Loyalty and Bonding
One of the consistent themes of the technology market is the incessant march from one paradigm to another and tracking customer attitudes about vendors serves up a great example.
When we began tracking customer attitudes seriously in the last decade, we were looking at satisfaction. It was based on the assumption that a satisfied customer was some kind of nirvana. The customer asked for something and the vendor provided it whether product, service, information, or something else. What possible other configuration could a customer have other than satisfaction or its opposite? That question was usually derived from HIPPOs, the Highest Paid Person’s Opinion. But what did they know? Their frame of reference was person-to-person retail.
Indeed customer satisfaction was the standard for a long time, especially in retail where we dealt primarily with delivering the exact product a customer asked for. But things change, arms races take hold and a newer style of customer emerged that vendors wanted to cultivate, the loyal customer, one that will come back and buy something else.
Loyalty is good but it is hard to measure in a passive but satisfied customer or a hostile and simmering one, so it involves things like attitude, which can also be traced to satisfaction. Thus a satisfied customer could or could not be loyal depending on almost anything and so the Net Promoter Score (NPS) was designed by Fred Reichheld to help us measure whether or not customers were so loyal they’d recommend us.
Unfortunately, the NPS is forward looking. As buddy Paul Greenberg rightly points out, it doesn’t say if a customer has (past tense) recommended a vendor, product, or brand only that if the occasion permitted that the customer would (see, conditional future tense). Not good enough.
Today many vendors need a stable of customers who actively sing their praises in social environments like communities because so much influencing happens before a vendor can get into a sales cycle with a potential customer. These customers are labeled advocates because they presumably advocate for the vendor. But advocacy is a higher hurdle than either satisfaction or loyalty and it requires a greater commitment called bonding.
Bonding is the new black. It shoots past loyalty into a higher orbit that can only be reached if a customer has successfully engaged with a vendor and found it worthy. I like to point out that bonding is not a one-time thing, that customers have micro-decision points throughout their lifecycles. At each decision point, which I call a moment of truth, a customer makes a decision—what might even be a sub-conscious decision—like “This vendor rocks!” or “Who is this turkey and why did I buy that thing?” Add up the positives and subtract the negatives and you will know if you have bonded. But the rating scale is highly variable. Positive experiences (customers experience moments of truth) may not weigh as heavily as negative ones for the simple reason that the negatives have a tendency to derail the train while positive experiences simply get the train to the next station, no muss, no fuss.
Speaking of trains, Tolstoy knew this and a whole aphorism has grown up around this inequality called the Anna Karenina Principle. You could look it up if you wanted to.
So it’s bonding that counts because it drives advocacy and in contrast loyalty looks confused and so turn of the century. Nonetheless, there is a large and thriving loyalty industry that I think could use an injection of Anna Karenina and moments of truth. Where loyalty tends to be well intentioned but vague and dispersed, bonding and advocacy offer a direct path to a predictable and repeatable result.
Moments of truth and the Anna Karenina Principle form the basis of Customer Science, which you can read about here. It is a social science that gets to the heart of what motivates customers to act—the familiar structures of a relationship with, say, a vendor, or the impulse to take agency and find something better.
Loyalty still has its uses and it is a good term but with bonding and everything that underlies it, we at last have an approach that can deliver more predictable results.