Is loyalty dead?


The world around us is changing - and it is changing fast. In 1958, Companies lasted on average 61 years. In 2012, companies' lifespans average only 18! Because of digitalization impacting almost every part of our lives, these changes are also happening at an exponential rate. At the Wednesday Relations Loyalty Conference in Stockholm the question whether or not loyalty is dead was raised. Considering the ever-continuing changes taking place around us, this is a valid question. Who wants to stay loyal to a product or service, or even a brand, when tomorrow everything has changed? Would you?

Market share is one aspect of the business most companies are fighting to increase constantly. According to Byron Sharp, market share of brands and industries highly correlates with market penetration rather than loyalty, which remains the same regardless of market share. Thus, companies should focus on recruiting new customers, instead of trying to increase buying frequency of their already established customer base. Hence the old adage “80% of your revenue comes from 20% of your customers” is taking a beating. However, customers buy what they like, not necessarily the best product. Liking comes from good customer experience with a product or brand. This experience should be our focus going forward.

Firstly we need to discuss how customers, all of us, think in relation to the brands we do business with. Initially, there is of course an evaluation of the rational benefits delivered to me by the products and/or services, after which more intangible emotional benefits are brought into mind. This is all good, and with the right data and analytics we, as a supplier, will be relevant and able to deliver in line with expectations, thus affecting the Customer Experience. Companies of tomorrow will need to take this a bit further though. According to speakers at the Wednesday Relations Loyalty Conference companies need to deliver a sense of contributing to a higher good as defined by the customers in order to stay top of mind. We see for instance “Toms shoes”, assisting education in developing countries, and “Not For Sale Ale”, addressing human trafficking, as examples of this.

Of great importance to the customer experience is showing that we, as suppliers, really do care and that we go to great lengths in trying to understand our customers and the issues they face. Companies that actually do make life easier for me as a customer will win my loyalty. A customer-centric approach has been discussed and implemented, for this reason, in just about all industries today. It is however my view that we are merely addressing symptoms, like customer churn and profitability for instance, and not the root causes behind these. Driving forces behind profitability should be disclosed and should be on our agenda. Basic reporting will not do more than give us a view of the status quo. If we want to change this we need to go beyond and disclose what the real problems are. 3 things needs to be put in place:

  • Data, online and offline in combination. Not just “big” data, but “right” data.
  • Analytics capable of seeing correlations to disclose and rank driving factors of our KPIs. We need insight into the root causes.
  • Means of deploying such insight in our customer facing processes as well as internal strategy making and product development.

Today’s emerging cadre of Data Scientists can give companies the insight sought after and will, given that they are listened to, help companies to stay relevant for their customers. It might be true that we should focus on recruiting customers but this holds true for both new and existing ones. We need to win our customers over and over again if the ongoing change in our industry is not to lure our customers away from us. True customer insight is crucial for this task.

Do you want to learn more? Please reach out to me! You might also want to have a deep dive into this ebook, were we provide the latest research on customer loyalty. You will learn how to get better insights about your customers and win them over with personalized marketing.



About Author


Advisory Business Solutions Manager - Customer Intelligence

Impressed by analytics and the value it can bring to a company. Developing company KPIs requires deep understanding as to driving factors behind that KPI. With such insight root causes, instead of symptoms, of a challenge can be addressed. My special field of interest is understanding customers and their behavior, both in order to communicate with relevance for a good customer experience as well as increasing a company’s profitability and further develop their business. Twitter: @ThomassonPeter Linkedin: E-Mail:

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