What is false loyalty?

False loyalty, or the “nothing personal – only business” approach. False loyalty is involuntary behaviour. It means customers keep on buying at the same company, but it's not their genuine wish, and there are reasons for that: There are no other alternatives.

mycustomer.com - What is ""false"" customer loyalty - and why is it so dangerous? - MyCustomer

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In broad terms, we usually differentiate a “loyal client” from a “disloyal client” through the following criteria: “keeps on buying” vs “stops buying”. On the surface, this makes sense, because every loyal customer is always a regular one. However, not every regular customer is a loyal one; there’s a difference between loyal buyers and repeat buyers. What is the distinction? It is about the different motivations for continuing to make purchases with the same company. If we can understand these motivations, then we can distinguish "false" loyalty and "true" loyalty.

False loyalty, or the “nothing personal – only business” approach

False loyalty is involuntary behaviour. It means customers keep on buying at the same company, but it's not their genuine wish, and there are reasons for that: There are no other alternatives. It could be a monopolist market, or there are no easily available competitors, e.g. there is only one car service centre within an area. There are alternatives, but no significant differences between them. In this case customers are driven by reasons such as “near to me”, “fine for me”, “I got used to”, etc. It happens with commoditized products, e.g. groceries, telecom and internet providers, electricity, cleaning services, fitness studios, home appliances, etc. There are high switching costs. This is a situation where it is more reasonable not to change suppliers, even if the company underperforms. This is most typical in B2B, especially for IT services. Companies using outsourcing IT solutions can struggle to change providers due to the difficulties associated with ripping out all the integrated legacy technology. Customers don’t switch due to better prices, discounts or cash back campaigns. In this case it’s important to keep in mind the word “UNTIL”. Once your clients get a chance to buy the same for less money – there is a high probability they will dump you for a competitor with no regrets.

True loyalty, or the “something more than just a business” approach

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Unlike false loyalty, true loyalty is always a voluntary choice. But the question is: how does it differentiate from false loyalty? The key here is that customer attitudes are based on feelings toward the company, and not only on the rational reasons listed above. Of course, all customers have rational motivations to choose a company. But true loyalty is born when there is an additional emotional value. True loyal customers are not just buying, they are happy to buy from you – which is a big difference. Ask your customers to explain specifically why they have chosen you. If you hear words such as “fast”, “cheap”, and “fine”, you have identified your “false loyal” buyers. If, on the other hand, you hear something more detailed and specific about your company like “I like you most of all, because ….”, “You’re the best in doing this….”, “I remember how you helped me with …." – then you have identified your true loyal customers. Feedback will always contain emotive words such as “best”, “memorable”, “impressive”, “responsive”, “respectable”, etc. True loyal customers are not just buying, they are happy to buy from you – which is a big difference.

Why is it important to know if you have true loyal customers or false loyal customers?

So why is it so important to understand and differentiate between true and false loyal customers?

If you are able to identify which customers are true and which are false, it will protect you against sudden, unexpected departures. Companies that don't consider the difference, risk over-estimating their importance to customers: expecting them to remain customers longer than they perhaps will. Managers are often too focused on sales results to think about the customers’ experience in dealing with them, while other employees can be guilty of not finding out whether clients are dissatisfied with anything. False loyal customers are often silent – they almost never complain, because they think it’s futile.

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This is a big mistake, because false loyal customers are often silent – they almost never complain, because they think it’s futile. But one day, these silent customers could no longer be customers at all. So it's important that companies understand the difference between these two types of customers, and build relationships accordingly. They need to have an awareness and understanding that being “cheap” and “fine” is not enough; they need to find ways to create additional value to become outstanding.

How can help create true customer loyalty

This is where the importance of customer experience management comes into play.

Actually, this is the point where customer experience function begins. It causes the whole chain of further improvements, starting from customer satisfaction ( ) and estimation. Let’s remember how The most popular CX-quality estimating questions provide further evidence that true loyalty is worth thinking about:

Customer Satisfaction: ”How much are you satisfied with us?”

Both things – satisfaction and willingness to recommend – are emotional and perceptual, rather than rational and logical. And this is how the whole world estimates customers’ loyalty. No doubt, CSAT and NPS are not enough, as they are only the tip of the iceberg. There should be a serious data science approach behind any customer experience strategy, which enables the organisation to manage CX in an appropriate way. That being said, there is no denying that emotions are essential for any company that is looking to earn true customer loyalty. This article has been adapted from a piece that was originally posted by Anna on LinkedIn.

mycustomer.com - What is ""false"" customer loyalty - and why is it so dangerous? - MyCustomer

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