Monopoly loyalty is an extreme example, but does illustrate the point. Where customers have little or no choice, their ‘loyalty’ is far from devoted. It is often resentful. Our experience based on hundreds of customer surveys shows that customers with little or no choice often feel very dissatisfied. 

Other suppliers are notionally in a competitive situation. Their customers could use alternative suppliers – in theory. In some situations, however, the cost, difficulty or hassle factor involved in changing suppliers is so great that customers will do it only as a last resort. Again, our research shows that they will live with much lower than normal levels of satisfaction before they switch suppliers. But this reluctance to change suppliers cannot be described as ‘loyalty’. It certainly involves little allegiance, duty or devotion. 

Incentivised loyalty has possibly been the most over hyped marketing strategy in recent years. It may have some effect on customers who are not spending their own money, frequent business flyers being an obvious example, but the success of Southwest Airlines in the US and Ryanair in Europe has already dispelled that myth. Most people in the UK hold the ‘loyalty’ cards of more than one competing supermarket, store group or airline. They see the loyalty points as something they may as well take when it meets their wider needs to use that supplier. Tellingly, the UK supermarkets that have gained most market share in recent years are Aldi and Lidl. They offer a no frills product range and focus on value, with no ‘loyalty’ points to collect. 

Habitual loyalty may be the most common form of repeat business. As time becomes an increasingly scarce commodity for many consumers, familiar routines that can be quickly accomplished with minimal thought become part of the lifestyle. The weekly food shop is conducted at the same supermarket because it is convenient and familiar, as is the website process for those having online deliveries. Fuel is bought at the filling station that is passed on the way home from work, perhaps with the added convenience of grabbing needed groceries. Companies with high levels of customer retention may feel a misleading sense of security because allegiance to suppliers in these situations can be very low. If a new supermarket or petrol station opens which is more convenient, bigger, more modern or more competitively priced, the original supplier may find that there was very little ‘loyalty’ under-pinning the previous levels of customer retention.

Contrast the ‘allegiance, devotion and duty’ of the previous four loyalty types with the loyal customers of a football club. All three words apply to their loyalty which is often rooted in their core values (they were brought up to believe that their team is the greatest!), rather than in their attitudes. But a business is not a football club. It commands no emotional, irrational loyalty. It must continually earn its customer retention by delivering that total value package which meets its customers’ requirements at every customer encounter.

Real customer loyalty involves more than just making repeat purchases. It represents a positive level of commitment by the customer to the supplier and it is the degree of positive commitment which distinguishes truly loyal customers. This degree of customer commitment can be used in customer surveys to segment the customer base and identify customer groupings at most risk of defection. Often, customer loyalty segments will have different needs and priorities, they will certainly have different perceptions of their experience with your organisation and, consequently, you will often need to define distinct strategies for different loyalty segments.