Customer loyalty

Give me Loyalty or give me death!!
By Paul Herbig

Does loyalty in a business relationship actually exist? Loyalty is something you give to your country, your family, your friends. It is an absolute willingness to do something that could be against your own best interest. In its most intense form, you give your life for your country or to save a member of your family. It is a principle of profound faith. What it isn't is a marketing term denoting a customer's commitment to a business. As the old axiom spouted by my old mentor goes, “When prices goes up, loyalty goes out.”

Loyalty doesn't have a bi-directional requirement, but the relationship between customers and a business demands that two-way street. In its simplest form, a customer relationship with business is a value exchange. As the business provides a level of value satisfactory to a customer, so the customer provides value in return to the business. The customer retains that commitment as long as the business continues to provide the expected value. But when you stop meeting the customer's expectations of value, that customer goes elsewhere.

Is your business actually loyal to its customers? Then why would you need algorithms for customer lifetime value? Customer profitability shouldn't matter to a company that is loyal to the person, rather than to the long-term revenue potential of that possibly committed customer. Should it? Are your customers loyal to you? The expected churn rate for the telco industry is 77 million customers moving on to other telcos. Know how the telcos are going to deal with it? Not find out who have been the most committed customers with weakening ties, but who the most profitable customers with weakening ties are so they can try to manage the churn and keep those profitable customers.

But, you say, these things happen in business. Exactly. This is why there
is no such thing as customer loyalty. Business practice demands that customers be valued for their profitability and revenue possibilities, not for their emotional commitments to you or vice versa .So, CRM folks and aspiring English majors, get your language straight. Let's not denigrate loyalty with the needs of business. Call it customer commitment if you want, but business value exchanges don't equate with a deeply
held, deeply felt fundamental principle for country, friends, and family.
If you think they do, then I'd recommend a prenup. After all, "till death
do us part" is a business proposition, right?










The concept of loyalty, especially brand loyalty is misunderstood by many marketers. The love marketers have for specific demographics (particularly the young 18-30 group) is based upon the theory that once a person becomes brand loyal, that person is brand loyal for rest of their entire life. This is also why, marketers have taken to themselves to begin the marketing process with children, some even preschool age. They believe a form of indocrination: once smitten with my brand, no matter what my age, they will be forever brand loyal.

But that is not how life operates. A pre-teen girl could be in love with Barbie and American Girl. However, once she becomes a teenager, she overthrows her dolls for boys. As a pre-teen or tween, she might readily wear clothing that Hannah Montana or her other favorite shows might suggest. However, as an adolescent teen, she turns to Aeropostale or Hilfinger, whatever the current fad is by her social group. And when she goes to College, she changes again. After college with a career, she turns in her jeans and tees for more fashionable clothes. As she marries and has a family, she once again makes a change. And so forth until her apparel at the nursing home or retirement facility is a far cry what she started out decades ago.

Loyalty is not a one time affair. It must be constantly won and rewon. Never take a consumer for granted. Many have done so and have ended up on the scrapheap of history for doing so.


Paul Herbig is the Managing Partner of Herbig Marketing Associates, (www.herbigandsons.com) a nationally renown marketing consulting company and former Professor Marketing and Dean, Ketner School of Business for Tri-State University. He can be contacted at mktgandme@aol.com.