Differences between customer loyalty and customer experience

Customer experience and loyalty programmes – how different are they?

Last Updated on

Most of us are aware that customer loyalty and customer experience, although connected, are very different things – and both are vital for your business.

Loyalty – it’s on the cards for proactive brands

When we talk about customer loyalty, we’re speaking to the relationship between the customer and the brand; a relationship which is constantly evolving.  A customer’s loyalty is expressed through purchase behaviour and actions and is encouraged through a number of initiatives and policies including customer loyalty cards and schemes.  Although brands should always aim to offer more than just a loyalty scheme, these can be incredibly effective in encouraging loyalty as well as collating vital customer data. In fact, these can be so successful that many major brands use them as their key selling point. 

Far more effective than simply initiating a scheme, enterprise-wide initiatives can help businesses to increase revenue by up to 20%.  Enterprise loyalty is the process of introducing customer loyalty into every aspect of a business – something which should be common sense as, without customers there is no business. 

In our experience

The term customer experience is a little more complicated.  Whereas customer loyalty simply embraces the relationship between customer and brand, customer experience takes into account a wide spectrum of factors.  The umbrella term, customer experience, covers everything from how a customer perceives the aesthetic of a store to the nitty gritty of site navigation and customer service.  Customer experience is the combination of a number of different factors – and is only as strong as the weakest of those factors.  

SOurce: Feedback Ferret

A customer will measure experience in terms of comparison to – i.e. comparing their most recent experience with your brand with previous experiences with your and your competition’s brand.  

Customer experience can be affected by something as trivial as a quick browse through a brand’s social media, through to the complex experience of a physical store visit.  E-commerce giant, Amazon, for example, excels at providing a consistently strong customer experience. Using intelligent data and content, Amazon uses insights in order to deliver super-relevant, dynamic content tailored to individual customer behaviour, including features such as up selling, cross selling and personal recommendations in the form of ‘people who bought this, also bought……’  Amazon has built an incredibly trusted brand through its super-effective shopping experience. 

In turn, this trust has seen more suppliers flocking to Amazon, allowing Amazon to continue to expand and connect customers to a wide variety of sellers – all within the original Amazon shopping experience.  This kind of personalised and proactive experience makes a customer feel valued and important and therefore encourages loyalty and increases your brand’s profile. 

For a business to thrive, both customer loyalty and customer experience are incredibly important and, we take a look at the factors which drive a brand’s success within these important areas:

A touchy subject

Customer experience – and loyalty – relies on key touch points.  These are the various points at which a customer connects with your brand; from seeing an ad, to viewing ratings and reviews and, from visiting your brand including purchasing and customer service. 

In order to build more loyal customer relationships, a brand needs to identify their key touch points and then analyse each to determine its strength.  In the case of a physical store, employees are, without a doubt, a brand’s key touch point – acting, essentially, as brand ambassadors.

With an online business, it’a a little trickier.  These days, customers experience an onslaught of information every day via email, social media and online advertising and it can be easy for your message to get lost in the crowd. Similarly, customers are increasingly likely to practice showrooming – the art of checking out prices, offers etc online before making a decision.  For this reason, your marketing communications need to be tactical, transactional and dynamic in order to attract new customers – however, this, in itself, is not enough.

Brands need to address both frequency and relevance in order to encompass both customer experience and customer loyalty. British retail giant, John Lewis, is a great example of a brand which excels in both.  Combining in-store facilities such as free wifi and knowledgeable staff with its price guarantee and motto ‘Never Knowingly Undersold’, the brand successfully projects an image of quality, service and price. 

Customer loyalty and customer experience graph
Source: superoffice
This diagram shows a complete customer journey with a brand. Here it shows that experience drives loyalty for existing customers.

Getting customers on board

One of the most effective ways of encouraging customer loyalty at the same time as growing your brand is to get your existing customers on board.  Using incentives encourages customers to become advocates for your brand by giving the brand referrals and engaging with it on social media. Since time began, word of mouth has been one of the most effective ways of gaining new customers and is even more relevant today with countless review sites and forums.  In order to maintain a reputation of honesty and reliability, always avoid the temptation to include ‘fake’ testimonials as these can, ultimately, damage your credibility.

If completed effectively, by getting customers onboard, you can grow a whole wave of brand advocates who are, essentially, doing half the work for you. 

Putting the theory into practice

A brand’s goal should always be to improve customer experience and customer loyalty in equal measure.  As you work toward an ultimate goal of enterprise-wide customer loyalty, you can begin by implementing strategies for greater loyalty and experience. 

Consistently providing a great customer experience creates advocates and increases loyalty.  This builds trust within the brand and customer relationship – including full transparency on data held by your brand (GDPR compliance is vital).  By showing customers that they are valued, you’ll encourage loyalty and, subsequently, customer referrals. As we’ve mentioned, customer’s demands are fluid and ever evolving so you need to be proactive in making sure that you’re aware of what the demands are – and how to deliver them.  

By thinking of the customer as an extension of your brand, you can drive new business and grow organically.