What Makes a Shopper Loyal?

Talk about a complex question!

In fact, if you flip the question and ask what makes a loyal shopper, you would end up with two very different answers! We asked ChatGPT and confirmed that (see side bar What does the Chat Say?). Not that ChatGPT has the final word on anything!

Perhaps an even better question, however, is, “Is there even such a thing as loyalty today?”[1]

Loyalty means giving or showing “Firm, constant support or allegiance to a person or institution.” In marketing, many apply this term to “brands.”

“Constant” is a tough adjective. It means over a period of time. Or, something that doesn’t change.

As far as I know, there are only a couple of constants in nature (the speed of light is one of them, and Planck’s constant the other). Besides, what is the “period of time?” A year? Two? A few seconds?

Since nothing lasts forever, we have to include “loyalty” as part of the nothing. So, loyalty by definition isn’t “constant.” It ebbs and flows.

Therefore, if you are going to study loyalty, you should study tides.

Tides and Loyalty

Tides are a reliable phenomena in our world. Tides are very long waves that move through the ocean. This “movement” is a response to forces exerted by outside stimuli, in this case, by the moon and sun.

Tides start in the ocean and move toward coastlines where they appear as the regular rising and falling of the sea’s surface.

The sea in this analogy is loyalty. It is a “reliable phenomenon” coming from forces exerted outside itself – things like pricing, product performance, a brand itself, and other “moon-and-sun” factors.

Loyalty, like the ocean, ebbs and flows.

A stimulus for loyalty can also be a person, an idea, a spiff, almost anything.

Tides themselves have a range: from high tide (crest), to low (trough) and everything in between. Loyalty follows a similar pattern, especially in purchasing behavior.

So the “constant” in terms of loyalty is not loyalty itself (which in purchasing is the purchase of a product itself), but the MOVEMENT of loyalty.

Simply, loyalty is NOT constant.

To keep loyalty at its crest, something significant in the stimulus has to be present. That “something” is sometimes buried deep within a person’s belief system. Other times, it’s a change in the price or a coupon that can change the tide’s (and hence loyalty’s)direction.

Therefore, if all shoppers eventually switch their loyalty[2], what we should study (in order to answer our original questions) are the types of stimuli that make a shopper loyal or a loyal shopper. What drives the tide of loyalty?

What will make the shopper switch, if anything? Or, what will make a shopper crest or trough their loyalty? Does loyalty transcend certain stimuli?

It seems that the purchase of a product is what people have historically used as a basis of demonstrating talking about loyalty. The more purchases, the more loyalty. Or at least that is how the analysts have seen it.

But purchasing a product is not really measuring loyalty, is it?

The more important investigation has to be about WHY loyalty moves, or is it, in fact, the purchasing behavior that changes which may or may not have nothing to do with loyalty.

Mistaken Loyalty

In Mistakes, I asked a series of questions: What do you do when you make a mistake? Do you fess up and admit it as fast as you can? Run away?

If marketers have made a mistake in associating loyalty with purchasing behavior, what should they do?

Mistakes are a chance to show your best.

In the Mistakes, I told a story about what happened when I took a client to lunch and ordered a couple of beef sandwiches. I had previously frequented the restaurant each week, sometimes twice a week. I was “loyal.” But after the client lunch incident happened, I never went back again. My loyalty ebbed.

Decisions like that happen every day. They also happen in reverse; that is, something happens that increases loyalty.

The actions of companies and their products control the flow of loyalty. But the study of these stimuli is difficult, some would argue impossible.

Which is why purchasing a product based on price doesn’t necessarily make a customer loyal.

In fact, you can argue that price is what convince a person to switch their purchase even if they feel loyal to a specific brand but still buy the one “on sale.”[3]

It seems that a study of loyalty is really different than the study of purchasing behavior. Is one better to study than the other?

Where is the Love?

In 2015, Kevin Roberts, the Executive Chairman of Saatchi & Saatchi, one of the top agencies in the world at the time, produced a “red” paper about brand loyalty.

