Loyalty is awesome. Companies and organizations have put a lot of effort into trying to create Loyal Customers that will buy from them ahead of their competition. Loyalty is something to be coveted for sure and a great position to have in the market. Essentially, you can think of Loyalty as “margin.” Margin in the sense that you have a “margin of error” with your customers when they are loyal to you. If you mess things up, they usually give you another chance. What this margin is depends on how loyal they are to you – this is a variable margin, not a set margin.
For example, if someone is truly loyal beyond reproach, then you have a large “Margin of Loyalty” with that person. If you have a low margin of loyalty, then one or two problems or too large of a price increase and they might start looking at your competition. The goal is to create as large of a margin as possible – duh. There is an additional discussion around how much that is worth vs. how much it costs to achieve that i will share at another time. For now, that is the essence of Loyalty.
Advocacy, on the other hand can occur whether the person is a customer or not (see earlier post, Customers Don’t have to be Advocates). But when a Loyal Customer becomes and Advocate, you have rung the bell! Now you have someone who is committed to you as a customer out there “proactively” talking about you – it doesn’t get any better than that. They can relay their experiences and stories about how you treated them as a customer and be selling you to them at the same time. This is the ultimate goal for obtaining “word-of-mouth marketing/selling”. This is why I call this combination, “The Invisible Sales Force”. More on that in another post as well.
The big difference between Loyalty and Advocacy is the “proactive” actions that are taken by an Advocate. Someone can be extremely loyal and say great things about you, when they are asked, and this is great. But the ultimate goal should be to find those customers who are loyal and are also willing to be your advocate. No longer are they “waiting” to be asked how great you are, the are out there “telling” people how great you are. This is substantial. My recommendation is to look at all the customers you have that are in the Loyal category and see which ones you would also say are advocates. This can make a huge difference when you do your strategic planning…