InsightIQ Blog

Engagement is the New Loyalty

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Oct 26 2009

Loyalty is often simplistically defined as an emotional connection with a brand; a continued preference for something that meets a person's needs in a given category. 

In that same vein, attrition is viewed as a point in time "defection" by a customer that consciously and visibly switches to another brand.  In my experience, companies that adopt this crude definition often miss the fact that customers rarely (expect perhaps in membership or subscription oriented business models) think of themselves as having a "relationship" with a company.  Instead they tend to think in a much more pragmatic and transactional way about how your company meets their needs and whether your products deliver value for money.  Viewed from that perspective, attrition is a much more complex and subtle issue and the right measure is "engagement," which is a composite measure of the many individual actions a customer takes on an ongoing basis that touch your brands in ways that lead to purchase. 

In banking, for example, a customer may not close his account(s), and may therefore still appear to have a "relationship" with you.  In reality, however, he may run down his balances to a point where he has effectively moved his business elsewhere.   That phenomenon, which falls short of the traditional definition of attrition, is called "diminishment" and can be seen in some form in most businesses.   It demonstrates the fact that customers can be superficially viewed as "loyal" even though they disengaged a long time ago. 

The lesson is that you have to clearly and unambiguously define retention in a way which is specific to your business and incorporates the concept of engagement.  That gives you a set of criteria which you can clearly and consistently apply across your entire organization so that your personnel know what to look for in their interactions with customers or in looking at their behavior patterns.

 

 

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