This post was originally published on AlignMINT Growth Strategies. Ali Cudby is the Founder and CEO of Alignmint Growth Strategies, a consulting firm that specializes in strategies and tactics for post-sales customer retention and growth. (It’s spelled AlignMINT because once a mint plant is established, it grows like crazy - much like clients’ outcomes using Ali’s services) Ali’s expertise has served Fortune 500 corporations and startups alike. She is also the author of the #1 best selling book on customer retention, Keep Your Customers.
You may wonder how there can be three types of customer loyalty, and the reality is that all loyal customers are not created equal. If you don’t understand the difference between those groups, your company can end up chasing the wrong kinds of customers, which can waste time and money.
Just in case you’re not sure why loyalty matters, here’s a quick overview. The best kinds of loyal customers are the ones who feel connected to your company. That means they are inclined to spend more with you, stick around longer and refer additional customers to your company. There’s lots of good info about customer loyalty on the Alignmint website. It’s also a topic that gets a lot of attention in our Alignmint founders’ #1 bestselling book, Keep Your Customers by Ali Cudby.
The Three Types Of Loyalty
There’s a key reason why it’s important to understand the differences between the three types of loyalty. Namely, your loyal customers don’t behave in the same ways. They have different motivations. If you focus too much on the wrong kinds of loyal customers, you might develop products and services that don’t serve your path to growth. In fact, listening to the wrong kinds of customers can distract your team and take you away from your growth path.
Assuming you’re convinced that those lucrative, loyal customers are desirable for your business, let’s break down the three types of loyalty.
Let’s jump into the specifics of the three types of loyalty. These three types are: Lazy Loyalty, Limited Loyalty and Lucrative Loyalty.
The Lazy Type Of Customer Loyalty
Let’s say you have a customer who buys from you again and again. You might think that’s a loyal customer, right? After all, they keep buying.
A repeat buyer is one identifier of a loyal customer, but only true, lucrative loyalty if additional characteristics are also present.
Here’s an example:
For a while, I worked in New York City and commuted via the Subway to Times Square. Every morning, I got coffee from the same coffee cart. Five days a week. After a few years of regular purchasing, I got a new job. I still commuted to the Times Square station, and I still used the same exit. But instead of turning West, I walked East to my office. I never went back to that coffee cart again and never gave it a second thought.
I was happy to be his customer, and then perfectly happy to stop. That’s a prime example of lazy loyalty.
No matter how much marketing that coffee cart guy did, I wouldn’t have been motivated to go out of my way – even by a small amount – to get my morning coffee. Imagine if he had developed new coffee options with me in mind – I wouldn’t have cared.
To be clear, I was a good customer. He had every reason to treat me well. But I was purely a convenience customer. A Lazy Loyal.
Know who your lazy loyals are so you give them a good experience without letting them divert your company’s focus.
The Type Of Customer Loyalty That’s Limited
Some customers might be inclined toward loyalty, but they haven’t quite decided to commit to your company. Those “convince me” customers have limited loyalty.
Sometimes Limited Loyals are new to your company. They’re open to becoming loyal but need your company to deliver an excellent customer experience before they’re willing to commit. After all, loyalty can be a two-way street.
Other times, there’s a type of customer loyalty that’s due to external factors. For example, a customer may choose a brand of hotels or an airline because they’re loyal to the rewards they receive from being a customer.
When it comes to Limited Loyalty, your company has an opportunity to convert that customer to a deeper relationship. That’s why the Limited Loyal is the “convince me” customer. It’s important to listen to those customers and understand what motivates them so that you can offer them promotions and new products that move the needle for them.
What Are The Best Types Of Customer Loyalty?
Customers who embody the best types of customer loyalty are the high-value Lucrative Loyals. These customers feel engaged and connected to your company. They exhibit those all-important characteristics of dedication to your brand.
Lucrative Loyals spend more, stay longer as customers, and refer additional new customers to you. That’s a power-packed trifecta!
And that’s exactly why you want to identify your Lucrative Loyals. The more effectively you identify those types of loyal customers, the better you’ll be able to speak their language. Knowing how to communicate effectively to those customers means you can cut through the noise and grab their attention.
Truly understanding your Lucrative Loyals also allows you to prioritize their needs for product development. It helps guide your company’s decisions in ways that give you the know-how to grow.