What is Customer Loyalty? Part 1

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Article on RAPID Loyalty Approach – click to download article

There seems to be a consensus among customer feedback professionals that business growth depends on improving customer loyalty. It appears, however, that there is little agreement in how they define and measure customer loyalty. In this and subsequent blog posts, I examine the concept of customer loyalty, presenting different definitions of this construct. I attempt to summarize their similarities and differences and present a definition of customer loyalty that is based on theory and practical measurement considerations.

The Different Faces of Customer Loyalty

There are many different definitions of customer loyalty. I did a search on Google using “customer loyalty definition” and found the following:

• Esteban Kolsky proposes two models of loyalty:  emotional and intellectual. In this approach, Kolsky posits that emotional loyalty is about how the customer feels about doing business with you and your products, “loves” what you do and could not even think of doing business with anybody else. Intellectual loyalty, on the other hand, is more transactionally-based where customers must justify doing business with you rather than someone else.
• Don Peppers talks about customer loyalty from two perspectives: attitudinal and behavioral. From Peppers’ perspective, attitudinal loyalty is no more than customer preference; behavioral loyalty, however, is concerned about actual behaviors regardless of the customers’ attitude or preference behind that behavior.
• Bruce Temkin proposed that customer loyalty equates to willingness to consider, trust and forgive.
• Customer Loyalty Institute states that customer loyalty is “all about attracting the right customer, getting them to buy, buy often, buy in higher quantities and bring you even more customers.”
• Beyond Philosophy states that customer loyalty is “the result of consistently positive emotional experience, physical attribute-based satisfaction and perceived value of an experience, which includes the product or services.” From this definition, it is unclear to me if they view customer loyalty as some “thing” or rather a process.
• Jim Novo defines customer loyalty in behavioral terms. Specifically, he states that customer loyalty, “describes the tendency of a customer to choose one business or product over another for a particular need.”

These definitions illustrate the ambiguity of the term, “customer loyalty.” Some people take an emotional/attitudinal approach to defining customer loyalty while others emphasize the behavioral aspect of customer loyalty. Still others define customer loyalty in process terms.

Emotional Loyalty

Customers can experience positive feelings about your company/brand. Kolsky uses the word, “love,” to describe this feeling of emotional loyalty. I think that Kolksy’s two models of customer loyalty (emotional and intellectual) are not really different types of loyalty. They simply reflect two ends of the same continuum. The feeling of “love” for the brand is one end of this continuum and the feeling of “indifference” is on the other end of this continuum.

Temkin’s model of customer loyalty is clearly emotional; he measures customer loyalty using questions about willingness to consider, trust and forgive, each representing positive feelings when someone “loves” a company.

Behavioral Loyalty

Customers can engage in positive behaviors toward the company/brand. Peppers believes what is important to companies is customer behavior, what customers do. That is, what matters to business is whether or not customers exhibit positive behaviors toward the company. Also, Novo’s definition is behavioral in nature as he emphasizes the word, “choose.” While loyalty behaviors can take different forms, they each benefit the company and brand in different ways.

Customer Loyalty as an Attribute about the Customers

To me (due perhaps to my training as a psychologist), customer loyalty is best conceptualized as an attribute about the customer. Customer loyalty is a quality, characteristic or thing about the customer that can be measured. Customers can either possess high levels of loyalty or they can posses low levels of loyalty, whether it be an attitude or behavior. While the process of managing customer relationships is important in understanding how to increase customer loyalty (Customer Loyalty Institute, Beyond Philosophy), it is different from customer loyalty.

Definition of Customer Loyalty

Considering the different conceptualizations of customer loyalty, I offer a definition of customer loyalty that incorporates prior definitions of customer loyalty:

Customer loyalty is the degree to which customers experience positive feelings for and exhibit positive behaviors toward a company/brand.

This definition reflects an attribute or characteristic about the customer that supports both attitudinal and behavioral components of loyalty. This definition of customer loyalty is left generally vague to reflect the different positive emotions (e.g., love, willingness to forgive, trust) and behaviors (e.g., buy, buy more often, stay) that customers can experience.

In an upcoming post, I will present research on the measurement of customer loyalty that will help clarify this definition. This research helps shed light on the meaning of customer loyalty and how businesses can benefit by taking a more rigorous approach to measuring customer loyalty.