{"id":8109,"date":"2013-02-21T00:05:51","date_gmt":"2013-02-21T00:05:51","guid":{"rendered":"http:\/\/www.beyondphilosophy.com\/?p=8109"},"modified":"2019-10-07T08:14:55","modified_gmt":"2019-10-07T12:14:55","slug":"why-customer-loyalty-customer-sacrifice","status":"publish","type":"post","link":"https:\/\/beyondphilosophy.com\/why-customer-loyalty-customer-sacrifice\/","title":{"rendered":"Why Customer Loyalty = Customer Sacrifice"},"content":{"rendered":"
\"Why<\/a>

Loyalty equal sacrifice<\/p><\/div>\n

With all the talk around customer loyalty<\/a> over the years, I have been asked several times recently for whatever reason, what customer loyalty is and how does one know when they have it.\u00a0 The answer is simple.\u00a0 You don\u2019t have loyalty unless the customer is \u201chappy\u201d to make a sacrifice to do business with you in the face of \u201cbetter\u201d options in the customer\u2019s own mind.\u00a0 The more sacrifice the customer happily makes, the greater the loyalty.\u00a0 Tenure is not necessarily loyalty. Often it is not.\u00a0 Tenure of course can be the result of loyalty but it is often the result of having too high a cost of switching to a competitor or contractual lock-in.<\/p>\n

So, is the difference between tenure and loyalty a conceptual one only?\u00a0 Aren\u2019t most businesses really interested in customer longevity as that implies repeat purchases and hence increased revenue or lifetime value?\u00a0 Perhaps this would be true if the competitive landscape were constant.\u00a0 In such a situation a customer\u2019s choice at one point would be their choice at any point.\u00a0 However, in the real world, customers are presented with choice.\u00a0 Businesses that pay attention to simple tenure to the detriment of sacrificial loyalty will underestimate the risk they face when their competitive position or landscape changes.\u00a0 Customers churn when they perceive a better deal (i.e., some better combination of price, speed, and quality) elsewhere where the cost of switching is not too high.<\/p>\n

One solution is to create a business model that increases the cost of switching.\u00a0 This method forces tenure upon the customer.\u00a0 This is a lock-in strategy, not an opt-in one.\u00a0 Again, this is great until there is a competitive shift in the market.\u00a0 As soon as customers perceive a real alternative opportunity, they bolt.\u00a0 Businesses that pay attention to loyalty minimise the risk of churn during downturns as they will have invested to make customers willing to ride out the storm with them.<\/p>\n

Any business can establish competitive advantage by being better, faster or cheaper.\u00a0 Successful businesses generally get that way by offering any two at a time.\u00a0 The third benefit is the premium the customer pays:<\/p>\n