Designing marketing strategies based on loyal vs. habitual customers
If Jane comes to your store every Saturday and spends $200, would you consider Jane a loyal customer? Businesses often define loyalty based on how much consumers spend and how often they buy. But digging a little deeper into the psychological reasons behind “loyalty” can generate important customer insight and target marketing strategies.
In Jane’s situation, there are two possible reasons behind her “loyal” behavior:
- She really likes your products and services. So when the need arises, she always buys from your store;
- She comes to your store out of habit, whenever she’s on her way to visit her grandma on Saturdays.
In other words, both habit and true loyalty can drive Jane’s loyal behavior on the surface. Your optimal marketing strategy should be different based on the exact reason involved.
How Are Loyalty and Habit Different?
To understand the difference between loyalty and habit, think about someone who gets up every morning and drinks his cup of coffee (or orange juice for the more health-conscious). He may really like coffee/orange juice, or he may be doing that simply because that’s what he has always been doing for the last 20 years.
It turns out habit and true loyalty are quite different processes. The table below lists a few key differences.
Why Should You Care?
Since both a habitual customer and a loyal customer can buy a lot from your business, you may wonder why you should care what category the consumer falls into. Here are a few reasons why:
- The effectiveness of your promotional campaigns may be different between loyal and habitual customers. For example, research shows that brand-related promotions are more effective among loyal customers than habitual customers.
- How your customers respond to your competitors’ offerings are different. Although both can be fairly resistant to these offerings, loyal…