Why Customer Loyalty Is Not Determined by What the Organization Sells

Why customer loyalty is not determined by what the organization sells. Why do people buy from one organization over and over again?

Is it because they:

  • ‘love’ the business?
  • love their commitment to sustainability and the environment?
  • love the way they support the communities in which they operate?
  • love the products and services they offer?
  • deliver consistent high levels of financial return to investors?

In a generic sense, the question really is: “Are customers loyal to an organization because of what they deliver — i.e. output related— or because of the way they deliver it — i.e. process related?

Output or process: which is the determinant of customer loyalty?

I don’t see much differentiation among businesses in terms of what they produce. If you’re in the communications business, you’re going to have internet and home phone service in your product portfolio.

If you’re in the financial business you’re likely to offer essentially the same financial products such as basic savings, retirement savings, and education savings accounts as well as other products such as term deposits and investment vehicles.

I’ve written much about the fact that even though competition is fierce and growing relentlessly in global markets, differences among competitors that are both meaningful and compelling to customers are shrinking and are becoming less and less obvious.

Increasing competition is ironically resulting in less meaningful differences among combatants.

It’s a surprising result.

You would think that as competitive forces escalate, a business would get better at creating a sustainable competitive advantage in the markets they compete in.

But they’re not. My observation is that every participant basically looks the same and they all exist to produce something for the masses, using price to attempt to separate themselves from the crowded mob around them.

And generally, production-oriented, mass motivated and price focused organizations tend not to be a huge loyalty magnet; customers come and go based on short term satisfaction.

Sustainable loyalty actually has little to do with what is produced by a business; rather it is a process-based phenomenon with people as the nucleus.

People buy when they’re happy; when the engagement they have with an organization ‘feels good’ and they feel their cravings are being addressed.

And warm feelings are not likely to be continuously produced by a product or service which turns into old or used eventually when the lustre of ‘the new’ wears off.

These are the process and people things that, in my experience, create warm experiences for people and make them coming back:

1. Easy-to-do-business-with processes

There are two principles that are critical in terms of having ‘customer friendly’ processes.

First, build systems to enable customers to engage with the organization the way they want rather than force them to comply with processes designed with company efficiency as the main design criteria;

What percentage of customers that use a company’s website are ever asked if they like the navigation and buying experience? How many of them are asked to pass judgment on the artificial intelligence technologies used?

I doubt it ever happens.

Organizations build systems with scale and productivity in mind not with customer satisfaction as a key driving factor.

Furthermore, they serve as a factory to the ‘normal’ masses who are content to comply with whatever business processes they use and not the outlier ‘weird’ ones who require special handling — a group by the way growing larger and more powerful everyday and sometime soon will eclipse ‘the normal ones’.

Second, ensure that internal rules and policies serve the same customer purpose: to enable not restrict, to ‘say yes’ not ‘say no’, to empower not control and to please not disappoint.

Ever heard of a company asking their customers to participate in a panel to evaluate whether or not the policies of the company made any sense to customers? Whether they made it easy to engage with the company? Whether they were understandable or just plain dumb?

Unfortunately, I’ve never seen an organization enlightened enough to take such a risk and welcome their customers in to help manage their business.

2. People who like to serve

The majority of warm feelings that customers experience are induced by human beings. Technology might impress you, but people can delight you, blow you away, mesmerize you, dazzle you, surprise you, shock you and astonish you — all symptoms of loyalty building.

So it follows that organizations need to hire the type of person who can cause these types of feelings to exude from other people. Yes, they have to be intellectually competent to qualify for a customer server role,  but beyond that they must possess the innate hunger to care for another person and be driven to satisfy whatever craving the customer has at the moment.

Most businesses aspire to provide memorable experiences for their customers, but the quality of the engagement process doesn’t back up the claim. Their customer contact repair folks may be great at troubleshooting an internet problem sitting in a call Center in the Philippines, but the engagement moment with the customer falls short of being warm and caring. It’s often frustrating, cold and harsh.

It’s absolutely true that delighting a customer time and time again will deepen the affection the customer has for the organization and will lead to sustaining loyalty. The catch though is to have the type of ’human being lovers’ in place to pull it off.

Let me crystallize the loyalty takeaways for you:

  • Customer loyalty has more to do with HOW you conduct your business than it has to do with what your business produces.
  • Loyalty is created when business processes are created in the image of making it easy for the customer to do business with an organization.
  • Loyalty grows from customer affection which is earned by having caring customer servers who are the natural architects of warm moments customers experience.

Businesses don’t create customer loyalty; processes and people do.

Related: 2 Simple Reasons It’s Impossible For Businesses To Have Loyal Customers