As an ecommerce store owner, you’d be forgiven for thinking there’s only one type of customer loyalty (either they are or aren’t, right?). In reality, there are multiple types of customer loyalty based on consumer behavior theory and from what you can find in your customer data.
In this guide, we’ll cover seven different types of customer loyalty, including:
We’ll offer a definition for each of these types of loyalty, but more importantly, we’ll also cover how to build each type of loyalty, what to do for customers who show each kind of loyalty, and the business risks associated with them.
Beyond the types of loyalty, we’ll also give you some ideas on how to categorize your customers’ loyalty, tactics for increasing customer loyalty, and how loyalty programs can help address multiple types of loyalty.
The seven types of customer loyalty
Knowing the specific types of customer loyalty will give you a much better understanding of how to communicate with your customers based on their loyalty type.
These retention tactics also work well with several models of customer loyalty, which we’ll discuss in more detail in a later section. First, let’s go over the seven types of customer loyalty we mentioned.
Inertia
The first type of customer loyalty we’ll cover is perhaps the most passive. Inertia-based loyalty refers to customers who don’t actually have a strong preference for a brand—they just can’t be bothered to switch to a competitor.
You’ll usually find this type of loyalty among brands that offer purely utilitarian products, for which there is little need to build emotional connections.
How to build it
In a passive sense, you don’t necessarily need to do anything special to build this type of loyalty; you just need a good product that does what it says on the tin.
However, we wouldn’t advise folks to actively try developing inertia-based loyalty. The main strategy for doing so is to make it difficult for customers to move to a competitor (think, a little like utility companies) — this works best if you offer a product subscription.
Risks of inertia-based loyalty
The obvious risk of inertia-based loyalty is that the customers don’t actually have a preference for your brand. So, if a competitor comes along with a much better offering or an appealing introductory offer, it’s likely to convince your customers to take action and switch.
What to do if customers show this type of loyalty
The best way to address inertia-based loyalty is to build a stronger relationship with customers, replacing the inertia with active enthusiasm. Some strategies to help you do this include personalized email marketing and creating a loyalty program (the latter we’ll discuss in more detail later).
Transactional
Transactional loyalty refers to customers who are loyal based on price and convenience. They’ll stick with a brand because it offers the most “bang for the buck”, or conversely, one that is high-priced but high-quality, which means less frequent replacement.
How to build transactional loyalty
This type of loyalty depends on your goals. If your brand positions itself as a more affordable alternative to a higher-priced alternative, the best approach is to highlight your pricing strategy and make frequent comparisons to competitors online.
On the other hand, if you position your brand as a higher-quality alternative to a cheaper competitor, you will need to highlight your product’s benefits more frequently. For both approaches, email and social media are good channels for promotional material.
Risks of transactional loyalty
Similarly to inertia-based loyalty, the problem with transactional loyalty is that there’s little-to-no relationship to leverage when a competitor undercuts your brand (or otherwise provides a similar offer).
So, with more choices available for a customer whose loyalty is mostly transactional, they’re not likely to stick around if a competitor offers more or “better” value.
What to do if customers show transactional loyalty
Again, the solution for combatting purely transactional loyalty is to build a stronger relationship foundation — making it so that even if another brand comes along with a similar or “better” value product, they’ll stick with yours.
One of the best ways to accomplish this is by building a simple earn-and-burn loyalty program. These programs offer point rewards for transactional customers who behave exactly as they already do—the difference is that your brand is providing a value “buffer” through points.
Social
Social-based loyalty refers to customers who are loyal to a brand because other people are loyal. In consumer behavior theory, this can also be an expression of the “looking-glass self,” in other words, behaving based on the way we think others see us.
In this sense, customers who are social-loyal tend to follow social trends, and this is most easily observable in the fashion/apparel niche.
How to build social loyalty
There are two ways of looking at social loyalty. First, is the hot, bright, and fast-burning trends — this type of social loyalty is what you’ll find in fast-fashion and seasonal trends.
