Customer Loyalty: What it's All About

Driving loyalty is very different from driving repeat sales. There are always reasons people will do business with you that have nothing to do with you -- timing, price, convenience, lesser of evils and force of habit are just a few. These things can help influence an initial sale and they can influence repeat business, but they do not influence loyalty. Just because someone buys from you over and over does not make them loyal.

Loyalty exists when an existing customer chooses to do business with you even when a cheaper, more convenient or even higher quality option is on offer from another company. Someone's decision to ignore a sale or promotion of another seems like irrational behavior. And that's because it is. The part of the brain that controls decision-making and behavior exists in the same part of the brain that controls feelings and emotions. The part of the brain that controls rational thought does not, in fact, control behavior. Someone's decision to stick with one company in the face of overwhelming rational proof of a better offer has more to do with the buyer than the seller. Loyalty is, in fact, not rational at all but a highly emotional state.

Lets look at Apple, for example. Well known for having a fiercely loyal customer base, the base model Macintosh laptop, the MacBook, starts at $1099. A Dell laptop with equivalent performance specs is $649. The Apple is 40% more expensive! And if you're willing to have a slightly smaller hard drive than the Mac, the cost for the Dell is only $499 - less than half the price! Everyone knows that Apples have less software available for them and fewer peripheral choices. And as a recent Mac convert, I can report that my decked out MacBook is slower than my old mid-level Dell. The decision to buy an Apple the first time is clearly far from rational. But the decision to remain loyal is a deeply personal and emotional decision. Owning a Dell says nothing about who I believe I am. But owning a Mac accurately reflects my self identity.

This means loyalty is more a factor of a company's ability to express a clear and honest sense of why they exist and what they believe about the world than simply the quality of what they do or make. The clearer that belief, the more attractive the company is to those with similar beliefs.
Apple is a company not built around a product -- it's build around a belief -- the desire to challenge the status quo. It is no accident that creative-types are drawn to the machines. Apple's ability to attract such a loyal customer base has less to do with their products and their "rational" benefits, and more to do with what the company stands for. Like a flag a loyal soldier follows into battle, Apple and their products stand as a symbol for a cause worth making sacrifices -- like paying a higher price.

My favorite example of loyalty is Harley-Davidson. There are people who tattoo Harley's logo on their bodies. Some who do don't even own their product. The decision to do such a thing -- clearly irrational -- has nothing to do with the quality of Harley bikes or their value as a company. Someone's decision to display that logo on their body is a symbol of a belief. They identify as independents in a world of conformity. Members of the rugged open-road.

Because loyalty is emotional and not rational, you don't actually need to have the best product or service - it needs to be good, but it doesn't have to be the best. Loyalty starts with clarity - your own clarity of what you believe - why you do what you do. This has nothing to do with money, this is about why your company was founded in the first place. Why does it exists? What do you stand for? If others believe what you believe, they will put up with all kinds of better offers to do business with you.

A company's challenge is to never veer from saying and doing the things they actually believe. The discipline to do so is called authenticity, and there aren't too many companies left who can claim to be truly authentic. Fickle customers are not the reason there is such little loyalty these days. It's hard for someone to be loyal when no one knows what you believe.

Follow Simon Sinek on Twitter: www.twitter.com/simonsinek

Comments

[JBS]

To thine own self be true.

[Cathexis]

You state: "It's hard for someone to be loyal when no one knows what you believe."

I have to disagree ... it is exactly because I *do* know what most companies believe -- that their focus is solely on cutting expenses to maximize profit, even when it means compromising quality/service -- that I have built up my current high levels of disloyalty. They've shown their true colours and told themselves they were merely being "shrewd Businessmen."

Now, they'll reap the results of those actions -- I'll doubt every bit of spin they put out and I'll actively ignore their ads and pitches unless *I* have already come to the conclusion I need something. And then I will research and evaluate carefully, based solely on product -- company label be damned.

[bmora]

Can you say free market distortion and rational choice theory?

