Podcast Episode #10: The Single Biggest Driver of Loyalty

Hi and welcome to the Key Customer Growth Podcast. My name is Jermaine Edwards and I have become obsessed with customer behavior and how people and organizations win with their best customers long term. After starting, failing, and growing my own companies, 30 customer growth projects, hundreds of strategies, and the study of 50 years of customer service research, I've seen firsthand how and why organizations win, lose, and win again with their most important customers. This podcast is my way of sharing those insights, failures, principles, and strategies so you can become what I call an Irreplaceable Advisor, someone so valuable your customers never want to leave. In an increasingly competitive world, how do you continue to deliver unrivaled value and deepen those most important customer relationships? Join me as your customer growth guide, your Your journey starts here. Hey, and welcome to the Key Customer Growth Podcast.

My name is Jermaine Edwards, your customer growth guide, and this is episode number 10. And we're talking about loyalty today. We're really going to go a little bit further than the average conversation on loyalty. And I want to demystify some things and give you something to really consider to challenge in your own organizations, in your own private thinking, and also with your engagement with customers. And this area here for me is one of the most important areas for thinking about longevity with your most important customers. Outside things what I call relationship influence and value, creating value advantage, real kind of growth drivers with an organization, We're going to explore something called intimate loyalty, and we'll explore that through a lens in just a moment. So the 3 things we're going to cover today is really the danger of loyalty misinterpretation, one of the single biggest drivers of loyalty that we just know fact is there for every fanatical fan and beyond, and 7 factors to experiencing, really understanding intimate loyalty. So let's get started now. Let me ask you this question. Are you a loyal customer to any particular brand? So do you always buy like an iPhone every time it comes out or search the internet for a product only to return to buy it from your favorite provider? If that's the case, then you might just be one of these types of customers that have intimate loyalty, that from an emotional perspective and not just a convenience perspective, you have a deeper connection and affiliation with these businesses. Or you might be somebody who's loyal to an extent, and actually, depending the context, you might go somewhere else to purchase something specific. Now, either way, what we're going to explore is how we can create deeper connections with people so that they want to come to us more often. So global brands like Apple and Amazon do this really well, and they're not the only ones. There are other organizations that have these deep ties with their customers also, but they are, they understand, these global brands, that loyalty is much more rich and complex than people would give real credit for when it comes to really experiencing new things with our customers. It goes far beyond incentives and schemes and new promotions to encourage customers to stay. In fact, those things almost like buying the loyalty from your customers. And what we want is to have something that sits underneath that. We want incentives to be almost like a cherry on top to something that's much more meaningful underneath. And so what we want to be able to do is to tap into the behaviors and most importantly the emotions of the customers that have, that want to connect with us and establish what I'm going to call intimate loyalty. So let's just start first and foremost, but really just thinking about the dangers of loyalty misinterpretation. So we know that everyone Everyone wants loyal customers. Loyal customers have, and this is just kind of fact, convert and spend with brands more often. They spend more than others. Loyal customers tell and refer us more than others. So we know these things are very powerful, and these customers are extremely important to every kind of organization. But the biggest danger we have is mistaking customer convenience for commitment, or mistaking the behavior for a commitment rather than a specific kind of benefit that if somebody else were to give to them, they would go somewhere else. And so we need to identify what specific benefits those are and align our services to that Or what we can also do is to move into something much more deep and much more rich, and we're going to explore that in just a moment. But most businesses I've met often begin with the wrong questions to think about loyalty. They ask, 'What do we need to do? What loyalty schemes or incentives do we need to offer?' Whereas these aren't fundamentally wrong questions, they miss some really helpful nuances that allow us to think slightly differently about loyalty and gives us a new perspective, a new way in which we might think about engaging with customers. So if we look at the definition of customer loyalty today, a lot of people would say it's the result of your consistent positive emotional experience, you know, physical attributes, the satisfaction, the value of the experience, which includes the product or service. And there's some really good stuff inside that definition. The emotional experience, the physical product attributes, the value of the experience— all those things are really good. However, doing more of these things just by themselves new promotion schemes, creating a really nice experience. These are all really important, but they actually do not create loyalty and deep loyalty long term. And so as we begin to study and evaluate human behavior, and to really begin to look at how people are responding to brands today, what we find is the single biggest driver for loyalty is emotion. And intimate loyalty, I'll give you this, intimate loyalty is our ability to create positive and impactful customer experiences that connects to shared values and establish future commitments. Now, I'm going to explain the difference between these two. The first definition of customer loyalty, which looks at consistent positive emotional experience and the physical attributes and experience of a product or service versus a positive, impactful customer experience that connects to your shared values and establish future commitments. What do we mean by that? Well, what tends to happen is that we have these experiences that offer really great feeling, but when it's not connected to something that is very valuable, or underneath is not connected to a specific value, of that person, and our values do drive our beliefs and behaviors. If it's not connected to a, a certain value or to a future place in which they are trying to go, they will only see that experience as a contextual experience right now and will not connect it to a future event. Meaning, just because the experience was good now If there is not a connected shared value established with a future commitment, a desire to return, or when the— something's not designed in for future commitments, they will not see you long term as a viable option. Let's give an example here. So let's talk about the restaurant industry. So when somebody comes and