Customer Loyalty Framework: More on Inertia, Mercenary, Cult & True Loyalty

Have you heard about Customer Lifetime Value and how it can help your customer retention?

Definition: Customer Lifetime Value (CLV) is one of the key stats to track as part of a customer experience program. CLV is a measurement of how valuable a customer is to your company, not just on a purchase-by-purchase basis but across the whole relationship.

Do you want your customers to return? Do you want to increase your customer retention? Are you disappointed when you don’t see them again? That’s why it’s important to measure CLV so that you can improve your relationship with future customers. 

According to this research from Maritz Motivation Solutions, millennials tend to drop out of loyal customer groups in the first 6 months. As a comparison, the risk of exit among baby boomers usually arises after 1 year of commitment.

Lékué, an innovative kitcheware brand, was faced the same challenge in regards to staying engaged with their customers and fan base.  This case study explains how Lékué adapted through Flowbox a unique approach using social content in order to stay connected with their online community. 

So how can your brand use this strategy and others to keep your customers coming back? Does retention seem like a Gordian knot that you cannot solve? Don’t worry. You just need to optimize your current strategy. Here is how.

Explaining Customer Retention Through The Four Dimensions of Customer Loyalty

In 2015, Maritz Motivation Solutions conducted the aforementioned research, and asked 2000+ customers from millennials to baby boomers in the US about their brand loyalty. After analyzing the answers, they came up with the 4D loyalty framework that shares the four stages of customer loyalty, namely:

• inertia loyalty
• mercenary loyalty
• cult loyalty
• true loyalty

Your whole customer retention strategy is affected by which dimensions your current customers are in. Once you know where they are, you can make them go for the next level. But what is the real meaning of these dimensions? Let’s see!

#1. Customers are loyal to you, because there aren’t any alternatives

Believe or not, I’m really into comic books. And when I was little, there was one comic book store in my town. There was only a poor range of products, and only one staff member who wasn’t really helpful when you were looking for the latest issues of Spiderman. But, I didn’t have another choice, so I stuck with this one store.

This is inertia loyalty. Customers shop from you, because there are no other alternatives they can choose from. You may be the cheapest on the market, or offer a very rare product. It may sound like the ultimate utopia at first, but you should be cautious, because…

• Prices can be beaten
• Competitors can arise

See? Here customers are easily flowing in, but they can easily disappear, too. That’s why the best competitive strategy is to move past this stage, and offer your customers real value, that shows you care about them and provides you with a chance for deeper engagement.

Don’t make eCommerce marketing mistakes. For example, 62% of customers expect online content from brands in exchange for their loyalty. Here it’s not only how-to blog posts and tutorials that matter, but also product descriptions.

 

#2. Customers are loyal to you, because they can save money with you

My mother loves Tesco. She always reads the promotional catalogs and collects stickers. She never, and really never, misses an opportunity to take advantage of a deal.

She is the perfect example for mercenary loyalty. Compared to inertia loyalty, in this stage customers are actively engaged with you because they need to act to earn discounts.

Here is the ultimate toolkit a store needs to achieve mercenary loyalty:

• Limited offers: Offer free shipping or discounts for a limited time, and inform customers via email and on your website. You can run similar campaigns on special events like Valentine’s Day or Black Friday. Plus, sending offers to customers on their birthdays can also boost your sales.
• Pop-ups with coupons: Give customers a coupon code for certain actions, e.g. when they’ve finalized their first purchase, or when they’re about to leave your site (these are the so-called exit-popups). These can motivate customers to act. Tools like Optimonk, Coupon Pop and Nudgr can help you to design such pop-ups.
• Coupons for referred friends: Customers don’t want to earn discounts for just themselves. They also want to share the best shopping opportunities with their friends – especially if they are rewarded for it. Referral tools like Bullseye allow you to reward customers who invite new customers with coupons.
• Loyalty programs: Let customers earn points through a loyalty program by making a purchase, inviting friends or interacting with your social channels. Then they can redeem their points for discounts. For example, Antavo is a SaaS solution that helps you to run such reward programs in your store.

