Customer retention is not the same as customer loyalty

I read an interesting post on The Free Malaysia Today website about customer loyalty and you can read the full article here

It’s a useful article that any Malaysian business owner should pay attention to. But as often happens, it blurs the lines between customer loyalty and customer retention. They are not the same thing.

A retention program is not the same as a loyalty program because a retention program is normally price driven and those customers acquired as a result of a retention program can often be lost to competitors.

A loyalty program on the other hand will help increase share of wallet by encouraging more purchases, often of more premium products and, more pertinently in the social economy encourage customers to become brand advocates and communicate positively about the brand and experiences with the brand.

A case in point for me personally is MAS. I am a member of the MAS frequent flyer program but it does not buy my loyalty. MAS retains me as a customer but I am always looking for a better deal with other carriers.

If another carrier were to invest in building a relationship with me I would switch in a heart beat. I also tend to talk negatively about MAS and even when it delivers a positive experience I tend to take it for granted.

Whilst I’m on the topic of MAS I should mention that one way MAS could improve its business is by investing in its loyalty program and in particular software that can mine the database more effectively. As it is, all the loyalty program does is try to blanket sell all offerings to all members.

Loyalty is no longer about personal relationships and how often you take someone to karaoke or for teh tarik. Customers also expect you to know their industry, the challenges they face, who are their competitors and crucially, who are their customers, potential customers and who are the influencers of those customers.

If you understand and integrate a loyalty program into your brand strategy you will be on the way to building a strong brand. But if you mistake a loyalty program for a retention program, you may do more harm than good.

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