Roberts’ credentials are unmatched. The red paper is called “Brand Loyalty Reloaded” and it is highly recommended reading. The essential thought behind loyalty is what he called Lovemarks (something they invented), and the concept  was disarmingly simple:

Take a brand away and people will find a replacement.

Take a Lovemark away and people will protest.

In other words, Love is one powerful emotion. Emotions like love (and loyalty) are very elusive when trying to quantify using language. Which is what Roberts tried to do in one word: Lovemarks.

In particular, “Lovemarks proposes that mastering the emotional dimensions of marketing is by far the most important requisite of an enterprising life in business” he wrote in his paper. “Lovemarks go beyond rational factors into the emotional territory of Mystery, Sensuality and Intimacy.”

But do consumers really love products? I mean, really? Why would you buy Alexander McQueen sneakers rather than Sketchers? There are some people reading this who never heard of McQueen. There are some people reading this who wouldn’t buy anything else.

One might argue that both sets of buyers are “loyal” to their brand.

The same argument can be made of ANY brand, which is why Roberts’ paper is so interesting. Emotions can certainly play an important role in any purchase, but there are probably more purchases that don’t involve emotion at all, but rather, habit.

The product-shopper relationship has always been interesting and much studied. But, if you start with the premise that all shoppers are yours to lose, it makes understanding “loyal” easier. In other words, the product gives you the reason to be loyal, or not. And the stimuli around the product helps the loyalty ebb and flow.

Loyalty Programs

Loyalty programs, like loyalty itself, are often misunderstood. They were created to foster loyalty, but do they?

In The Evolving Art of Luxury Experiential Retail,” the author writes, “Luxury shoppers are most interested in technology that provides clear benefits, like loyalty programs and free amenities (which can be used to capture CRM data).”[4]

The most important stimuli that drives loyal shoppers or creates shopper loyalty is what is called the customer experience. That experience, which includes perks when you are involved in a loyalty program (i.e., cash back, discounts on next purchase, etc.)  is AROUND the product, and hence, outside of the product itself.[5]

In other words, the quality of the product has to be a given: the McQueen or Skechers sneaker has to be, well, a quality shoe. After that, it’s the way the sneakers make you feel that determines loyalty.

Loyalty Programs are an incentive. These programs – and everything AROUND, UNDER, NEAR, OVER, etc. the product – are in what analysts call the “path to purchase.” Of course, the usage of the product counts, but its usage is only one aspect of the “customer experience.”

What is a Customer Experience?

Accountability Information Management, Inc. is a B2B research company cited in this research. In What is a Brand, the company posted an explanation of the “experience” — what a brand conveys beyond the product itself.

Shoppers therefore who display the trait of loyalty, do so beyond the product itself. Think about this:

“Virtually all retailers (98%) say that building relationships with their existing customers is key to success in today’s challenging economic times. Unfortunately, only 39% say they can confidently identify who their best shoppers are – which is absolutely paramount to building any such relationship. At the same time, only 36% of retailers have assigned a single owner to oversee the overall customer experience, and customers feel that lack of accountability.”[6]

Looks like someone dropped the ball, doesn’t it?

As it turns out, a customer has a “relationship” with a brand, but that relationship (like all relationships) is comprised of many variables. Indeed, relationships are even more complex than anyone can imagine. Retailers carry brands, but they are also brands themselves, so does shopper loyalty extend to the retailer as well as the brands they carry? When things go south, does the consumer blame the store or the product manufacturer?

If “loyal” encompasses EVERYTHING around the product, the answer is a firm “yes!” The consumer blames both.

Since loyalty is based entirely on the feelings of the shopper, then the provider of the product shapes those feelings. The provider is the manufacturer, retailer, or anyone in the path to purchase.

From the outset, the customer’s feelings are always positive if loyalty is involved. The person doing the purchasing has a concept of how the product will perform, and has purchased it in the past. Anything that changes this perception changes the loyalty.