Rewarding purchases should be a basic step in your customer retention strategy, as 69% of customers are loyal to those brands who reward their purchases. Why? Because of the social rule of reciprocity.

In this video, Dr. Robert Cialdini, explains why reciprocity is so important when you want to influence your customers’ purchase behavior. In short, customers act by the social rules in their minds. When they get rewarded or receive a gift from you, it makes them feel they should “return the favor,” which initiates that after a positive experience with you they should make their next purchase in your webstore.

 

#3. Customers are loyal to you, because they feel that you are part of their identity

Imagine this.

You purchase a Moleskine notebook – those slightly overpriced and beautiful products I actually adore. If you meet someone with the same notebook, you feel that you are connected to each other. You get the sense that you are part of an exclusive community.

Ready to take your customer loyalty to the next level? Book a demo with Flowbox now!

This is where cult loyalty starts.

Rewarding only customer purchases doesn’t differentiate you from others. Your brand message and power to build a contributing community can also help. So while you’re creating mercenary loyalty, you should provide incentives for cult loyalty by involving the next elements in your strategy:

• Brand message: Customers prefer webstores who share their values including those who show concern for other people’s or animals’ well-being, or environmental protection. Showing your kind side increases customer empathy toward you by 391%.  
• Community: Customers want to forge long-term relationships with those who share their values. That’s why incentivizing conversations on your social channels, and on your FAQ sections and product reviews don’t just drive social proof, but also show that your customers’ opinions matter.
• User-generated content (UGC): After forming a strong bond with your customers, the next stage is to allow them to produce content for you like photos and videos. Tools like Flowbox can help you to collect the right customer photos from Instagram and show them next to your products. Those who get featured will feel honored while their images help you to get more social proof.

#4. Customers are loyal to you, because they love your product and service

I love a web store called Tokyo Otaku Mode. It sells products for the fans of the anime and manga subculture. When I order something from them, it arrives from Japan in 5 days and they always send a nice thank you letter, a badge and a beautiful paper holder. Their “delight and surprise” strategy is what always makes me fall in love with them.

And this is exactly how true loyalty is earned. The key here is to find every possible way to make your customers smile. Besides my example, here are 3 further fields you should focus on for boosting positive customer experiences:

• Friendly customer support: Customers need to be able to reach you whenever a question arises. Moreover, besides your product, customer support is the second most important factor to influence loyalty for 76% of customers. Moxie,Tawk.to and Boldchat, are live chat apps that can help you start a conversation with your customers.
• Personalized product recommendations: Make your customers’ shopping journey easy. For example, help them find products they need by listing similar products based on their previous purchases. Apps like Semknox, Clerk.io, Nosto can help you with this.
• Optimized mobile experience: Besides a mobile responsive design, supporting mobile checkout is key. This feature is not one to take lightly – 0.75 billion people globally are m-commerce buyers today. Tools like Paypal, Zong and mobile wallets like Apple Pay can help customers to checkout in your store from their mobile devices.

Find out how to make your customers love you even more in  .

Use a multi-loyalty strategy to keep your customers on board

The best strategy for maintaining customer loyalty in your store is to optimize your current strategy by mixing the elements of mercenary-, cult- and true loyalty.

But where to start?  

Just think over your current strategy.

1. Do you make it easy for your customers to engage with you?
2. Do you reward their purchases in different ways, but also offer them the opportunity to get emotionally attached to you?
3. And the most important thing: have you maximized the positive customer experience during the full customer journey?

By answering these questions, you can get everything right quickly and will see how to move forward with your loyalty strategy.

And if you need any help or would like to ask for advice, I’m always ready to get in touch. Just write here in the comment section or Tweet me.

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About the author:

Timi Garai is the Content Marketing Manager and blogger at Antavo Loyalty Software. She produces ebooks, use cases, whitepapers, blogposts about ecommerce marketing and customer loyalty. In her other life she blogs about the manga and animé subculture for 10 years. Connect with her on Linkedin or Twitter.