To build this type of loyalty, you’ll need to think about social media virality (most likely posting on TikTok). It’s no guarantee, of course, but that’s how the game works.
On the other hand, you’ve also got brands that inspire social loyalty due to a sense of exclusivity or prestigé. This type of social loyalty is a little easier to achieve and better for your brand in the long term.
To build this kind of social loyalty, you’ll want to create an on-brand loyalty program that promotes the sense of exclusivity and belonging to a “club” of other members.
Risks of social loyalty
The main downside of social loyalty in the first case, is the knowledge that trends come and go — and you’ll always need to stay on top of them to cater to social-loyal customers.
On the flip side, if you try the exclusivity route, you’ll inevitably exclude some customers who may not want to join a loyalty program.
What to do when customers show social loyalty
In the case of quick trends, capitalize while you can—promote your trendy products on TikTok and Instagram, create ads on these platforms (and maybe Google Ads, too, for the search channel), and so on.
For customers displaying long-term social loyalty, you can capitalize by creating a referral program, increasing your customer acquisition and retention at the same time.
Engagement
As we move forward on this list, the forms of loyalty are becoming increasingly more desirable for brands. In this case, engagement-based loyalty refers to customers who engage with the brand beyond purchases.
Sounds pretty simple, but it refers to behavior such as following your brand on social media and engaging with your content, responding to feedback callouts, or other types of active engagement.
How to build engagement-based loyalty
To build engagement-based loyalty, the minimum you need to do is be proactive and give your customers something to engage with—whether that be online content, a loyalty program, emails, requests for feedback, or user-generated content.
In this case, you’ll need an active, well-rounded marketing strategy, which should include:
- A detailed Ideal Customer Profile (ICP)
- Opportunities for personalization (email)
- Channel(s) for community building (e.g., social media groups/pages)
To level up further, it’s also worth considering building a loyalty program for customers to engage with (this helps you target customers who don’t use social media). With a loyalty program, you can use gamification strategies to encourage even more engagement.
Risks of engagement-based loyalty
There is very little downside to engagement-based loyalty, only that you’ll have to work hard to keep the attention of your customers and produce high-quality content for them to engage with.
What to do when customers show engagement-based loyalty
The best approach is to return the engagement! Make sure that customers who are engaging with your brand beyond purchases are heard and valued by responding to engagements as much as reasonably possible.
Behavioral
This next type of loyalty is a quieter one. Behavioral loyalty refers to customers who demonstrate loyalty through purchasing behavior rather than using words or feelings — they repeat purchases or have higher average order values.
Note that behavioral loyalty is different from transactional loyalty. Transactional loyalty is mainly concerned with price or convenience, whereas behavioral loyalty demonstrates more commitment.
How to build behavioral loyalty
One of the best ways to build behavioral loyalty is by offering a loyalty program to reward these customers. Doing so helps convince customers who like your brand but don’t regularly shop or order as much at once to change their behavior.
For example, after MoxieLash created their tiered loyalty program, they found it generated a 3x increase in members returning to make a second purchase, and a 1.5x higher average spend compared to non-members.
Risks of behavioral loyalty
While actions often speak louder than words, customers who commit through behavior alone may still be willing to switch to a competitor should they create a similar offering.
What to do when customers show behavioral loyalty
It’s good that your customers are demonstrating behavioral loyalty, but you can take this relationship a step further. Try building a more emotional connection with these customers to deepen the relationship and make them less willing to move to a competitor even if a similar offer comes up.
Emotional
Moving to matters of the heart, emotional loyalty refers to customers who have formed a deeper, emotional bond with a brand. They’ll use language like “I love [brand],” and “[Brand] is there for me when I need them.” This is almost the perfect type of customer loyalty.
How to build emotional loyalty
Building an emotional relationship with a customer takes time and effort, and it’s not something you can force. That being said, there are certain strategies you can use to help develop this type of relationship with your customers.