Think of it as a scale with 100 one-pound weights on it. Anything negative in the experience removes one pound. Loyalty keeps getting lighter and lighter. If a positive occurs, one pound is added back.

This back and forth tidal action is what happens in every purchase made by every consumer each time it is made. And this is why a purchase is never the same. Amazon, however, has made the experience as much of “the same” as a company can make it. Painless.

Feelings are intangible.

Feelings are emotional responses brought on by a stimulus. Unfortunately, feelings are intangible. Attempts to quantify feelings always fall short because of their intangibility[7].

In purchasing a product (and hence, loyalty itself), the customer will actually go through a range of emotional responses (feelings) which start positive (excitement, comfort, etc.) which may turn to negative (i.e., confusion, anger, unhappiness, frustration).

Therefore, it is really providers of the customer experience who, in all cases, have the power to shape experiences of the customer. A successful customer encounter has to transform any negative feelings into positive feelings and keep the positive, positive.

Path to Excellence

The path to purchase is riddled with its own, separate obstacles that produce more feelings beyond the initial one, including but not limited to: 1) communication issues (language and technical), 2) inability to resolve issues (lack of knowledge), 3) attitudes of the customer-service provider and customer (personality traits), 4) temperament of the customer and service provider.

Exact measurements of customer service or that path, therefore, are extremely complex because of the feelings involved; such measurements are probably impossible simply because of this complexity in the communications path itself.

However, as stated, the measurement of any customer experience is the customer’s “feeling” once the experience is concluded. The customer will either be satisfied or not satisfied based on the outcome of the encounter, and that satisfaction will produce ranges of emotional responses (i.e., happiness, hate, etc.).

Therefore, a careful study of the words that customers use in their customer exchanges can result in clues to achieving customer excellence and loyalty.

Loyalty = Service

 Sellers of services face different problems than sellers of goods. When a seller of goods provides customer service, that seller becomes a seller of services. In other words, a manufacturer transforms itself into such a seller of services, using the services as a key component in building loyalty BEYOND the product itself.

Think about this: 49% of consumers have left a brand in the past year due to a poor customer experience.[8]

We live in a world of omni-channel marketing – where everything reflects on everything else. Thus, a poor retailer experience with your product and a consumer will reflect back on you.

Likewise, an excellent customer interaction will reflect positively on you.

Both can either build or destroy loyalty (the tide effect).

In other research, over 4 out of 5 respondents will leave a brand to which they are loyal after three or fewer instances of a poor Customer Experience (and about 1 in 5 after only one instance).[9]

Despite the proliferation of self-service options, phone-based customer support remains the most popular and critical customer service channel for brands, according to the 2020 CallMiner Churn Index[10]. That company also found consumer reliance on phone-based customer support increased by 17% since 2018.

And yet, how terrible are most phone interactions?

Consumers named “previous good Customer Experiences with the brand” and “speed of availability/delivery” as their top two criteria when considering a new purchase. (Emplifi)

Many factors affect brand loyalty according to numerous studies. These factors include: 1) perceived service quality/status, 2) costs, switching costs, 3) situational factors, 4) perceived value, 5) satisfaction, 6) commitment, and 7) trust[11]. Brand loyalty is studied in many areas.

Still other studies have documented how brands get dropped. When COVID-19 caused supply-chain disruptions, and when consumers couldn’t find their preferred product at a preferred retailer, “they changed their shopping behavior: many consumers have tried a different brand or shopped at a different retailer during the crisis.”[12] They found that value, availability, and quality were the main drivers for consumers trying a different brand.

Our belief is that the opportunity to increase a brand’s already strong loyalty is through the customer service channel.

Every encounter is an opportunity to “show your best.” The more you train customer service representatives, sales associates, retailer sellers and so on, in dealing with consumers, the more you increase the commitment to loyalty that your customers may already feel for your brand.

Research done by others has shown the following as important implications for our own research and such a framework.

