Loyalty Universals: What Retailers Should Leverage

Loyalty is a very tricky term to define. And even trickier to achieve.

So, let’s level the playing field here. Brand loyalty is a shopper’s preference for a particular brand, be it a retailer or product, and a commitment to repeatedly purchase that brand in the face of other choices. Traditionally, retailers establish loyalty programs that offer rewards to repeat customers. This allows retailers to keep track of preferences and buying habits, but is this loyalty defined?  It could just as easily be understood as opportunism, transient and fleeting, driven by a transactional relationship rather than long-term engagement.

To make matters more complex, loyalty takes on different flavors across the globe. Hong Kong offers many loyalty programs, including Octopus Rewards, which can be used to earn points in certain shops, including McDonald’s and Wellcome supermarket. The idea is that the rewards and loyalty are derived from the shared well-being of the group. In this instance, loyalty is more than an individual and the business. It is about facilitating interactions within the socio-cultural network as a whole. It moves the decision process away from simply finding “good deals” to a reflection of one’s place in the social structure, with Octopus Rewards becoming a facilitator of what it means to be a good person. This is reflected in the historical and cultural underpinnings of China (see The Sociology of Loyalty by James Connor for more detail).

Loyalty programs established in Russia have been less successful than anticipated because they are seen as an intrusion into a person’s life. To some, participating in a loyalty program funds activities that violate privacy (Doing Business in Russia by Sergey Kolpashchiko). Again, as with China, history and cultural patterns shape expectations and beliefs about these programs.

So if rewards are no guarantee of loyalty, and significant cultural differences shape whether or not a loyalty program will take root, how do you establish real, meaningful, long-term loyalty that transcends these variances?  Well, the good news is: there are universals. 

As wealth increases and people have more free time to spend shopping, experience and interaction within the retail space becomes more important (see The Comfort of Things by Daniel Miller). Loyalty becomes less about price incentives and more about catering to notions of self, personal comfort and local identity. It becomes intertwined with establishing emotional bonds that translate into devotion.

Loyalty, then, relies on shifting the conversation to achieve a specific paradigm:

Rewarding loyalty for loyalty’s sake is not an obvious path, but it’s a worthwhile one.

The idea of shifting the focus from paying people to stick around to one of deep engagement involves risk, commitment and a well-developed strategy segmented to various shopper types and consumer levels. But the payoff moves your retail brand from one of volumes to one of margins.

Tell a story that appeals to loyalists, engage them and you win. Treat customers differently and reserve the highest level of respect for those that stand by you. That’s when you will see brand devotion that transcends global borders and cultural underpinnings. It’s loyalty, defined. And achieved.

What brand did you first become loyal to? Share your thoughts below or on our LinkedIn Group.