The Ugly Truth About Customer Loyalty

It has been 10 years since Dr. V. Kumar exposed the myths of the loyalty movement (Reinartz & Kumar, 2002). Yet, to this day customer loyalty is still sought after as the holy grail of customer success. The age of social media has only served to drown out the voice of reason, since it provides an arguably richer source of behavioral (and attitudinal) data to sift through and analyze. Are we using all of this data effectively or are we just playing with new toys? Let’s see what he was talking about 10 years ago and you can decide if it still makes sense.

The loyalty movement claims a number of things about loyal customers, and we’re going to briefly present an alternative view, based on primary research from V. Kumar. What he found may surprise you. He found that the correlation between loyalty and profitability was weak to moderate in the four companies that were studied. In one study of a corporate service provider, they had setup a costing program in order to track the performance of…