1. Service providers have the ability to create stronger loyalty bonds with their clients than do suppliers of more tangible goods. When a manufacturer handles a service call on their products, they become a service provider and thus, can create an even stronger loyalty bond than with their highly successful products. Amazon, who is a distributor, knows this well. They will step in regardless of the manufacturer and “fix” the issue.
2. Since loyalty is greater or more prevalent among service consumers than among goods consumers, every time a manufacturer can service a product, the manufacturer becomes a service provider!
3. Services provide more opportunities for person-to-person interactions. When your products are sold through retailers, it is the retailer that benefits from the interaction with the consumer. Servicing those products interrupts the retailer relationship with your own direct-to-the-consumer interaction.
4. Perceived risk is often greater when purchasing services than goods, providing an atmosphere more likely to lead to customer loyalty since loyalty is often used as a risk-reducing device. That is because of the intangibility of “service” due to the “feelings” as discussed earlier.
5. With some services, switching between providers may involve certain barriers not present with brand switching for goods. This presents a unique opportunity for consideration by the manufacturer: servicing other-than-your-own products with your products as their replacement.

So, the real problem is that this journey or path-to-purchase is that it must be perfect every time a purchase is made! And afterward as well[13].

One moment of weakness and everything is lost, as the philosopher said.

Therefore, manufacturers have to use every means in their power to maintain the customer experience and thus enhance a loyal shopper, or shopper loyalty. Good luck with that.

SIDE BAR

What Does the Chat Say?

Here is what Chat GPT said when we asked the question in two different ways.

What makes a shopper loyal?

There are several factors that can contribute to shopper loyalty, including:

1. Quality products: Shoppers are more likely to be loyal to a brand or retailer if they consistently offer high-quality products that meet or exceed their expectations.
2. Convenience: Shoppers value convenience, and brands that make it easy for them to find and purchase products are more likely to inspire loyalty.
3. Personalization: Shoppers appreciate brands that offer personalized experiences, whether it’s through tailored product recommendations, customized offers, or personalized communications.
4. Customer service: Brands that offer excellent customer service, such as responsive support and hassle-free returns, are more likely to inspire loyalty.
5. Trustworthiness: Shoppers are more likely to be loyal to brands they trust, and brands can build trust by being transparent, honest, and ethical in their business practices.
6. Emotional connection: Shoppers may also be loyal to brands that evoke positive emotions, such as happiness, nostalgia, or a sense of belonging.

Ultimately, loyalty is built on a combination of all these factors, and brands that can deliver on multiple fronts are more likely to inspire long-term loyalty from their shoppers.

What makes a loyal shopper?

A loyal shopper is someone who consistently chooses to purchase from a particular brand or retailer, even when other options are available. There are several characteristics that can make a shopper loyal:

1. Repeat purchases: Loyal shoppers are those who make repeat purchases from a brand or retailer over time.
2. Advocacy: Loyal shoppers are often advocates for the brand or retailer, recommending it to friends and family, and leaving positive reviews or ratings.
3. Higher spend: Loyal shoppers tend to spend more than occasional customers, as they trust the brand or retailer and are willing to pay a premium for their products.
4. Emotional attachment: Loyal shoppers may have an emotional attachment to the brand or retailer, perhaps due to positive past experiences, shared values, or a sense of community.
5. Forgiveness: Loyal shoppers are often forgiving of occasional missteps or mistakes by the brand or retailer, as they have built up a level of trust over time.
6. Resistance to competitors: Loyal shoppers are less likely to be swayed by competitors or promotions from other brands, as they have a strong preference for the brand or retailer they are loyal to.

In general, loyal shoppers have a strong connection to the brand or retailer, and are willing to invest their time, money, and advocacy into maintaining that connection.

While similar in some ways, how you answer these questions will ultimately determine if you are studying purchasing behavior, or loyalty, two very different things.

