I recently read a whitepaper co-written by Don Peppers - www.peppersandrogersgroup.com
In it, it discusses the types of Loyalty. It describes Attitudinal Loyalty, occurring when a customer is favorably disposed to you: they like you and they trust you. The other definition of loyalty is behavioral loyalty, which is measurable by transactions: a customer is loyal if they buy repeatedly.
Of course we all want customers to be attitudinally loyal but the paper reasons that the only real business benefit of loyalty comes from behavioural loyalty.
In my opinion this is not the case. I may regularly shop at the local Tesco, but this Behavioural Loyalty is a Forced Loyalty as it is the only supermarket within easy reach . I might however on an ad-hoc basis use Waitrose..and I love the Waitrose experience so much that I recommend it to friends and family as a result of my attitudinal loyalty which results in an indirect business benefit to Waitrose.
I am surprised that Mr Peppers does not take this into account – but I am wondering if the fact that the paper was co written by Oracle’s VP of CRM Applications influenced the focus on a transactional viewpoint.
You are correct in your suggestion that behavioral loyalty without attitudinal loyalty isn’t worth much. But at the same time attitudinal loyalty without behavioral loyalty is worth nothing at all. We have written much more extensively about the difference between behavioral loyalty and attitudinal loyalty, and you can read about the many different implications of this at our Strategy Speaks blog http://www.peppersandrogersgroup.com/blog/ and throughout our 1to1 Media web site http://www.1to1media.com (just search either place for “loyalty”).
ReplyDeleteBoiling it down: attitudinal loyalty without behavioral loyalty has no financial benefit, but behavioral loyalty without attitudinal loyalty is not sustainable, for all the reasons outlined in your post. Therefore, BOTH types of loyalty are important, and each reinforces the other.
We stand by our conclusion that the business benefit of a changed attitude is zero, without some type of changed behavior. If you disagree, please name a financial benefit that does not involve a behavior change on the part of the customer.
One more thing: While your post is a good reminder to everyone that having customers who are satisfied – and not just behaviorally loyal – is important, I do hope you don’t really suspect we would alter our thinking based simply on the identity of the sponsor of our white paper. Anyone who doubts that this is Martha’s and my honest and objective point of view about the nature of behavioral and attitudinal loyalty can read the same exact conclusion we espouse in this white paper by turning to our graduate-level textbook on CRM, Managing Customer Relationships http://www.1to1media.com/view.aspx?ItemID=634, and looking up the sidebar in Chapter 2 on this specific topic.
- Don Peppers
Mr. Peppers, thank you for your comment.
ReplyDeleteI agree that BOTH types of loyalty are important, and each reinforces the other. I think where we differ on this point, however, is the use of the term behaviour. Again I agree that the ''business benefit of a changed attitude is zero, without some type of changed behavior'', but your paper with Oracle focusses on the Transactional aspect of behaviour. I only point out that my Attitudinal Loyalty does not always readily translate into a direct Transactional Business Benefit that can be measured as a result of perhaps any marketing activity pointed in my direction. If we can use ''change of behaviour'' to include my willingness to become an advocate then we may very well find an indirect business benefit as my friends and family act on my recommendations and provide some ''transactions' to the lucky, or rather well deserving, brand.
For the record, I in no way meant to infer that you ''would alter our thinking based simply on the identity of the sponsor of our white paper''. But as the paper was co-written or sponsored by Oracle of course a Transactional viewpoint was central to the discussion.
Point taken, about transactions. Of course the actual transactions and interactions a person undertakes with a marketer are the most observable behavior, but recommending a brand to a friend is also - in my book, anyway - a type of "behavior." It might not be as observable as a purchase or a payment or a Web site interaction, but it is still more than an attitude. And in these days of social media, as more and more customer-to-customer communications occur online, even a brand recommendation is often quite observable!
ReplyDeleteThanks both of you for let me understand easily the difference between those types and it is very important points. Can I ask a thing? Researchers have indicated that their studies based on behavior loyalty, but then most of them used some factors may belongs to attitudinal loyalty such as Trust. In addition, they also used Structural Equation Modelling when did so. So, it makes me confuse to get it. Is there any other approach to determine loyalty mixed both of them? or is it just related to SEM? please answer me, (Sorry my poor writing, I'm not native in English)
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