As mentioned a few times, a loyalty program can do the trick here, but more specifically, a value-based loyalty program. One example of a value-based loyalty program is LEGO Insiders, which rewards customers not just for purchases, but also for registering LEGO sets, engaging with the customer community, and contributing to initiatives like LEGO Ideas.
Risks of emotional loyalty
As with any type of relationship, when emotions develop, it raises the stakes of risk.
If a customer who has developed emotional loyalty to your brand experiences a big enough issue (or lots of smaller issues), you may break their trust and they can churn — in some cases, loudly, by denouncing your brand online.
As such, it’s always a good idea to monitor customer support tickets and integrate customer support with your loyalty program. Otherwise, just because a customer develops emotional loyalty, that doesn’t automatically mean they’ll shop more.
What to do when customers display emotional loyalty
Developing an emotional relationship with your customer is a big deal, but you can take this a step further by encouraging these customers to spread the word about your brand and helping you acquire more customers (i.e., turning them into advocates).
To do this, you’ll want to create a value-packed referral program. For example, Ofra Cosmetics‘ program generated a 56% increase in repeat purchase rates and a 59% increase in customer spend, while the referral program alone generated over $180k in revenue.
Advocacy
The final type of customer loyalty we’ll examine is the holy grail of loyalty: customer advocacy. Customer advocates go out of their way to tell everyone how great your brand is.
How to build advocacy
Given the value that customer advocates create, it would be no surprise to find it’s the hardest type of loyalty to build — it takes more time and effort than any other type, and much like emotional loyalty, you can’t force it.
However, building on what I previously mentioned in the emotional loyalty section above, the best way to develop advocacy is to have your customers participate in a referral program, or otherwise reward them for creating user-generated content.
For a good example of the latter, we can look at The Pulse Boutique, who created an on-brand loyalty program named Pulse Perks. The program was designed to increase engagement and develop a broader base of customer advocates by rewarding customers who create written or photo reviews of their products.
Through Pulse Perks, the Pulse Boutique saw a 39% uplift in returning customers, a 19% increase in AOV, and generated $200k in earned rewards purchases.
Risks of advocacy
Similarly to emotional loyalty, customer advocates are still customers — if they’re on the rough end of a poor customer experience, it can dash all the hard work you’ve put into developing the relationship.
What to do when customers show advocacy
When customers show advocacy, there’s very little you need to do or build on except encourage their continued community engagement and reward them for their loyalty.
How to categorize the loyalty of your customers
Now that we have a better idea of the different kinds of loyalty your customers might be demonstrating, we ought to take a closer look at how to categorize your specific customers.
Reading through the definitions above, you might already have an idea of the loyalty landscape of your customers. Even so, going through the following exercise(s) can be helpful for greater accuracy.
Before anything else, you’ll want to figure out your customer journey map (CJM)—a loyalty program customer journey map would be even better if you already have one.
Either way, the general wisdom on this topic is that there are five stages in the customer journey:
- Awareness
- Consideration
- Decision
- Service
- Advocacy
Provide a detailed customer journey map (including touchpoints and customer actions), as it’ll make it a lot easier to categorize your customers’ loyalty in the “decision” stage (or similar) and beyond.
After determining your customer journey map, use customer data to segment them according to behavior and map them onto appropriate stages of your CJM. Here are some example segments you can use:
- New customers
- Most likely type of loyalty: Transactional
- CJM stage: Consideration/Decision
- “At risk” customers
- The most likely type of loyalty is inertia, Transactional, or Social
- CJM stage: Service
- Customers with high/low Customer Lifetime Value (CLV)
- Most likely type of loyalty: Behavioral, Emotional (high CLV), Social/Transactional (low CLV)
- CJM stage: Service
- Customers with high/low repeat purchase rates
- Most likely type of loyalty: Behavioral, Emotional (high RPR), Transactional (low RPR)
- CJM stage: Service/Advocacy
- Customers with high/low average order values
- Most likely type of loyalty: Behavioral, Advocacy (high AOV), Social/Transactional (low AOV)
- CJM stage: Service/Advocacy
- Customers engaging in the referral program
- The most likely type of loyalty is advocacy
- CJM stage: Advocacy
With LoyaltyLion’s analytics dashboard, you have these metrics easily available. In other cases, you can also find this kind of data in Shopify’s customer data dashboards.
