Organizations have an unhealthy obsession with Customer Loyalty.
Fact is, and I wrote about it before, that what we measure as loyalty is not even real loyalty. Loyalty, same as satisfaction, is a feeling, an emotion and it cannot be measured or repeated.
You can point me to the countless studies done that show correlation between loyalty and re-purchase, wallet-share, mind-share, upgrading, buying more and what not. All I see is a metric being tracked, and a established relationship between that metric and another one. Anyone with even a couple of classes in statistics would find it not that hard to do.
So, why do we chase Loyalty today? Why did we chase Customer Satisfaction three years ago?
We are looking for a magic, easy, short and simple solution to the most complicated question: how do we keep customers engaged and have them return for more?
The idea of having to segment our customers, determine what makes each segment march, and find a way to leverage that knowledge into a marketing, sales, and service campaign is just too much work to even think about it. It is simpler to believe there is a magic pill that will make it easy, and that it is our fault we cannot do it right — not the fact that the system may not work.
Chasing Loyalty, as with any other single-metric, is very wrong.
There is no method to know whether a specific customer will continue to do business with us or if they will increase their spending. There are different metrics that we can track and co-relate to each other, but that only reduces the amount of guessing involved.
The best way to measure Loyalty is to not measure it, worry about it, or be obsessed with its implementation.
Just segment your customer base, find the key metrics for each segment, the co-relation to corporate metrics, measure and repeat on a historical basis. The results may not be a “sexy” NPS score, but they will definitely be a good way to manage your business to success.