has a really great experience, what tends to happen is Sometimes they may be given a card that says, hey, we'd love if you come back, we'd love to treat you as a guest, as a customer of ours. Come back for a special drink when you come back because we really love your business and so forth. Now that's the best-in-class kinds of restaurants or who really think about their customers in that way as really appreciating those moments where people come in to spend with them and create an experience that matters. However, most organizations, when they design these experiences, design these experiences, and that somebody leaves, they, they may talk about it, but actually there's nothing from a values perspective keeping them with that business. There's nothing that has said, hey, we should come back immediately to this specific organization. So what is that for you? What are the ways in which you're connecting to the values of your ideal customers? And how are you creating future commitments? And this is why intimate loyalty is such a powerful concept. Intimate loyalty is thinking about impactful customer experiences that connects to shared values. It really sits in and underneath the emotions and establishes future commitments. So the rational consumer will only stay as long as you provide that certain value and experience. But an emotional customer, an intimate loyalty-based customer, is more likely to stick with you. And according to Forrester Research, emotion is the number one driver of loyalty, and the evidence is all stacking up towards it. In fact, an analyst, a senior analyst from Forrester Research, had actually said that strategies that rely purely on loyalty programs to offer points, discounts, miss an opportunity to drive deeper engagement through emotional loyalty. I call this intimate loyalty directly. So how do we activate intimate loyalty? What are those things that we need to experience? Well, there are 7 kind of qualities that we need to think about, and these 7 qualities are really powerful, and even done individually, they can create really interesting moments for you and the customer, things that you can measure and track. So let's talk about the first of the 7. So the first is shared values. The second is killing curiosity. The third is raising standards. The fourth is making or creating space. The fifth are moments of truth. The sixth is humanizing the exceptional, and seventh is making the customer the hero. These are some qualities, some particular disciplines, actions you can— that sit within intimate loyalty. Let's talk about shared values to begin with. So this is about what organizations represent, their level of trust and the position they take on when it's what's important to the customer. So the CEB study actually published, obviously now Gartner, published by the Harvard Business Review, had actually surveyed 7,000 consumers across the United States, UK, and Australia. And what they showed was that loyalty to brands is almost impossible to achieve long-term without one key element. Now those consumers who had strong brand relationships, more than 64% had cited shared values as the primary reason. So this is a really important area. So shared values. So companies like Tom's Shoes, Zappos, Clearwater, these are companies that have and begin their product and services with a shared value, a common interest to create, to something that is deeply rooted in the either the moral fabric of a particular person in something that drives unique decision-making, the filter in which somebody does that, such as Clearwater, which is really focused on the act of service and serving other people, helping people around the world get clean water. Or Tom's Shoes— for every purchase, you're actually putting shoes on the feet of children around the world. So things like that connect people together. People like to know that their money is going further than just a product or service, and that could be a range of different things. So think about Thinking about shared values is something, and if you don't have that inside your business, you may want to consider how authentically and truly genuinely you can put that in. The second is killing curiosity. And this is a really odd phrase, but it's a really important concept to understand. And this is about organizations becoming aggregators who don't bother to penalize or otherwise pressure organizations to just see them. They simply put things out and state the facts. So an example of this is if you, uh, like Amazon. So essentially they will offer you a range of different products including their own in the same platform. And so they are an aggregator of all kinds of different products and services, and they'll give you the pricing, they'll still share with you exactly what these things are, and you have the liberty to go anywhere else. However, what it is, because they've given you the baseline of what's happening across a range of different marketplaces from a pricing perspective, and then the variety of pricing, what other people have said, what will happen is when you go somewhere else and only see one kind of view of a product from a different platform, you're more likely to go to the other place that gives you more variety or more— there's the perception of more transparency. So how does this come back to his Hawaii killing curiosity? Well, what it does is that it reduces the customer's want to go and see and explore other options more thoroughly because you've created an environment where they can see what's happening in that marketplace. And you can do that with your customers today. Simply talk to them about what's out there. Don't hide things from them. They're probably going to find out already. Talk to them about what's happening, what's taking place across the industry, that there are many people doing some great work, and you'll help guide them through that process. That's killing curiosity, reducing the propensity for customers to look for the new thing. Raising standards is the third one. So in setting higher standards, the right standards tend to show up for organizations who don't settle and they really push the boundaries. So raising standards is really interesting, something that you can see actually in the history of Disney. If you look at Walt Disney, he was very, very particular, very thorough in what he did. Steve Jobs was known to be somebody like that, hugely detailed, focused on quality, thinking about these ideas. And so what tends to happen when we raise standards and we do that across our departments, then all areas of the customer touchpoints go up in terms of quality and experience. And an example of this is this. I had the opportunity to work with a logistics company, and in principle, they saw themselves simply as somebody moving something from A to B, and that's exactly what they were. However, throughout the journey of a customer using them, they noticed that the customer was having more and more touch points with different kinds of people— truck drivers, um, customer service, technical, and people giving advice from different points of reference in different countries— and they didn't have a consistent way in which they were training and supporting people in having these customer conversations. So the simple things they did, they said, okay, from now on, what's going to happen is