Fast Company

What Makes Us Loyal? II

FC Now reader Jackie Huba offers some useful statistics that relate to Alison's entry.

Customers who experience a problem with a potential loss of under $5.00:

  • 37 percent who did not contact the company said they would continue to buy the product
  • 46 percent who complained but were not satisfied by the company remained loyal
  • 70 percent who complained and were satisfied remained loyal
  • 95 percent who complained and were satisfied quickly remained loyal

For customers who experience a problem with a potential financial loss of over $100:

  • 9 percent who did not contact the company about the problem remained loyal
  • 19 percent who complained but were not satisfied remained loyal
  • 54 percent who complained about the problem and were satisfied remained loyal
  • 82 percent who complained and were satisfied quickly remained loyal

Speed, it seems, is of the essence.

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6 Comments

  • Jim Berkowitz

    Whenever a discussion revolves around the "meaning" of several key words or terms, I like to turn to the dictionary to make sure that these terms are uniformly understood. Here's what I think about customer loyalty (along with
    definitions from dictionary.com):

    We start with a need (a condition or situation in which something is required or wanted). If we are satisfied (our need is fulfilled and we experience a gratification of a desire, need, or appetite), and especially if the product or service exceeds (is greater than; or surpasses) our expectations (to consider likely or certain; to consider reasonable or due), then we may display loyalty (a feeling or attitude of devoted attachment and affection), form a bond (a close personal relationship) or become committed (bound emotionally or intellectually) to a particular product or service.

    According to Maslow's hierarchy of needs, there are general types of needs (physiological, safety, love, and esteem) that must be satisfied before a person can act unselfishly. He called these needs "deficiency needs." As long as we are motivated to satisfy these cravings, we are moving towards growth, toward self-actualization. Satisfying needs is healthy, blocking gratification makes us sick or evil. In other words, we are all "needs junkies" with cravings that must be satisfied and should be satisfied. Else, we become sick.

    So, as long as are needs are being met, we'll stick with a particular product or service if we are satisfied, or our expectations are exceeded. At any point where our needs are not being met, or we believe they can be better met by an alternative solution, then an internal measurement system kicks in. This system balances the ease of change, the cost of change and the percieved added value (satisfaction) of making the change. Based on the results of this
    balancing process we make our decision to change, or not.

    Is there such a thing as loyalty to a business or organization, or to its products or services. Yes, I believe so. But, it's always subject to our needs versus satisfaction balancing process. Loyalty can be lost at any time by
    slipping up and failing to meet a customer's need or expectation. In addition, a smart competitor can impact the balancing process such that the perceived added value from changing is greater then the cost or difficulty of making the change.

  • Jon Strande

    Tom,

    That is a GREAT question!!!

    But heres the thing; the company doesn't know me. They have no way to build my loyalty becuase they don't know who I am. Consumer goods manufacturers have no way of 'connecting' with the consumers of their products (without requiring the customer to take action). So, the idea that they have to worry about me switching is real, and they are powerless to do anything about it. Perhaps.

    You're an author, right? So what do you to build loyalty with your readers so they purchase your next book? What about the customers you don't know, say someone who picked up one of your books at Borders?

    Great debate and thank you for posting the follow up question!

    Jon

  • Tom Asacker

    Hi Jon,

    Great comments and food for thought. I have a question that sums up my feelings regarding loyalty to products and companies. You wrote: "There is a certain brand of soccer shoe that I REALLY LIKE; I have yet to find another pair that fit me the way this brand does. I have an emotional connection to these shoes and to the company who made them every time I step onto the field." If you discovered a company that made a much better fitting soccer shoe (and at a comparable price), would you sacrifice your desire for the NEW shoe to remain loyal to your present brand? Because THAT is the true definition of loyalty.

  • Mark Zorro

    The fact that a company has to talk about loyalty usually means there isn't any. In any case Tom's analogy with marriage may actually be be the key to understanding loyalty marketing - the divorce rate is 43% and falling, loyalty marketing must in some divine odd sort of way must surely be working. I think that sums it up.

    M.
    zorromark@consultant.com
    (Mark Twain wasn't Mark Twain, Mark Zorro isn't Mark Zorro)
    http://www.markzorro.blogspot....

  • Jon Strande

    Sigh.

    First, I think you make some GREAT points here Tom.... truly... but, as soon as you use the word "never", most people capable of critical thinking have to discount everything that follows.

    Yes indeed, I think you can create customer/product/service/brand (offering) loyalty as well as connect with people on an emotional level.

    Think about your own life, perhaps you are a sports fan, a music lover, there is a certain make and model of car that you really like (I won't use the word love here), I'd be willing to bet that some "business" has connected with you on an emotional level.

    There is a certain brand of soccer shoe that I REALLY LIKE; I have yet to find another pair that fit me the way this brand does. I have an emotional connection to these shoes and to the company who made them every time I step onto the field.

