Why we should NOT depend on the loyalty of our customers to grow our business.
Before you completely disregard everything I am about to say, here is the disclaimer. I don’t think customers loyalty is bad or not important, I genuinely believe that only depending on the loyalty of our customers is a bad business strategy for growth.
Here is the truth, there is a difference between loyalty and repeat business.
Repeat business is someone buying your product or service more than once. As brands we tend to interpret this as loyalty, when in reality it might just be convenience for the customer.
Loyalty on the other hand is someone choosing to buy your products over the competition, even though it may even be better. Think why people get iPhones or Anroids, the often the competition has tools, which are better, but we do not switch phones very easily.
There is a difference between repeat business and loyalty.
Dave Ramsey said, “we are in the people business.” I am not in the jewellery business, textiles, or digital marketing, we are in the people business. At the end of the line there is always a person deciding to give us money for our services or not. We, humans, are very irrational. Therefore, cannot be depended on for being loyal for a very long time.
Want some proof?
Think of a brand you loved. You would buy a lot of their products, sometimes more than you actually needed, but today, not so much. Maybe you had a bad experience, maybe it isn’t “cool” anymore. Maybe, it moved from where you live, maybe you moved to a different part of the city, or an entirely new city.
This is how loyalty ends; slowly fading out.
“We are in the people business.” - Dave Ramsey
There are two factors which when change effect our loyalties towards brands.
1. Physical Changes
This is more to do with the fact that we value time over than anything else. If the store shifts from the neighbourhood, then trekking to another part of the city might be more difficult and therefore loyalties tested. We might relocate to another part of the city which doesn’t have the same brands we are used to. Anything that makes it physically more difficult to get in touch with the brand comes in this category.
2. Emotional Changes
We evolve, grow and continuously change. Things we were fascinated by growing up, may not be so exciting to us today. From music genres we listened to for hours, to the clothes we wear to work. If we get married, have children, our priorities also change. This category contains all the things that happen to us during our lives and therefore shift our loyalties towards a brand.
So now you are probably wondering, what should we as brands be focusing on if we cannot depend on the loyalty of our customers?
The answer is … (drum roll) innovation.
My favourite example is of the music industry. The music industry has evolved so many times in a short period. From the grammar phones to cassettes, cds, mp3 players and today we are in the streaming phase. Surprisingly, companies and brands which were leading the way in one product did not become the dominant force in the next. Brands which made cassettes were not the ones leading the way in the streaming of music.
One of the biggest learning from this is, we as brands get so obsessed with our own products, we forget what it means for our customers. No matter how big brands get, customers are the ones who decide its future.
We as brands have to realise, we don’t sell the product to our customers, but, sell the benefit our customers get by using our products. When we focus on the benefit to the customer, we have the capability to evolve with the desires of our customers.
People loved hearing music, and are not particular about the medium we used to hear our favourite songs. So when it got easier to listen to music from cassettes to mp3 players, we as customers shifted brands, which got us to our music faster. Companies which focused on the customers music experience evolved, sadly those only focused on making the product did not survive.
My mentor, Seth Godin, once said, “The safest thing you can do for your business is to take risks.”
We don’t sell our product to the customer, we sell the benefit our customers get by using our products.
The idea behind taking risks is not gambling our hard work away, but to keep the customers benefits from our product as the driving force behind innovation. Take the risk of delivering a better, quicker, benefit to the customer. Once we start focusing on the benefit, we will become amazing at attracting new customers. Resulting the in the growth of our brand, sometimes, far beyond what we ever imagined.
The only question remains is how are you innovating your business?
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