With the customer data mapped onto your customer journey map, you’ll have meaningfully categorized your customers based on their level of loyalty, and crucially, you’ll be able to see which customers to focus on for different loyalty strategies.
How to create more loyal customers
With your customers segmented and categorized based on their type of loyalty and stage in the customer journey map, you can move onto practical tactics for increasing your loyal customer base and moving them along the CJM.
We can now refer back to the strategies that we discussed earlier in each type of loyalty — but a little more linearly:
1) For new customers in the late consideration/early decision stage:
Since these customers are most likely demonstrating transactional loyalty, to move them along the CJM to the mid-to-late “service” stage, you’ll want to actively encourage them to join your loyalty program, or otherwise start engaging with your brand through other means.
2) For customers who are “at risk”:
Since these customers are likely showing Inertia type loyalty (or a stronger type of loyalty, but have had a bad customer experience), you’ll want to use win-back strategies to not only retain them but develop a deeper relationship.
Some win-back strategies include offering a free gift, bonus reward points, or one-off perks in a loyalty program.
3) For customers in the “service” stage that have low repeat purchase rates or low CLV:
These are the customers most likely showing transactional or social-based loyalty. In this case, you want to use strategies that help increase RPR and CLV, moving them closer to Engagement and Emotional loyalty, or late-stage “Service” on the CJM.
Start highlighting the benefits of your loyalty program if you have one, particularly low-effort points-earning strategies to build up the engagement. Otherwise, another strategy to increase these metrics is offering product bundles that increase AOV or a subscription service to increase CLV.
4) For customers with high RPR or CLV:
Since these customers have likely developed emotional (at the very least behavioral) loyalty, you’ll want to move them along to Advocacy. In this case, a great strategy here is having a tiered loyalty program with a high-value “VIP” status with a referral program built in.
Otherwise, a high-value referral program can also help turn already-engaged customers into advocates.
How loyalty programs affect customer loyalty
As you’ll probably notice, throughout this guide, we’ve emphasized the importance of using loyalty programs to build multiple types of customer loyalty.
To conclude this guide, we’ll quickly cover what types of loyalty programs are most effective for developing the different types of loyalty (with the exception of Inertia-based loyalty).
Earn-and-burn loyalty programs:
This type of loyalty program is the simplest. It rewards members with points for purchases, which usually earn discounts. The structure of this program is particularly well-suited for building transactional loyalty.
Tiered loyalty programs:
A tiered loyalty program is the kind that customers can move from one tier or “level” to the next (higher value) tier through engagement and purchases. It can be useful for a few different types of loyalty, but they’re most effective in building Engagement loyalty and Behavioral loyalty.
Value-based loyalty programs:
If your brand has a particularly powerful mission or value statement (and actions to support them), a value-based program can help you empower your customers to join in with your brand. For example, Edgard & Cooper offer loyalty members the option to plant trees or donate a meal to a shelter dog.
Subscription loyalty programs:
Whether referring to premium “paid for” loyalty subscription programs, or programs that specifically reward product subscriptions, these are great options for developing behavioral loyalty as a step above simple engagement.
Use LoyaltyLion to help you develop customer loyalty
By now you should have a better understanding of the nuances surrounding customer loyalty — what different types of customer loyalty look like, how to build each type, risks associated with each type, and what to do to improve the loyalty of your customers.
One of the most effective solutions for identifying loyal customers and increasing customer loyalty is building a loyalty program. With LoyaltyLion, you can build an on-brand, customizable loyalty program that suits your business needs and helps you build a long-term customer loyalty strategy.
Check out LoyaltyLion’s pricing page to find a plan for your store.
Managing your program
