What is customer loyalty and where did it come from?

This post was updated by the editor on 13/07/2020.

It’s a term that’s used a lot in retail. Go to any seminar or conference and you’ll hear experts talking about how important it is. But just what is customer loyalty? Where did it all start and why could it make such a difference to your ecommerce business? This article aims to answer these key questions – and how the definition of customer loyalty can help shape how you look after the people that choose your business over others.

We even have a handy infographic to show you how long customer loyalty has been around.

What is customer loyalty?

Customer loyalty is the term that describes how devoted a customer is to your brand and its products or services. A loyal customer is more likely to shop with you instead of your competitors and recommend you to their friends.

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The definition of customer loyalty also means someone who keeps coming back you again and again. It’s often based on the experience they have when shopping with you. It could be for a range of reasons – from shared values to rapid delivery or a generous loyalty program.

It also means that someone isn’t motivated by the price and availability of what you offer. It’s based on the quality of what your brand offers. More often than not, the definition of customer loyalty also means someone who’ll always pick your brand – even if it means paying more. In fact, research shows that 86% of consumers would put a great experience over price.

Defining customer loyalty: Is it a new thing?

The definition of customer loyalty in marketing certainly isn’t a new thing. Go back as far as you can imagine, and you can see examples of loyalty schemes. A 2018 report from the US found that more than three-quarters (77%) of consumers had been loyal to specific brands for 10 or more years. Even the majority of millennials (60%) could say the same thing.

More companies are now investing more money into customer loyalty programs. It’s common practice to set up loyalty programs as an essential marketing tool. When it can cost five times less to keep hold of existing shoppers than acquire new ones, it’s not difficult to see why. But where did it all start? Well, customer loyalty – and its definition – is older than you may think.

The earliest known form of loyalty marketing dates back to 1793! With our infographic, you’re able to chart its development and transformation into what we recognise and use today.

History Of Loyalty Programs Infographic V2

Why is customer loyalty important?

Customer loyalty has been a focus for companies for many years. It has resulted in some of the most innovative marketing strategies too. Loyalty programs, cards and apps are a major part of this too – as some of the best examples show. Time and again, they prove to be so effective for improving a brand’s customer retention rate – and helping them grow.

The importance of customer loyalty can’t be underestimated. A loyalty program encourages and incentivises customers to return – offering rewards in exchange for purchases and more. There’s research to suggest that loyalty can drive up revenue between 12 and 18% every year too. But there many other benefits of customer loyalty – some you might not have realised.

What is the definition of a customer loyalty program?

Now we know what the definition of customer loyalty is. But what about a loyalty program? How do they work? Well, this can very much depend on the type of loyalty program – and the type of consumer. You can build a program that rewards people for what they buy (or how much). Then again, you could offer incentives for things like referrals, reviews or site visits.

It all depends on what your brand wants to achieve from it. And, of course, it’s important to get an idea of what your customers need and want. The benefits are there for both sides.

At LoyaltyLion, we can help your brand get to grips with the loyalty schemes definition that best suits your ambitions. Our platform is incredibly flexible – one that you can adapt as you wish. It gives you the freedom to create those meaningful bonds with your customers. And, in doing so, keeps people coming back to your brand long into the future.

Book a demo with one of loyalty specialists and discover the power of our platform today.

Want to know more about the definition of customer loyalty and customer retention? Download a copy of our free ebook, The quick guide to customer retention.

About the author

Alison Murtagh

Alison is a Marketing Assistant at LoyaltyLion. After starting at the company as Office Manager, she began helping the Marketing team with projects in her spare time. Since then, she has developed a strong interest in Marketing and joined the team full-time, working on content, events and social media.

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