that will be an evaluation of the quality and standard of communication with our customers, and everybody will now have that as part of their remit, as part of their evaluation. Now what happened was standards were raised. All of a sudden, as soon as that happened, not only did their scores go up in terms of satisfaction— and satisfaction again is simply an indicative driver, but it's, it's, it's it's helpful to get those measures. What happened was customers started to tell and refer those business, that business more often, meaning their referral rate went up significantly. And the numbers I'm not too sure about, but we know that we're getting at least 1 in 4 customers bring in another customer and tell them about the experience. That's how important raising standards can be. Number 4, creating space or making space. So this is simply by creating a meeting place where customers can connect with others and have open conversations. Now, in this particular example, it's gonna happen in so many ways. Like, you can have them through corporate executive boards, you can have them through customer advisory boards, you can have them through small intimate online communities, you can have this through connected communities of customers. There could be a range of things that you could use, but creating space supports deeper intimate loyalty around those shared values. The fifth, moments of truth. So at the times when important branding Impressions are formed, both good or bad. Making the ordinary exceptional is what we want to be able to do. So moments of truth happen in the ordinary moments of what we are thinking. So what we want to do is think about where are the specific ordinary mundane things that we would take for granted, like sending the email or a check-in call. What we want to do is simply like— it's similar to raising standards— what we want to do is ask ourselves the question How can we make this specific ordinary thing exceptional? How do we make the ordinary thing exceptional? And this could be something as simple as attaching something fun inside an email that when somebody sees it, they laugh about it, it connects to something that they care about. It could be a range of different things. There's so many different examples out there of companies doing this, creating moments of truth. Jan Carlsson, from the former CEO of of Stang Scandinavian Airlines was somebody who thought about this very practically within the business when he ran it right from the '80s into the late '90s. And what he had done with the business is he asked people on the ground to look for opportunities for those people, customers walking from place to place, to make those ordinary moments exceptional. So when they came simply to ask a question at the desk, how can we make that exceptional? What we're going to do is we're going to personalize the experience. We're actually going to find places to walk people to locations rather than just send them over to that particular place. We're going to make sure that we're creating, making those ordinary moments exceptional. That leads us really nicely into number 6, which is humanizing the exceptional parts, meaning there are going to be things that are much more mundane and much more transactional, and sometimes those happen with technology, sometimes it happens with people, but where we actually have areas where we, we have to physically interact with customers, where we're going out of our way, where these are meetings, whether or not we're having to physically be in front of a customer doing something directly, what we want to think about is in that particular moment, how do we humanize the exceptional? So how do we make those human-to-human connections? How do we make those moments much more emotionally connective? So example might be, we can take Disney. So many different examples there. So one of the things that they did, particularly as Walt was developing the business, was trained all of the different staff. So when they were there at the, the park, at times where the people in the park, families, were looking for the parade to start, the really simple things— there was the families were asking about when parades would begin And simply what the team would do is they recognize and note down all the questions that are being asked by families and people throughout the park, and they create a simple response to all of those specific kinds of questions. And what they do is if a family asked, hey, when's the next parade, they'd simply approach this— those people either proactively, or if they were approached by the family, the family would come up to them, and they'd physically show them where the best places were to set up to see a parade, or they'd even take the trash away from the family so that family weren't carrying around things and could actually go and buy new things before going to the parade as well. So really, something— humanizing the exceptional. Simple things like that really make a difference. The last thing is making the customer the hero. So organizations are the mirror for a customer. To see themselves more clearly. And so the whole idea of making the customer the hero is understanding that the reason why they are purchasing from you is to achieve something and to solve something that they have set for themselves. And so they're on a journey. You are Samwise Gamgee and they are Frodo Baggins. They are on the road. You are Yoda, they are Luke Skywalker. They're the ones who are going to be the hero conquering the day doing the things that they need to do. So what we want to begin to view in our interactions is if our conversations are more about our solutions and less about what they care about and how they are winning and the results that they are getting, then we are not making the customer the hero and we're not generating emotional and value-based connections for future commitments. So those are all really important. I've got so, so many different, uh, examples that I can show you. You can actually get a link to the blog so you can see this directly and see some of those examples go into more detail in thinking about these 7 areas. But the big thing here is this: what do we do next? Well, just stop and consider the different interactions you have with your customers. Write them down and highlight the places where you have the opportunity for creating emotional connection. It might be be a bit of a big task to begin with, but just start with a small area. Start with just your phone calls, start with the emails that you send, start with something very small and just ask yourself, what are the different interactions here and where can we create deeper emotional connection and establish future commitments? So hopefully that's been really good for you. Again, the 7 kind of attributes of intimate loyalty, shared values, killing curiosity, raising standards, making space, moments of truth, humanizing the exceptional, making the customer the hero. If you can do any one of these things, or even all 7, you'll be on your way to creating not just fanatical fans, but intimately loyal fans that have future commitments and connect with you from a values perspective. I'll see you in the next episode. Look forward to speaking to you about some really cool things coming up in this series.

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