Customer loyalty is when a customer consistently purchases from a business. This is typically based on the customer's needs, preferences and experiences with the business. The following are common types of customer loyalty.
ProductConsistently purchasing the same product. This can be due to the features or quality of the product. For example, a customer may try several shampoos until they find one that they prefer. Once a preference is established it may continue for years. Calculating customer loyalty for products requires extensive market data and is often based on representative samples. For example, a firm might define a loyal customer as someone who purchases the product at least once a month for six consecutive months.
ServicesSubscription based services often benefit from loyal customers that represent monthly recurring revenue streams. Calculating loyal customers is easy for subscription based services as ample data is typically available. Six consecutive months is a common threshold. Restaurants and other non-subscription services typically base customer loyalty on purchase frequency such as once a month or six times a year.
Brand Brand loyalty may result from reputation, customer experience or a customer who identifies with the brand. Customers may be loyal to all the products offered by a brand or some subset.
DistributionA customer may be loyal to a particular location simply because it's convenient. For example, a customer may be loyal to a restaurant chain because it's close to their office. If the convenient location closes, the customer may be unlikely to seek the chain out elsewhere. Likewise, brand or product loyalty may end if products aren't available where the customer shops.
PriceA customer may be in the habit of consistently purchasing the same product or service based on price alone. For example, a customer may always purchase the same brand of coffee because its always the cheapest on the shelves. Such a customer will immediately switch if prices go up and may be indifferent to efforts to improve product quality.
RelationshipsA customer may be loyal to a person such as a salesperson but not the underlying products, services or brand. Often a top salesperson who leaves a firm is able to attract their former customers to their new firm's products.
This is the complete list of articles we have written about customer experience.
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