Let me start by answering the second part of the question: loyalty is not dead. But the assumption that any company can earn the unwavering commitment of their customers is simply naive.
If you think that loyalty is the blind devotion of customers to purchase your goods and services, then it’s not only dead, it’s crazy. Many marriage vows include the phrase “until death does us part,” but there are still a lot of divorces. If people can’t stay loyal to their spouses for life, why would we think that they can remain loyal to a company?
So what is loyalty? That’s the key question. I’d like to throw out this simple definition:
The willingness to consider, trust, and forgive
A loyal customer is willing to consider new products and services you have to offer. A loyal customer is willing to consider you in their short list of suppliers for new purchases. A loyal customer is willing to trust your descriptions of new products. A loyal customer is willing to forgive you if you make a mistake (as long as it’s not repeated or egregious).
What more can you really ask for?!?
And if you need more convincing about the existence of loyalty, take a look at the range of loyalty levels for companies across multiple industries (data from 2012 Temkin Loyalty Ratings, 2012 Temkin Trust Ratings and 2012 Temkin Forgiveness Ratings).. There are some significant differences between loyalty leaders and laggards.
A loyal customer, however, can not be expected to purchase a product that is overly expensive, or select a service that is substandard, or put up with a consistent set of mistakes.
USAA tops the 2012 Temkin Loyalty Ratings for banking, insurance, and credit cards. Do you think it would be in that position in 2014 if the company doubled its fees and rates, cut way back on its call center training, made it difficult to file a claim, and stopped investing in mobile, which is becoming its members’ most-used channel? I don’t think so.
Loyalty is not dead, but it’s also not permanent. Companies need to constantly focus on how to keep customers loyal and not fall into the trap of relying on that loyalty.
Loyal customers are willing to consider, trust and forgive you….for now. Nothing more, nothing less. Embrace it.
The bottom line: If you want a customer’s loyalty, then you need to keep earning it