How to Build Customer Loyalty in The Age of Skeptics

Customers are skeptical.

That’s a given.

And, it shouldn’t be surprising: they’ve been lied to from everyone from politicians to large corporations; they’ve seen their data stolen; they’re constantly bombarded with companies trying to grab every dollar they can; and, when they contact a company with an issue they often have to battle to get the company to make it right.

Even companies that claim to be customer-obsessed usually think of customer-obsession only in terms of how it can maximize ROI and increase the bottom line. It’s more of an obsession with the customers’ wallets than the customers themselves.

The Problem with Customer Satisfaction

To maximize their share of customers’ wallets, most corporations spend a large—if not the largest—portion of their data collection budget on monitoring customer satisfaction.¹ They attempt to use these measures to outpace their competition and get their customers to spend more. 

They rarely care about making the customer experience the best it can be. Instead, they only concern themselves with being a bit better than the competition, so that the customer is more likely to spend money at the “better” experience.

When I bought my new iPhone last month, an employee at the AT&T store where I picked it up had more interest in making the next sale than giving me the correct information to set up the new phone. This resulted in a SIM error that Apple had never seen before and took over four hours on the phone with AT&T and Apple to resolve. 

Most people would consider this a poor experience. It was. But, if I were to answer a satisfaction survey, I was satisfied to some degree with the overall experience: the people on the phone were trying their best and the situation eventually got resolved. And, given the horror stories I hear from friends about every major mobile service provider,  I know at some point the experience at another mobile provider would have been about the same.

This is the main problem with customer satisfaction metrics: it’s a relative measure; it doesn’t reflect how well a company is creating the experience a customer really wants.

Customer satisfaction measures what researchers call The Expectancy-Disconfirmation Paradigm (EDP). Customer satisfaction is an evaluation of how well something performs relative to how the customer thinks it will perform. 

Even though the experience I had with  AT&T was objectively poor, AT&T performed as I expected it would and how I perceived other mobile companies would also perform. As a result, I was satisfied. 

But, if some other company came along and wowed me with a much better experience, you can be sure I’d be switching at the end of my current contract.

This is why focusing on customer satisfaction can be so dangerous: satisfaction is only relative to past experiences with your business and similar companies—who are also likely only doing an objectively average job at it.

This creates a passive, unspoken desire to leave inside most customers.

It’s also why disruptive technologies are so, well, disruptive: they offer customers a significantly better option that comes closer to meeting a customer’s ideal experience than a company whose experience is based on only striving to be moderately better than the competition.

Many customers are likely “satisfied” with your products and services. But, how many would actually truly care if you disappeared from the market?

Customers and Companies Are Usually in Broken Relationships

This desire to treat customers as an object whose resources are to be mined to the greatest extent possible has also led most companies to spend more time and resources in acquiring new customers instead of taking care of existing customers. 

Just look at the number of companies offering great incentives to new customers but offering no appreciation—beyond upselling them with some weak “deal” for being a “valued customer”—to customers that have been with them for years and it becomes obvious how little effort is put into maintaining relationships.

Customers end up being treated like numbers instead of people.

This is no different than what erodes personal relationships. The main reasons relationships go south are selfishness, narcissism, a lack of balance, the relationship not being a priority, and issues of trust.^{2 3}

When customer relationships are treated as one-sided—when there isn’t an effort to try and benefit the customer at least as much as the company benefits from the customer—there’s no reason for customers to view a company with anything but skepticism and a lack of trust.

You can’t build loyalty without trust. Yet, many companies start to try and build “loyalty programs” without fixing the broken relationships and building trust. 

The Problem with Loyalty Programs

Most loyalty programs aren’t truly about loyalty. They’re based on an outdated idea of loyalty that focuses solely on behavioral loyalty.

Currently, loyalty research has gone beyond thinking of loyalty in this one-dimensional way and instead conceives of loyalty as encompassing attitudinal, cognitive, and behavioral dimensions.⁴

In other words, loyalty isn’t just how people behave towards a brand, it’s also about how they think and feel about it.

A person can be loyal from a perspective of behavior because they currently see no other option—the same reason they may say they’re satisfied—but are ripe to switch if someone meets their deeper human needs better.

Instead of trying to build great relationships by understanding what motivates customers to do business with them at a deep, human level and then doing more and more of that to build trust and ultimately create loyalty, most companies skip these attitudinal and cognitive dimensions of loyalty and focus solely on programs to encourage behavior.

The “loyalty” to these programs is mostly based on what researchers term switching costs: making it hard to switch from one loyalty program or another due to the perceived costs—monetary, psychological, and time-based—it would incur to switch over and start with a new program.

Companies focus on these switching costs because they know their “loyalty” programs look pretty similar to their competitors’ and lack a distinct advantage. They reward their customers in the same monetary and monotonous ways, instead of doing what they should be doing: rewarding the best customers in ways that reflect why they love the brand in the first place.

But, that requires deeply listening to customers. And, when companies act like narcissists for their own benefits, it becomes hard to listen. 

These companies are essentially trying to trap their customers in bad relationships. 

It’s not surprising that so many of them end up with lackluster results from their loyalty programs.

Finding True Loyalty

Loyalty begins with trust and trust doesn’t happen overnight.

Trust is built up over time by customers seeing that you have their best interests in mind over and over again. They don’t mind that you have your own interests—just like in any relationship—but they want to see that you care about them in an equal way. 

Loyalty happens when they develop cognitive and emotional attachments to a business as a result of trust being built up over time. These cognitive and emotional attachments reinforce their behaviors and get them to both think of you first and purchase from you frequently.

Loyalty requires being proactive instead of reactive. It’s not about being slightly better than the competition or waiting until enough customers complain before you fix it. It’s about understanding your customers’ tensions and desires better than they do and constantly trying to push further towards those ideals. 

And, that all starts with deeply listening to and understanding your customers and caring about their needs as much as you do your own.

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