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The Loyalty Hierarchy of Needs

By Adam Sarner | June 19, 2013 | 2 Comments

Achieving true “loyalty” from customers means that you have created a feeling of affinity or true affection towards your brand and its products and services. It means that sometimes, even when data suggests they should do otherwise, customers choose your company over others. Not easy to do, nor is it something you can obtain solely by awarding points from an accrual and redemption engine. To obtain the holy grail of loyalty, that is, profitable long term customers and advocates (customers who buy from you and actually like you) there needs to be a loyalty hierarchy of needs, steps along the way (loyalty programs included) that build on each other towards true loyalty.

First steps: Promise me something that I need and deliver on it. Very basic, but mandatory. For example, an airline promising to take customers from point A to point B, safely (and perhaps on-time). Does this make customers loyal? Nope. It hasn’t for the airlines. However, if there is no value proposition and no customer satisfaction along with it, there is no loyalty. They paid, you delivered, they’re satisfied. There are others with a similar value proposition, and may even be able to do it more cheaply.

Next steps: Entice me, get to know me, and be make it easier to accomplish my needs. Here is where loyalty programs get useful. Think of these systems at best as a type of payoff (usually around a 2% discount) incenting a customer to keep on buying from you vs. others. Are they loyal now? Nope. You’re competing on price or another largely undifferentiated scheme your competition has enrolled their “members” in. The trick is to use the incentive to ask and gather information about their needs. Do they prefer self checkout? Which channels of communication do they prefer? Do they go on holiday the same time each year? Now’s the time to ask that information. Pre-populate the customers recurring point of origin on a travel site. Enable a mobile app to take a picture of a customer’s check saving a trip to the bank. Even newer digital marketing loyalty type techniques such as gamification and social can be used as incentives to start figuring out how to make it easier to accomplish their needs. You will be amazed how many expensive loyalty programs are disconnected to any sort of understanding and preference building and just sit there redeeming toasters.

Last Step: Be in-tune with my evolving needs. Armed with the preceding steps where you have customer satisfaction, incenting, learning and building trust (your doing something about preferences they share with you, right?) You are now in a position to start anticipating future needs. Here is where the love starts. Your continually understanding their preferences, your aligning their goals with your products and services, customers are exchanging more information because you’ve delivered on the preferences they’ve shared already, and they got value from them. Because of this, you recognize patterns and even start to anticipate needs. “Dear customer, it’s your wife’s birthday, you haven’t bought flowers, we took the liberty of arranging a last minute delivery in your area. Press here”. True loyalty even saves lives, ensuring long term relationships.

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  • Jason Miller says:

    Great post Adam, and very timely. I just finished reading Loyalty Rules by Frederick F. Reichheld. Seems to be one of the few classic books around loyalty, well the only one that had solid reviews for that matter.

    Jason Miller – Marketo

  • Steve Saenz says:

    Nice work, Adam. This is a topic that has been near and dear to my heart for many years. You might find this piece, which I first published back in the mid-1990s, interesting. In it, I introduced something called the “Principles of Client Advocacy.”