The key to customer loyalty is repeat business and points programs are an effective way to do it - right?

yourMAG and the RSL & Services Clubs Association recently published this article about the benefits of having attitudinally loyal customers.

For Peter Wilton, the answer is no. Sure, repeat customers are good, says the award-winning Australian academic from the Haas School of Business in California, and points programs do serve a purpose. But neither create real loyalty.

"There’s not much you can tell from repeat purchase except you know the customer is not dead yet, but you actually don’t know how they feel,” he said.

Real loyalty is not measured by customer satisfaction either.

"Every organisation I work with, when you ask them to show you customer satisfaction scores, guess what you see? Everybody has scored 60-70% of satisfied customers,” Peter said.

"There’s actually studies of people who switch between two organisations, and as many as 90% of those people were actually satisfied before they switched. Satisfied customers are not necessarily loyal, and the reason a satisfied customer switches is there was no compelling reason to stay.”

The goal, Peter explained, is to convert ‘behaviourally loyal customers’ – repeat business – into ‘attitudinally loyal customers’. Attitudinally loyal customers never consider switching brands. Not only are they loyal, they become advocates for your business and bring more customers through word of mouth, reducing your marketing budget. They are more willing to give you information about themselves, which allows you to tailor more effective cross-selling opportunities, and they are willing to pay more for your product.

In fact, attitudinally loyal customers are literally worth twice as much to your business.

Based on a club of 7,500 members and an average RSL customer spending about $100 a month on gambling, Peter showed delegates how that club would achieve an extra $30m in profit over 10 years if each customer was attitudinally rather than behaviourally loyal.

"Both are repeat customers – behaviourally loyal and attitudinally loyal customers keep coming back. Cross-buying behaviour however is very different. What you notice with the behaviourally loyal customer is they’re not very engaged in cross-buying all the other services we offer.

"You cannot cross-sell anything to anyone until you first understand their motivations to cross-buy. To understand their motivations you need to have information and there is only a certain type of customer who’s willing to give you that information.

"What’s their attitude towards you? The behaviourally loyal customers like you but they’re passive. The attitudinally loyal customer is emotively active. They talk about you and they will actively support you. Testimonials, information, referrals, recommendations, bring their friends – that is the holy grail of customer loyalty, to get a customer into that state where they become a proactive advocate supporting the organisation.

"You can double the profitability of the organisation by simply converting people from behaviourally loyalty to attitudinal loyalty.”

So how do you create attitudinal loyalty? Points programs are useful to collect information about customer preferences but they don’t create loyalty, Peter says.

The key is to deliver "unique and relevant” experiences to your customer, and the way to find out what experiences your members want is to ask them.

"We have to step forward as individual clubs and start to proactively manage our own leadership reputation. We have to strengthen that customer value proposition and build a differentiated customer experience, and build customer loyalty through that,” he said.

"What’s the point of the conversation – to find a new way to become relevant and unique. What I want to do is find a way to create value for my members, an experience for my members that nobody has thought of before. The opportunity to become unique and relevant in ways that you’ve not recognised before is there and if you want to get attitudinally loyalty, that’s the answer.”

"The challenge for all of us when it comes to loyalty is to understand that it’s not sufficient to create satisfaction. The trick, as we come under increasing pressure, is to reinvent what we do that makes us unique and relevant and let us grow that attitudinal loyalty.”

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