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Loyalty defined

The dictionary defines loyalty as the state or quality of being loyal. Loyal is "having or showing continued allegiance; faithful to one's country, government, [brand] etc."

Loyalty in the retail environment is best defined as a state of mind or attitude in which the customer has a desire to purchase your product offer in preference to a competitor's alternative. Loyalty in this sense is relative, rather than an absolute concept since the strength of the desire will vary from customer to customer.

Loyalty is a combination of emotional ideas such as faithfulness or allegiance and also more practical behaviour such as consistency. Since customer behaviour, not customer emotions, actually creates profitability, the significance of brand loyalty in a business context is an area of intense debate.

Loyalty can be defined as a list of categories:

  • Monopoly loyalty, which exists where no choice is available (eg government legislation establishing a single supplier such as a utility company).
  • Inertia loyalty, characterised by customer's unwillingless to actively seek alternatives.
  • Convenience loyalty, in which the driving force is location of retailer.
  • Price loyalty, in which consumers constantly evaluate alternatives and are loyal to the retailer with the lowest available price.
  • Incentivised loyalty, driven by reward for consistant customer behaviour.
  • Emotional loyalty, the only category consistant with the original definition; typically found in brand loyalty.

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