Customer loyalty is something every business needs and desires. Some companies are spectacular at accomplishing it, while others struggle.
According to a study by DMA, perhaps we’re missing an important fact…not all loyal customers are the same.
DMA’s “Customer Engagement 2016” study, takes customer loyalty a little further. It narrowed the pool of loyal customers into four groups: Active Loyals, Habitual Loyals, Situational Loyals and Active Disloyals.
It’s rather interesting to take a look at this:
- Active Loyals – According to the study, “Active Loyals” contains customers that are loyal to your company for both routine and special purposes. In the case of a car dealership, this would obviously include those that purchase cars from you and those that also service, with you regardless of any “deals” your competitor may have. They trust you, enjoy your service and don’t look elsewhere when they need anything related to their vehicle service or purchase needs.
- Habitual Loyals – These are customers that may or may not have purchased their vehicle from you, but are your regular service customers. However, when it comes time to purchase their next vehicle, they will shop you against your competition to make sure they are getting a good deal. They’ll probably still buy from you, based on their previous great experience, but it’s not a guarantee. Treat them right. Be fair when it comes to a new purchase and you’ll win their business.
- Situational Loyals – This group is the opposite of Habitual Loyals. They will shop elsewhere for service or parts if presented with a compelling offer. But will return to you when they’re ready to buy a new (or new to them) vehicle, due to the experience you provided. Of course, the lifetime value of a loyal customer is significantly higher when they are servicing with you, so this group is incredibly important to nurture and, hopefully, transfer into the group of Habitual Loyals. Service revenue is more consistent and vehicle margins are continuously decreasing so gaining this group’s loyalty in service is important.
- Active Disloyals – This group has no loyalty whatsoever. They’ll bounce from deal to deal without the slightest concern over loyalty or experience. Sure, if they have a bad experience, they’ll probably not return. But regardless how great an experience you offer them, chances are it won’t change their minds. All hope is not lost, however. Just because these tend to be frugal people, doesn’t mean you can’t earn their business. While they may be the most unlikely to be loyal, people change. The key to winning this group’s business is consistency in marketing, customer experience and competitive pricing.
Customer loyalty is a finicky thing. Is it possible to narrow down customers into one of these four groups through data analysis? Perhaps. Transactional records and behavioral patterns can help you identify these people, but it will never be 100 percent accurate. In addition, these groups of loyal customers are dynamic. Individual customers can bounce from one category to the other with one single misstep or perceived wrongdoing.
Customer experience is really the buzz word of today. It pays dividends to pay attention to all your customers and ensure that they have the best possible experience at your store – regardless of how loyal or disloyal the customer may be.
Author: Michael Gorun
Michael Gorun is founder of Performance Loyalty Group, a technology-based owner retention and loyalty company. He has more than 25 years in operational service management positions for Ford, Nissan and General Motors. He can be reached at: email@example.com.