Used to be, customers were often regulars because either perceived switching costs were high or they had no option awareness. That’s not so true anymore, so they’re been abandoning mediocre brands in droves, into the arms of companies which actually care about them.

Used to be, margin was the firm’s key performance indicator and employees’ focus was on maximizing the bottom line. For the better brands, that’s not so true anymore. These brands regularly demonstrate a deep understanding of their customer, their needs, the context in which they use their product, and most importantly, why they are customers. These companies focus on the customer experience first, track ROI on the various experience initiatives, and enjoy continued financial success via a more customer-centric path.

So-called loyalty programs are easy to measure and thus often serve to help management feel good. Yet they’re not indicative of true customer loyalty. Purchasing a new product on a regular basis, or having an active subscription to your service means nothing in terms of loyalty, because awareness is approaching infinity, and switching costs are at historical lows and getting lower by the day.

Consider the four reasons why your customers remain loyal:

– This company cares about me and what matters to me, and acts accordingly.
– This company cares about the things I care about (e.g., climate change, community building) and acts accordingly.
– This company cares about the quality of the product/service they create and acts accordingly.
– This company cares about fixing it when things go wrong and acts accordingly.

See anything in that list like, “After a tenth purchase I get a free [product]”? Exactly. Because these are all related to the company’s focus. And like magic, suddenly producer and consumer values are aligned. That’s what creates loyalty. Successful customer retention strategies are built upon this shared set of values.

Yes, understanding your customers—and the story they tell themselves—is difficult work, and in the short term can cost. But it’s better than the alternative and pays dividends over the long term. How will you define your customers’ loyalty?

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Summer sunset at Garden of the Gods.