Brick and Mortar Loyalty is Different Than Online Loyalty

Michael Greenberg has presented an interesting note in his article of August 25th published in the Multichannel Merchant that makes an interesting case that loyalty for brick and mortar companies is very different from loyalty for companies that are online. The obvious point is that customers who visit brick and mortar companies have to travel some distance to comparison shop whereas the online company is only a click away from all of its competitors. He provides two interesting definitions for loyalty.

The overall definition for customer loyalty according to Mt. Greenberg is a reflection of preference and choice. Within this definition he defines RATIONAL loyalty as the rational decision to choose one provider over another for a given purchase. It is measured by share of wallet.

The second definition is EMOTIONAL loyalty which reflects an attachment of the customer to a brand and is not measured by share of wallet. It is measured by word of mouth, referrals and participation in company programs with the customer.

The main difference Mr. Greenberg sees between online and brick and mortar is that online the company has the ability to track nearly all customer behaviour and transactions on the web. The brick and mortar company usually is limited to perceptions usually measured by a customer survey with little or no measure of
customer behaviour.

There are two strategic aspects to these differences.
1. The brick and mortar company can make friends with the customer and build personal bonds whereas the online company has little likelihood of building personal relationships.
2. The online company has the ability to track nearly all customer behaviour and thus can focus entirely on the driving customer value. Since online companies lack the ability for personal relationships that brick and mortar companies have, they must fight for every new customer on equal footing with every competitor (large or small is not easily perceived online).

Mr. Greenberg provides a list of actions that online companies should consider as a means of building customer loyalty.
1. Improve the online experience by making the shopping experience easy.
2. Reward loyalty by appealing to the rational loyalty element and giving the customer a financial reason to return.
3. Clarify the brand by making sure the brand message is consistent.
4. Listen and respond by watching and managing complaint rates and monitor social media for poor feedback. Avoid the likelihood that customers with a bad experience will share it with friends and coworkers.
5. Enable community by allowing customers to share their experiences with others through reviews and forums.
6. Communicate relevantly by eliminating irrelevant communications. Communications should be relevant, timely and useful and track your brand.
7. Minimize negatives by improving an unpleasant experience so it is neutral or better and no longer the source of bad perceptions. (When a bad experience is solved, it will often result in higher loyalty than a customer with no bad experience).

The bottom line is that online companies must act differently than the brick and mortar companies. When all your competitors are only one click away, the online company must offer some reason for the customer not to make that click. This topic needs more investigation; however, Mr. Greenberg has given some interesting perspectives and a real challenge to the online businesses. I think he presented an interesting idea that loyalty has two dimensions; namely rational and emotional. While this makes sense to the casual observer, there is no discussion on how these two definitions work together. The interaction of these two definitions of loyalty is an obvious topic for futures blogs.