Loyalty trends & best practices

Direct Marketing News: Two Views of Customer Loyalty

by Julia Leyrer
December 30, 2015
Direct Marketing News: Two Views of Customer Loyalty

Direct Marketing News’ loyalty ebook, One Tough Question: Two Views of Customer Loyalty, featured the thoughts of Justin Yoshimura, CEO of 500friends, on two differing definitions of customer loyalty, and what marketers should do. You can download the full ebook here.

The question from Direct Marketing News:

One of the biggest challenges with customer loyalty is the often-conflicting definitions that marketers and customers have regarding loyalty. In grocery, for instance, customers who purchase bulk items monthly may consider themselves loyal; however, the grocer they buy from might not because—despite the regularity of their purchases—those customers aren’t buying their staples from that grocer. And buying staple items weekly is how that grocer defines loyalty. So, the question for marketers, then, is this: How should an organization best reward or recognize customers who see themselves as loyal, but aren’t in terms of how the company defines it? Or does the company not reward those customers, instead encouraging them to become loyal in the way it defines loyalty?

Justin Yoshimura, CEO of 500friends provides his advice:

The chasm between a customer’s and a marketer’s definition of loyalty is down to both a difference in the metric by which loyalty is measured, and a misalignment in the brand’s positioning. Once these differentials are clear, the marketer can use loyalty-based rewards to recognize such customers and align their behavior to the brand’s definition of loyalty.

Here’s how, for each circumstance:

  1. The difference in measurement is due to customers’ equating loyalty with spend instead of profitability. Ultimately, a customer will see themselves as loyal if they spend a large amount a few times or a small amount numerous times. Both are irrespective of the margin and profitability to the brand. The opportunity is to reward these customers in a way that incentivizes them to become more profitable at the same spend level. Many grocers, for example, attempt this today through couponing offers for higher-margin private label items to those customers who buy bulk brand-name items.

  2. The misalignment in brand positioning is due to customers’ view of the brand being more limited than its aspirational branding. In the example provided, the customer only purchases bulk products and not staples. That could be a result of how the customer sees the brand: a low-cost and bulk seller of groceries. This may differ with the marketer’s branding around convenience, access, and value; all of which are geared toward the purchase of staples and bulk goods. The opportunity here is to identify the relevant segment and target them with communications to reinforce the messaging around the brand’s desired positioning.


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