One thing that never ceases to amaze me are customers who continue to patronize a company even though the company is not providing the service and/or value that should warrant the loyalty. While we can’t discount the masochists out there… I think there is a very simple, but very important answer, and it has to do with the various rungs on the Loyalty Ladder.
Back in the 80’s and 90’s, we were all about measuring customer satisfaction. Then one day, someone got the bright idea that we should be measuring loyalty (usually in the form of willingness to recommend). At the turn of the century (wow am I that old?), we started using the Net Promoter Score (NPS)…which is a kissing cousin of loyalty, but goes a bit further. What should we be measuring? I think it depends…there is a lot of merit to NPS, but I like other types of measurements as well.
How do I categorize customers so that I really understand how likely they are to continue to buy from me? I put people on the rungs of what I call the Loyalty Ladder (shown in bulleted form).
• Raving Fans—these are folks that are giving me the highest scores possible on my survey. They are also going to recommend me every chance they get and will be willing to pay more for me (because I am just that good). I try to get everyone into this bucket but hey I am human…
• Always Done It That Way—these are folks that buy from you out of habit. To them , you are like the comfy blanket (or binky) that they had as a child. This type of loyalty is good, but not entirely loyal.
• I Have No Place to Go—these are the folks that feel trapped, but don’t spend a lot of time looking for alternatives. For example, cable companies had a lot of loyal customers before consumers were aware and understood the service provided by DirectTv and Dish Network. So what happened? Once these two companies (and others like them) became mainstream…these once loyal customers were not so loyal.
• Asleep at the Switch—these are the people that are using you and don’t even know that you are providing the service. They have no loyalty to you but they started your service some time back and forgot to turn it off.
• I Have a Coupon—consumers switching to you for discounts and other couponing are not necessarily going to stay with you. If they switched to you for a discount, they can easily go in the other direction (a competitor) the next time they need your product/service. For these folks, you need to add value beyond the coupon.
So why is this so important? When defending and/or attempting to increase your customer base, you need to know where your customers and prospects are on this loyalty ladder (for lon-term success that is).
Where are your customers on the loyalty ladder?