Loyalty courtesy BeyondPhilosophy

The Accurate Definition of Customer Loyalty

We’ve found many definitions of customer loyalty over the Internet. Blog articles, scholarly journal, and marketing tutorial websites, many of those, are discussing and defining the customer loyalty. Yet the accurate definition of customer loyalty is still in debate.

Here, we will promote the closest to the most accurate definition of customer loyalty. Our judgement based on readings and all references available in the Internet.

Frequency As Loyalty

Most of common people, and many of marketers reckon frequency as loyalty. Therefore, the definition of loyalty revolves around how often the customers make purchases, customer retention, and so on. The point is the more they purchase the more they’re classified as loyal customers.

Bobinski (2003) coined the term frequency program instead of loyalty program. The purpose is nothing else than keeping the customers returning. For example, buy one sandwich, get 50% discount off for the next purchase. We think that is the best explanation for frequency.

We agree that frequency is one of the variables of customer loyalty. But, we think it is not the best predictor whether a customer is genuinely loyal or not. There are more to dig.

Price Premium As Loyalty

Aaker (1996) argued that basic indicator of loyalty is when customer pay price premium. Price premium itself he defined as the amount a customer will pay for the brand in comparison with another brand offering similar benefits.

A good example of price premium is when business A sells lemon juice for $5 and its competitor nearby sells it for $4.5, the customer prefer to purchase from business A because the customer feel attached with the owner of the business. Very difficult to buy feeling right?

We think Aaker’s argument is very strong and reasonable. Compare with frequency as loyalty, customers who frequently purchased products from a store not necessarily loyal customers. It could be the price or discount drove them to purchase.

Advocacy As Loyalty

Customers become the advocate of the business. This kind of customer can be classified as loyal customer. Without paid by the company the customers are willing to market the product. They are spending their time to convince their friends, relatives, and strangers to buy the products.

Satisfaction is the main entry to build customers advocacy. Typically, customers were highly satisfied with the product and its quality exceeded the expectation. They become die hard fans because they have never found anything like they just consumed before.

Many times this is also positively correlated with the customers willingness to pay price premium. Therefore, we suggest pay premium and advocacy to become the primary predictors to measure loyalty and as a foundation to make more accurate definition about loyalty.

Reference

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