Can You Rationally Explain Loyalty?

“I just don’t understand. You seem like a rational person and yet support Peyton Manning as the best quarterback to ever play in the NFL. Don’t you see that Tom Brady is better?! He’s won four Super Bowls and Peyton only has two!” said the young football player.

“I’ve rooted for Peyton Manning since before you were born. In his golden age, that is… I can’t switch who I root for just like that…” replied his coach.

There is no better place to search for the true meaning of loyalty than in sports. And the coach’s last sentence in this dialogue sums up all there is to know about loyalty. It’s about commitment. It’s about sticking by something no matter what. It’s about emotions.

That isn’t to say that rational thinking doesn’t play a part. The coach did justify his initial choice of Peyton Manning with his undeniable success from years past. But what differentiates satisfaction from loyalty is the emotional aspect added to the rationality.

The Satisfied and the Loyal Customer

Think about it like this. If you have a satisfied customer, it means you did something well. You provided them with a good product/service at a reasonable price. You probably also surprised them in some way, gave them something unexpected. So, your customer is satisfied.

For now.

As your customer looks around and does business with other companies, even in other industries, she might find something better out there. Better, as in more rationally appealing. She might find a better priced item. Her friend may have told her about an excellent service she received from an alternative provider. When that customer finds that rationally-better company, she will switch. Even if she’s satisfied.

Well, actually she’ll switch because she’s satisfied. Bruce Jones at the Disney Institute put it so eloquently, “a customer who is merely “satisfied” is still likely up for grabs in the marketplace.

The loyal customer, on the other hand, like the avid sports fan, is not “up for grabs.” The loyal customer has invested himself emotionally into the relationship as a result of several experiences he’s had with the company. Therefore, he is less likely to defect following a single negative experience and certainly won’t be shopping for alternatives.

The Rationale Behind Loyalty

Even if you want to look at the impact of loyalty on the company from a strictly rational perspective, the stats align perfectly. The White House Office of Consumer Affairs lays it out:

  • In contrast to their first purchase, loyal customers, on average, are worth up to 10 times as much.
  • Retaining a customer costs 6-7 times less than acquiring a new one.

Loyalty_StatisticsKeep in mind, though, that any company still needs to focus on both the satisfied and the loyal customers. Satisfied customers are the basic requirement for doing business. Loyal customers are what drive profitability and growth.

But how do you implement both focuses?

You improve drivers that influence both. You offer competitive customer service and you treat your customers like valued customers in order to drive loyalty. At the same time, you exceed customer requirements while also taking ownership of problems in order to develop the satisfied customer.

While this is a simplified explanation of the way to do things, the importance in understanding the complexity behind loyalty and satisfaction as separate entities is surely made clear.

Our coach from the beginning will not transfer his support to Tom Brady after he lands yet another Super Bowl ring. In the same vein, the young football player will continue to support Tom Brady twenty years from now, even if Peyton Manning ends up retiring with the cool, winning breeze of Super Bowl 50 at his back. Because that is, after all, what loyalty is all about.

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