Although the word “loyalty” can certainly refer to that powerful emotion of commitment described above, at most companies it's used instead to refer to a specific behavior—repeated transactions.
You might book the same airline every week because they fly where you need to go, or eat at the same coffee shop every day because it’s near your home. These companies consider you “loyal,” even though you may not feel loyalty for their brands. Nevertheless, you have your reasons for continuing to do business with them—to behave “loyally”—at least for now.
The term “customer loyalty” is also very often used in the context of loyalty programs—point-based accounts that give the customer “free stuff” if they engage in repeat transactions. Loyalty programs can be very effective. With limited exceptions, loyalty programs are really just a form of discounting. You pay $300 for a flight, but you get points back that are worth, perhaps, $25 toward future travel. Maybe you also get coupons for a couple of free drinks.
It’s a solid move to improve the value proposition in this way, but it’s really just a way to offer the customer a better deal. It may stimulate sales, but it’s transactional; it won’t send your customers back onto the battlefield to save your brand. In fact these “loyal” customers may not care about your brand at all.
So to me, the term “customer loyalty” is “taken” in business to mean the “frequent transactor.” We need to use a different term to refer to the emotional connection we would like to create in our customers. I call this feeling “customer love.”
You can’t buy love. But you can inspire it by ensuring that you follow The Customer Love Formula.
THE CUSTOMER LOVE FORMULA
What is this formula? We have studied hundreds of brands, some that are truly loved by customers, like Starbucks, Nike, Disney and Apple, and many who may be successful at driving transactions, but are not truly loved, like Citibank, AT&T, and American Airlines.