4 Types Of Customer Loyalty: How Loyal Are Yours?
Customers are loyal for many reasons. And maybe some are not as loyal as you think they are.
Whatever drives your customers back to your venue, it’s important to find out the intention behind it and to create different loyalty segments.
This allows you to market to them on a much more personal level and turn all levels of loyal customers into true brand lovers.
The Customer Loyalty Matrix
In general, there are 4 main customer loyalty categories as shown in the matrix below. They differ based on their level of brand attachment and price consciousness.
Let’s take a closer look at each quadrant.
1. Habitual loyals
This type of customer loyalty falls under the ‘simplest option’ category.
They are driven by habit which means they don’t have a specific preference for a certain venue. Often there is no intention to look for an alternative as they are satisfied enough with what they get for now.
A common example is the coffee shop on the way to work. Customers are used to going there but they are no emotional connections to the venue as such.
However, as their loyalty is based on convenience they’re also at risk of switching should they come across a better option. Such as a new fancy coffee place opening up.
2. Transactional or offer-based loyals
What’s the ‘cheapest option’ with the best offer? That is what transactional loyal customers are looking for when choosing a venue.
They want to save money, more so now than ever.
Businesses can keep them hooked with regular offers and discounts, though their loyalty is, as is the case with habitual loyals, not related to a specific venue.
3. Loyalty-program loyals
The third type of loyalty can be categorised as the ‘satisfying option’.
Customers are engaged and actively interacting with your business based on your loyalty program and previous good experiences.
Despite the fact that their main goal is to climb up the ranks and get rewarded (price sensitive), they are certainly attached to your brand.
They are willing to spend more and chances are high that they tell their family and friends to join your loyalty program.
4. Emotional loyals
No doubt, these are your most valuable loyal customers. For them, your venue is the only option.
They are deeply connected to your brand due to ongoing value creation from your side. They identify with you. Call them your brand fanatics.
With high attachment and affinity comes advocacy. Hence they also love to spread the word about your place and attract new customers for you, for free.
This is the category you want all your customers to be in.
How to move customers around in the matrix
Based on the matrix, habitual and transactional loyalty can be categorised as passive loyalty. On the contrary, loyalty-program-based and emotional loyalty as active.
The question is how to get customers from a passive to an active level.
Here are some ideas to get you started:
Customers come with their individual needs and expectations and especially habitual customers tend to also have certain behavioural patterns.
This is when customer data insights come in handy. Use your CRM to build unique 360° customer profiles.
So, for example, instead of sending out a generic’ birthday offer’, dig into your order & pay app data.
Let’s assume a customer always orders an espresso martini. Try this email instead: “Celebrate your birthday with us. The espresso martini is on the house today.”
Adding an extra personal touch can go a long way and convince your passive loyals to switch from a money-driven to a value-driven mindset.
2. Online & offline experience
The hospitality industry is special in the way that there are offline and online touchpoints along the customer journey.
To raise brand awareness and value perception you need to provide a unified experience across all. I.e. make your brand recognisable.
This way, passive customers will become more aware of whom they are actually engaging with. Even more so if the overall experience was frictionless.
Gamification can add another fun layer to your loyalty program.
It keeps customers engaged and encourages them to interact with your brand more frequently. Which in turn drives their emotional brand attachment.
Besides, if they have fun they will share it with others, win-win.
Tip: Find some clever gamification ideas in this article.
4. Referral scheme
A referral scheme is especially useful to move already active loyals to the highest level.
Customers get rewarded for their ongoing loyalty. You can show that you really value them.
After all, you’ve chosen them to advocate for you, so they feel proud. Which in turn enhances emotional attachment.
Tip: Here’s how you can set up a simple referral scheme.