    There are plenty of examples of people who have some "bond" with an offering:

    - Apple Computers (and the iPod - I have a Nomad Zen by the way, it's great!)
    - Linux
    - A favorite author
    - A favorite artist (music or otherwise)
    - Their Haristylist (my wife owns a salon, trust me - there is HUGE bond there)
    - Tivo
    - Krispy Kreme
    - A political candidate

    Should I continue?

    I have Dunkin Donuts ground coffee home delivered every month. I signed up and each month I get my "regular refills". The coffee is great and I never have to think about stopping and picking it up, which use to be a hassle. Now I have a Starbucks near my home and I am in there a couple times a week, I could easily pick up their coffee and make it at home, but I don't. Dunkin Donuts has my business because they solved my problem of waking up to a REALLY good cup of coffee. Also, Im never out of coffee so I dont think about buying it. Theyve made my life easier. Do I have an emotional bond to them? Tough to say.

    The point is that some offerings aren't worth "bonding" to. Can you bond with dishwashing liquid on an emotional level? For most people I'd bet the answer is no.

    Now, the issue of employee loyalty is huge topic worthy of a week of special commentary itself. I have always felt that work is voluntary... someone willing to trade their time (intelligence/skill) for the employers money. If an employee is not loyal to an organization it is simply because the employer has failed to provide the employee a reason to be. People don't work for your reasons; they work for their own, as you state. It is as simple as that.

    Jon
    --------------------------
    jstrande@comcast.net

  • Tom Asacker

    I am sooo tired of hearing businesses and organizations talk about customers' and employees' loyalty. Why? Because in the overwhelming majority of cases, there is no such thing as loyalty to a business or organization, nor to its products or services. There never has been and there never will be. Those acts were never anything more than a series of mutual concessions: “You give me what I value (in a product, service, or work environment) and I'll give you what you value (money, time, intelligent work, etc.). And if, by chance, I decide to transact with you for a second, third, or fourth time—whether it's work for pay or money for products or services—it's simply because I expect something in return.” In his most recent HBR article (Dec. 2003), Frederick Reichheld describes loyalty as: “(t)he willingness of someone – a customer, an employee, a friend – to make an investment or personal sacrifice in order to strengthen a relationship.”

    Why have we come to believe that "repeat" customers are "loyal" customers? How have we misinterpreted historical, egocentric actions with a deep emotional bond? What was once referred to as loyalty—back in the hey day of mass marketing—was simply habitual buying patterns and limited choice cultivated by smart marketers with mega spending on advertising and control of distribution channels. Today, those same smart marketers have added bribery to the mix: "Buy from me and I'll give you something free!" They call those particular tactics "Loyalty Reward Programs." Ha!

    Don't confuse switching barriers or habitual buying —which occurs when involvement is low and differences between brands are small— with brand loyalty. There is a HUGE difference. A difference that is putting a lot of hurt on many small and large businesses and organizations today. And it’s only going to get worse . . . MUCH worse. Why? Because enlightened business leaders are using technology and other forms of innovation—including innovative work environments which value people and their feelings—to make it easy for YOUR customers and employees to leave YOU and get the value they truly want (read: feelings) from THEM.

    I just returned from a speaking engagement in Denver, followed by a wedding in the beautiful mountains of Breckinridge. What made this particular trip so enlightening to me were the wedding vows exchanged during the ceremony. This may sound a little weird to you, but I started thinking that those same vows represent the commitment that a business and its customers¾and employees¾must make to each other to achieve any kind of long-term, mutually beneficial relationship.

    It went like this: “We are gathered here to witness and celebrate the pledging of loyalty between YOUR COMPANY and A CUSTOMER (EMPLOYEE).”

    In their decision to become loyal to each other, these two people acknowledge their love and respect for each other, and their desire to enrich and compliment one another’s lives from today forward. Note: Enrich and compliment! Not exchange goods and services for money.

    This relationship is an act of creation and bonding. In it you will have times of happiness, and times of sorrow. In the happy times your moments of joy and delight will be caused by what you are continually building together. Note: Building together! Today’s economic environment is about dialogue, change, sharing and responding. Not making and selling, nor dictating!

    In the times of sorrow, you will find strength in what you share together¾strength that will return you to happiness. You will also have times of separateness within your relationship, when you individually renew your goals. That’s right. They may leave for a while.

    When you come together again you will face one another in confidence. This important confidence is found in being honest, first with yourself and then with each other. Honesty and candor create trust; confidence. And trust creates loyalty.

    Individually your lives are good; sharing them together is better. Are you improving people’s lives, or selling them stuff?

    Work together to have and keep times of joy by giving to each other unselfishly. Through giving and loving comes a deeper understanding of your partner¾a unique person, a lifelong friend. Enjoying one another is the most rewarding aspect of your relationship. Feelings, not features! Experiences, not exchanges!

    "May your days be good and long upon the earth. It’s up to you."