[joebaggadonuts]

Simon. You are not thinking clearly. This article does not lay out anything well and chooses a poor example with Apple. You never state clearly what a better offer means then you say that rationality is smarter than emotion. Read Blink by Gladwell and try again.

I liked your statement about authenticity, but it was too little, too late. People trust name brands because of authenticity. That is part of the value equation they rely on in making purchasing decisions. If you buy a brand that stands behind the brand when something goes wrong, such as Mattel pulling all the lead painted toys from store shelves when they discovered their Chinese suppliers were using lead paint, then you have a reason to buy from them. When J&J pulled Tylenol from the shelves because some whack -job nut-ball poisoned a few bottles - you have a RATIONAL reason to buy your Acetaminophen from J&J. Too, when companies protect themselves from consumer liability by hiding behind Federal regulation preemption, you have a reason to decide NOT to buy their products. So long J&J and Medtronic. It was nice knowing you.

[TrevorAlan]

HuffPost's Pick

Wait a minute Hoss, there is some truth to what you say--There's no logical reason for me to buy Coke more often than Pepsi or generic cola (well, some generics actually do taste nasty), and until recently I bought a certain brand of jeans based on a very old ad campaign, not anything logical.

BUT, because some people value certain aspects of a product above the aspects YOU value does not make them irrational.

There IS a cultish aspect among Mac people, myself included, but Apple's tendancy to work right out of the box, for those fewer peripherals to have FAR fewer compatibility problems make some people decide the price difference is logical. But that's a side point.

One big issue is loyalty to brands that decline. Once upon a time, perhaps you came to find that any sony stereo, Chevy car, Craftsman tool, was always superior to competitors and worth a higher price. You might have found that anything by these or another company ALWAYS works the way you expected it to, so you are loyal and don't feel the need to comparison shop. Too often the corporation owning these names (actually not THOSE names, but large corporations generally) take a historically good product line and start introducing cheaper components, designs and materials and misuse your loyalty. So you spend more for a product that gives you less, and maybe you do this a few times before you have to part with your loyalty.

[TakeSake]

That's where marketing and accounting got involved and traded their reputation for a cheap shadow of the original product. Then they get their bonus, retire, and leave everyone else to get outsourced and rightsized.

[dadw5boys]

Some loyality is because of the time it takes to get use to other brands. People actually devolpe allergies when changing product.

But if you are constantly changing products then you don't have that problem!

[jinjinpinti]

I used to be totally DISloyal to all brandnames, always opting for the best bargain. Now, after all these years, I do have well tested, tried and true preferences for certain brands. Every single Panasonic product I've ever bought (tvs, phones, stereos, etc.) in my 65 years has performed perfectly and NEVER malfunctioned. Also, you can't beat a Whirlpool washer and I've tried 'em all. There, also, are many brands of vacuum cleaners out there, from low priced to cha-ching, but my Hoovers never quit and do as good a job as price permits. I have an old, second car, an Audi, that is so ancient, everything but the running gear is disintegrating. It never breaks down and just keeps on going, and going, and going...

[TakeSake]

Strange, I noticed the same thing after a while. For me anyway, Panasonic seems to work well, while Sony, even if they work, have issues or user-interface problems that make me wish they would break so I could replace them.

And the thing about it is that there was only ever one or two weak points that could have been addressed to make it work well.

[dougbob]

bravo!

especially the line about authenticity being a discipline. too few business people realize that there is a difference between smart business practices and lowering your standards to the lowest common denominator.

[darker]

Your article is dead on arrival.

[Mickeleh]

small correction: "Everyone knows that Apples have less software available for them" Since Macs can run the Windows operating system as well as the Mac OS, Macs have more software available.

[wolfgangmo]

Not to toot Jobs horn, but my company made the switch to apple for fiscal reasons. They cost less to run, break down less and our tech guy doesn't spend half his waking hours on compatibility issues. So our operating costs are MUCH lower and in the long run apple is much cheaper. Frankly we used to have daily problems on other machines but don't see issues on Apple.

And yes we run Windows on some of our machines. The choices are endless in software.

Sometimes what seems like brand loyalty is actually a smart decision and not about the emotions. Although I do LOVE my apple.