Customer loyalty is a myth, just ask my taxi driver

I loved my local taxi firm – low prices, lots of cars and easy to book. Sure, the car was often “just round the corner” and it was a bit annoying that I had to call if I wanted to pay by card, but overall they were great. I used them all the time.  

Then Uber came along with its one-tap ordering, cashless payment, and map of where your car actually was. So I switched. Immediately. Years of using the same taxi firm meant nothing to me when this new service appeared on my phone screen.  

That’s because, for most organizations, customer loyalty is a myth. Loyalty is a particularly personal thing, driven by association with other humans. It’s a feeling that links people together under some common purpose or relationship, “a strong feeling of support or allegiance” as the Oxford English Dictionary puts it. It’s a feeling of emotional connection, not functional transaction.  

Many of these connections will be with individual people, political parties or athletic affiliations. It’s (sadly) become a frequent sight at English lower-league football grounds to see long-time fans collecting money to try to rescue their club from collapse – something that I don’t recall seeing outside the boarded-up windows of Woolworths HQ. If customer loyalty does exist, then it tends to be with smaller, local companies – those that are a crucial part of the community or where the owner is personally known and regularly visible. Therefore, in a world where bigger organizations are focusing on the functional experience, loyalty is just shorthand for usefulness – or, more specifically, staying more useful than the alternatives. 

The last 20 years has provided plenty of evidence of this as much-loved institutions such as Woolworths, Blockbuster, and British Home Stores (BHS) – as well as entire industries – have found their customers to be anything but loyal. Shiny, new, more useful alternatives appeared on the digital horizon, causing customers to sprint towards the light, only stopping to swap memories of their misspent youth in the pick-and-mix aisle. 

Usefulness comes in many forms. For some customers, it’s a more “useful” price while for others it’s ease of use, with anything that requires leaving the sofa an insult to customer experience. It could even be status: why do people queue for days outside the Apple Store to be the first to buy a phone they could order online and have delivered? Not always because of the useful price or the useful product, but the useful status marks them out as “Someone Who Buys New Apple Things As Soon As They’re Available” and is therefore a) rich, b) trendy, and c) very much in control of their time management. 

But as customer experience has become more faceless, so loyalty has become more transient, with a better, more useful proposition just a tap away (and the ability to find out about that offer only needing a few more taps, or a well-worded question to Alexa). If you don’t believe me, think about a company that you use a lot. Now imagine they’ve tripled their prices or halved the quality of whatever it is you’re buying. Still feeling loyal? 

This mistaken belief in customer loyalty has a real-world impact on organizations. It encourages an over-weighting of focus onto acquisition and onboarding, believing that once the customer has been attained, they’ll be likely to stay for good. Attention quickly shifts to attracting the next customer, rather than keeping the existing ones happy. It also creates a laziness in design, with loyalty schemes and reward points used to artificially inflate an organization’s usefulness. But these loyalty schemes are not, as their name suggests, anything to do with loyalty. If they were, it’s unlikely customers would have the audacity to stand in front of the cashier at Costa Coffee while removing their Starbucks, Caffè Nero and Coffee #1 cards to find the right one to stamp. (Of course, such cards are extremely useful tools for companies to collect behavioral data on their customers.) 

This isn’t a good situation for organizations to be faced with, leading to a death spiral of new customer offers and discounted prices alongside a proposition that is quickly copied by new entrants and incumbents alike.  

The only way for organizations to get closer to genuine loyalty from customers is to act in a human way – to create a personal connection through colleagues who are allowed to throw off corporate shackles and show genuine care, not just regulatory compliance. Focusing on creating this emotional connection can create deep relationships, ones that outlast any bumps in the road. This will mean more customers joining off the back of genuine recommendations and word-of-mouth marketing, and more customers remaining as contented customers.