Loyal Customers vs. Habitual Customers – There’s a Difference
I read something recently about beer drinkers where the author said that Brand X customers were so loyal to the company that it didn’t have to worry about its core customers switching brands.
Whoa. There’s a difference between loyal customers and habitual customers. In my experience, loyal customers are actively engaged in choosing a brand whereas habitual customers are no longer actively engaged. If another brand captures a habitual consumer’s interest, they could switch – a costly loss. Is the beer company that confident in their customers’ loyalty?
Quite a number of years ago, I was doing research in the high-end, white tablecloth chain restaurant segment. As I was moderating group after group, I was met with silence when asking about their decision-making process. After the first group I thought “maybe it’s me.” During the second group, when I met with the same silence, I probed even more. By the third group, I’d figured out what was going on. Most of the target consumers were older and had been dining out 2-4 times a month at these high-end chain restaurants. They’d been doing this for so long they could no longer explain why they were doing it. “That’s just what we do.”
The key consumer insight for the client was one they didn’t really want to hear: this restaurant segment was dying. I believed it was going to take some time, but two things were at play. First, the segment customers were older and in many cases were (literally) dying. Second, target consumers – both younger and older – had more options than ever before (Cheesecake Factory, PF Chang’s, Macaroni Grill, etc.) and these options met their needs and were places friends and family liked to visit.
While a few chain restaurants of this type still exist today, the segment is almost completely gone.
Irrespective of segment or category, how can you engage your more profitable customers to ensure their repeat business? Is there a way to make them brand advocates vs. passive purchasers?
Tags: Consumer Insights, Marketing, Restaurants
Jan 06, 2010
McKinsey has done some work on typology of loyalty and come up with three different types of loyal customers namely ; Deliberative Loyal, Emotive Loyal and Inertial Loyal customers. I guess the example sighted by you may be more of an inertial loyals.
Jan 06, 2010
I hadn’t read about their types before…good to know. From their names, I would agree with you about the inertial loyals.
Jan 06, 2010
Very true! The typology seems to be logical and your view regarding the consumer’s loyalty towards the particular beer brand also holds good. However, i feel that for beer brands, emotive loyalty may hold good as well. Statements like: “This is our brand”, “Every year we repeat this” have some emotional contribution to the brand loyalty. Just like every brand has a story behind it, every brand loyalty has a story behind it! Just try to remember the good experience you had with a brand and thats the story!
Jan 07, 2010
I concur there is way too much “rut” or habitual thinking going on, not just amongst consumers but also with marketers. One the best ways I have experienced is to get those that live in the ivory tower of the C-suite out into the trenches with the consumers. The insights that come from this nexus are very interesting and often actionable. This is not an easy task, but it is a vital one if we truly desire to be innovative and break out of habitual thinking.
As for habitual thinking on the part of consumers the goal is too encourage them to roll over into evangelists. How best to do this is an ongoing debate.
Greg
Jan 08, 2010
I am not clear what you trying to express, except the fact that you are talking something about habitual thinking. what we are discussing about is all about the loyal customers and their buying behavior. What makes the marketers believe that their product will be bought even if they do not advertise about it. it happens only when the consumer is loyal. When is he/she loyal? It depends upon teir experience with the product and what value addition they perceive or in short the typology i.e. Deliberative Loyal, Emotive Loyal and Inertial Loyal customers!
Jan 12, 2010
Do not know the background of McKinsey typology but seems to be close to what we employ (mostly in FMCG shopper research): to distinguish between “numeric loyalty” and “preferential loyalty”, simply between “buy it” and “want it”. The resulting 2×2 matrix shows clearly the position of brands, chains etc. The emotive vs. deliberative polarity seems to refer more to details of decision process (‘why do you prefer this brand’) and would be better treated separately from loyalty issues. BTW: ‘habitual behavior’ is one of the deepest mysteries of purchasing process, IMHO, and a thing of prime interest to marketing/market research
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