning loyalty

If we hope to achieve a loyal customer following we have to look at ourselves first. Earned loyalty is comprised of certain elements that are not evident in purchased loyalties.

These include:

  • Admitting fault or wrongdoing and apologising for it
  • Aligning interests and shared causes
  • Earning a person’s loyalty by always keeping their best interests at heart
  • Following through and doing what you say you will do
  • Showing up as promised

Always keep the above points in mind when you are trying to earn customer loyalty. Rather than bribing your customers, earn their loyalty by appreciating them and genuinely rewarding them.

What are your thoughts on customer loyalty?