______________________________

[1] We asked the Chat and it responded this way: “Yes, there is still such a thing as loyalty today, although it may look different than it did in the past. With the rise of e-commerce and social media, shoppers have more options than ever before, and it’s easier for them to compare prices and products across multiple brands and retailers. This means that brands need to work harder than ever to inspire loyalty and retain their customers. However, research suggests that loyalty is still important to shoppers. According to a survey by Accenture, 63% of consumers say they are more likely to purchase from brands they consider to be loyal to their customers, and 77% say they stay with brands that consistently meet their expectations. Additionally, a study by Edelman found that 57% of consumers say they are loyal to their favorite brands, and that loyalty is driven by factors such as trust, value, and personalization. While loyalty may be harder to achieve in today’s competitive marketplace, it is still possible for brands to inspire and maintain loyalty among their customers. Brands that focus on building trust, delivering value, and providing personalized experiences are more likely to inspire loyalty and retain their customers over the long term.” Well, that’s a real interesting answer, but what does it really say? How DOES loyalty look different than in the past? This is typical of the Chat…citing what it knows, but leaving some big gaps in the answer. See my blog on using Chat to build a business strategy.

[2] In the late 70s, Tareyton introduced a light cigarette brand with the copy “Tareyton Smokers Would Rather Fight than Switch.” So loyalty has always been about the study of movement, how to keep it, why it is lost, etc.

[3] In research conducted by Accountability Information Management, Inc. (AIM), during COVID they found many interesting facts about loyalty and price. But the main was availability. People inevitably would purchase based on availability more than anything else, including “devotion” to a brand. There were exceptions. For one product they studied, the individual said that if it was a choice between owning the product or a Tesla, he would always choose the product. What was that product? Email me and I’ll tell you.

[4] The Evolving Art of Luxury Experiential Retail, BoF, April 2023

[5] In “The Human Side of the Spiff,” I argued against an editorial that said spiffs didn’t really work. It is recommended reading, because it brought in the “human” side of spiffing.

[6] What Makes An Excellent Customer Experience? Customers And Retailers Weigh In: A 360 Degree Benchmark Report from the Retail Systems Research by Brian Kilcourse and Steve Rowen, Managing Partners February 2023 Retail Systems Research.

[7] A doctor will ask you to measure pain on a scale of 1 to 10, but what does that really tell you about “pain?”

[8] Emplifi provides brands with insights needed to empathize with customers and amplify the right experiences. Our unified CX platform empowers brands to meet the fast-changing customer expectations across marketing, commerce, and care touchpoints.

[9] 2017 State of Global Customer Service Report by Microsoft provided a number of additional insights, including: 1)54% of respondents say they have higher expectations for customer service today than they had one year ago. This number jumps to 66% for the 18–34-year-olds surveyed; 2) 72% of respondents expect agents to already know who they are, what they’ve purchased and have insight into their previous engagements; 3)96% of our respondents say customer service plays a role in their choice of and loyalty to a brand; and, 4) 90% of our respondents say they expect brands and organizations to offer an online portal for self-service. And when customers are not able to resolve issues on their own, over half of all respondents say it’s because there is too little information online.

[10] CallMiner provides omnichannel contact center software. They claim the industry’s most comprehensive platform for customer conversation analytics, making it possible to capture and analyze 100% of customer conversations across all channels.

[11] (Cheng, 2011; Dick & Basu, 1994; Duffy, 2003; Ha & John, 2010; Habib & Aslam, 2014; Lee & Cunningham, 2001; Kussik, 2007; Tepeci, 2015; Yang & Peterson, 2004).

[12] Perspectives on retail and consumer goods is written by experts and practitioners in McKinsey & Company’s Retail and Consumer Goods practices, along with other McKinsey colleagues.

[13] Beauty retailer Sephora ensures its 25,000 in-store sales associates (Beauty Advisors) are fully trained and equipped with technology to enrich customer visits. ‘The Skin Diagnostic’ allows staff to diagnose customer requirements via a smartphone and recommend a personalised care routine, while the ‘MCIQ’ is a makeup tool that uses AI to enable foundation matching against a dataset of more than 10,000 skin tones