It Takes More Than Repeat Business To Create Loyalty

Driving loyalty is very different from driving repeat sales. There are always reasons people will do business with you that have nothing to do with you -- timing, price, convenience, lesser of evils and force of habit are just a few. These things can help influence an initial sale and they can influence repeat business, but they do not influence loyalty. Just because someone buys from you over and over does not make them loyal.

Loyalty exists when an existing customer chooses to do business with you even when a cheaper, more convenient or even higher quality option is on offer from another company. Someone's decision to ignore a sale or promotion of another seems like irrational behavior. And that's because it is. The part of the brain that controls decision-making and behavior exists in the same part of the brain that controls feelings and emotions. The part of the brain that controls rational thought does not, in fact, control behavior. Someone's decision to stick with one company in the face of overwhelming rational proof of a better offer has more to do with the buyer than the seller. Loyalty is, in fact, not rational at all but a highly emotional state.

Lets look at Apple, for example. Well known for having a fiercely loyal customer base, the base model Macintosh laptop, the MacBook, starts at $1099. A Dell laptop with equivalent performance specs is $649. The Apple is 40% more expensive! And if you're willing to have a slightly smaller hard drive than the Mac, the cost for the Dell is only $499 - less than half the price! Everyone knows that Apples have less software available for them and fewer peripheral choices. And as a recent Mac convert, I can report that my decked out MacBook is slower than my old mid-level Dell. The decision to buy an Apple the first time is clearly far from rational. But the decision to remain loyal is a deeply personal and emotional decision. Owning a Dell says nothing about who I believe I am. But owning a Mac accurately reflects my self identity.

This means loyalty is more a factor of a company's ability to express a clear and honest sense of why they exist and what they believe about the world than simply the quality of what they do or make. The clearer that belief, the more attractive the company is to those with similar beliefs.

Apple is a company not built around a product -- it's build around a belief -- the desire to challenge the status quo. It is no accident that creative-types are drawn to the machines. Apple's ability to attract such a loyal customer base has less to do with their products and their "rational" benefits, and more to do with what the company stands for. Like a flag a loyal soldier follows into battle, Apple and their products stand as a symbol for a cause worth making sacrifices -- like paying a higher price.

My favorite example of loyalty is Harley-Davidson. There are people who tattoo Harley's logo on their bodies. Some who do don't even own their product. The decision to do such a thing -- clearly irrational -- has nothing to do with the quality of Harley bikes or their value as a company. Someone's decision to display that logo on their body is a symbol of a belief. They identify as independents in a world of conformity. Members of the rugged open-road.

Because loyalty is emotional and not rational, you don't actually need to have the best product or service - it needs to be good, but it doesn't have to be the best. Loyalty starts with clarity - your own clarity of what you believe - why you do what you do. This has nothing to do with money, this is about why your company was founded in the first place. Why does it exists? What do you stand for? If others believe what you believe, they will put up with all kinds of better offers to do business with you.

A company's challenge is to never veer from saying and doing the things they actually believe. The discipline to do so is called authenticity, and there aren't too many companies left who can claim to be truly authentic. Fickle customers are not the reason there is such little loyalty these days. It's hard for someone to be loyal when no one knows what you believe.

This article originally appeared on The Huffington Post on June 1st, 2008

Comments

[Matthew Weiss]

Outstanding piece! I am already quite familiar with Simon's Why concept but this article clearly and easily sets forth its virtues. Well done.