22 May 2013 469 words, 2 min. read

How to use customers’ habits to increase customer loyalty

By Pierre-Nicolas Schwab PhD in marketing, director of IntoTheMinds
Customer satisfaction is now subject to controversy as far as its effect on customer loyalty is concerned. As we recalled in a presentation on loyalty strategies that we have given ca. 10 times in Belgium in 2012-2013, customer satisfaction accounts […]

Customer satisfaction is now subject to controversy as far as its effect on customer loyalty is concerned. As we recalled in a presentation on loyalty strategies that we have given ca. 10 times in Belgium in 2012-2013, customer satisfaction accounts for a maximum of 10% in customer retention. What this means is that 90% of customer loyalty is NOT influenced by customer satisfaction.

Although many different antecedents exist, some theorists say that habits are at the origin of most loyalty patterns observed.

 

How does a habit work?

In the presentation we gave we explained how an habit works. It’s always in 3 steps.

  • Step 1: there is a cue. This cue can be a visual, olfactory, … cue. Anything that actually can trigger …

  • Step 2 : … a reaction. This reaction transforms into an habit if there is …

  • Step 3 : … a reward

How to use customers’ habits to increase customer loyalty

Rather than giving you lengthy explanations, we’d prefer to give you a concrete example. The latter was actually given to us by an Romanian entrepreneur we wet at one of our latest conference.

Emanuel has developed an application to measure … happiness in a team. This application asks you to rate your happiness every morning and sums up the happiness factor of the whole team. How the information will be used and how it can be monetized is not yet know. Yet, like with every mobile app, the danger is that users get bored and that using the app becomes a fade. Most app are indeed downloaded and tested by users before being abandoned because the app is only marginally affected.

To overcome this danger Emanuel used a habit-based strategy.

 

Three steps to make people addicted to your mobile app

What Emanuel did is actually rather simple. He used the three steps above and gives the user a reward for using the app every morning.

  • Step 1: you get a daily trigger to use the app (in the form of a reminder)
  • Step 2: you rate your happiness
  • Step 3: you get a reward which is … a daily quote to inspire your day and a nice picture

 

It’s simple. I was actually struck by how elegant this solution is.

 

 

Advice for your marketing strategy

Use the 3-step approach above to leverage customer loyalty. We are not saying that adding a reward will be sufficient. If you think you can bypass customer satisfaction you’re wrong. Customer satisfaction is so basic that it needs to be ensured by all means. We dream of a world where loyalty cards would be abolished and where customer loyalty would be based on non-monetary rewards. Approaching production development with the “habit perspective” will certainly help you go beyond monetary rewards and envision a new world.



Posted in Marketing.

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