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It’s always been easier to keep existing customers than land new one, but keeping loyal customers doesn’t come without its own set of challenges.

A new report backs this up: “For Love or Money 2017: Customer Loyalty – The Marketers’ Point of View” found marketers plan to focus on customer loyalty in the next few months because it takes precedence over acquiring new customers.

But marketers tend to have their own ideas about what drives customer loyalty, and those ideas don’t always mesh with what the customer is thinking. If they want to meet customer expectations and create experiences that keep them coming back, marketers need to understand motivations, attitudes and opinions.

What is loyalty, really?

The first hurdle, according to the report, is the disconnect on how marketers and consumers define loyalty.

The report noted that marketers are more likely to think of loyalty in terms of consumer recommendations and purchase behaviours, such as frequency and volume. Being forgiven for mistakes was also cited by marketers as a dimension of loyalty.

From the marketers’ perspective, the top four actions that generate loyalty are the quality of the product or service, making the customer feel important, consumers believing in what brands stand for and offering value for money. On the other hand, the study found that consumers are more loyal to brands that offer value for money, a quality product or service, convenient buying process, and an overall consistent experience.

While both groups agree that quality is important, the overall disconnect indicates companies need to get closer to their customers to better understand what loyalty means to them.

Marketers aren’t thinking engagement

The study suggest that marketers may be relying too much on technology to fuel their growth over the next 12 to 18 months. Marketers indicated that they plan on investing more in customer relationship management (CRM) and marketing automation. But while these tools are important, they fail to build a critical aspect of loyalty: customer relationships.

As our chief product officer, Divesh Sisodraker, argues, systems such as CRM measure the number of transactions a customer has a with a brand, but they don’t necessarily build relationships. Most companies know what their customers buy, when they purchase and where. However, few truly understand why those customers buy and why customers choose to have a relationship with companies to begin with.

Sisodraker said it’s important for business leaders to step back and more clearly define what customer relationships mean to them, as a clearer understanding helps align the tools a company uses with the strategy it is pursuing. Defining customer relationships is a necessary step in delivering what customers truly want—and driving business results.

Yes, data is important, but really engaging with customers means moving beyond transactions. A brand’s ability to meet rising consumer expectations depends on having an authentic relationship with its customers. Without that, it becomes prohibitively expensive to deliver better products, improve customer experience or create effective campaigns.

Marketers mistake metrics for loyalty

Today brands have no shortage of data at their fingertips. The study found that marketers use as many as 17 different metrics to measure customer loyalty. The most common include repeat purchase rate, Net Promoter Score (NPS), customer retention rate and customer satisfaction (CSAT).

But some of these metrics, such as NPS and CSAT, often lack the necessary context to provide actionable insight. For example, an NPS score depends heavily on one experience that a customer had with the brand. It captures a single point in time, and even mean a loyal customer could appear as a detractor if their most recent interaction with your brand was frustrating.

To unlock the true power of NPS and CSAT, companies must continue the conversation with customers.

NPS also contributes to survey fatigue—response rates have dramatically declined over the past decade. It’s also susceptible to manipulation. Having gained traction with most Fortune 1000 brands, many companies started tying bonuses to these metrics, which unfortunately incentivizes staff to game the system.

Most importantly, NPS doesn’t tell you why. The key is to give your NPS and CSAT score some much-needed context, and that happens in the follow-up. To unlock the true power of NPS and CSAT, companies must continue the conversation with customers.

NPS shouldn’t be your only customer loyalty metric. Rather than put all your measurement eggs in one basket, consider multiple measures of both satisfaction and loyalty.

Get on the same page with your customers

Marketers may be acknowledging the importance of customer loyalty, but it’s essential they remember that loyalty isn’t just about better products or experiences. Something more fundamental is required.

The focus must always be on customer experiences and their expectations from the products they use. Most importantly, understand their aspirations if you want to win their hearts and business over and over again and keep them from going to your competitors.

How to keep your customers from cheating on you

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Kelvin Claveria

Kelvin Claveria was the former Content Marketing Manager and was responsible for Vision Critical's blog and social media marketing program. Before joining Vision Critical's global marketing team, Kelvin worked at Dunn PR, a Vancouver-based public relations firm. His experience includes working with lifestyle, real estate, and non-profit clients to develop social media marketing and PR strategies. Kelvin has a Bachelor of Business Administration from SFU's Beedie School of Business.
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