Loyalty is not the Holy Grail

Byron Sharp and Kate Newstead

A loyal customer may not be your best customer. They may have little interest in your category, sticking with your brand for an easy life, and will be low volume purchasers

Loyalty is important. All marketers want this year's sales to re-occur next year and the year after. Yet the loyalty obsession often leads marketers down a path unlikely to generate brand growth, profitability, and – strangely – even loyalty. Brand loyalty follows empirical laws established by decades of scientific marketing research. Marketers who don't know these laws misinterpret their own metrics and risk falling prey to consultants touting mysterious proprietary loyalty metrics.

Over the past decade, many marketers spent heavily on 'loyalty marketing', realising miserable returns. Other marketers, like Apple and HSBC, who have moved away from narrow loyalty marketing, use a handful of empirical brand loyalty laws to their advantage. These are the marketers who embrace sophisticated mass marketing to build larger, more profitable brands.