Brand loyalty is a myth: experience is what drives growth

Loyalty schemes, cards, discounts and rewards all rest on the assumption that loyalty exists and can be bought. The founder of a customer experience consultancy argues that what businesses call loyalty is usually convenience, habit or a lack of alternatives, and that growth comes from somewhere else.

Tom Belt is the founder and managing director of AAWE, a customer experience

 consultancy that works with organisations on customer experience strategy and design. In this contributed piece he sets out his own view of why businesses should stop celebrating loyalty and start measuring experience.

For years, too many businesses have tried to build customer loyalty through simplistic activity: schemes, cards, discounts and rewards, all under the assumption that loyalty is enough and will keep customers coming back.

But loyalty is not bought, and most customers will choose the path of least resistance rather than put up with inconvenience in the name of loyalty.

The challenge businesses face is that they often mistake repeat purchases for loyalty, when the reality is that the customer is simply choosing what they think is the most suitable route to get what they want at any given time. This is especially obvious in sectors such as retail and financial services, where comparison websites, challenger brands and changing customer expectations have made switching easier than ever.

The harsh reality is that customers care less about brands than many businesses think they do. What they really care about is what they get. Any customer who has been with you for years would switch to get a better experience elsewhere, whether through how they buy, the support they get, better products or price.

What many businesses describe as loyalty is actually something very different. It can be convenience, familiarity, or simply a lack of alternatives. A customer might stay with the same bank for years. That does not make them loyal; it means they have not come across a reason to switch. The same applies across retail, utilities, insurance and countless other sectors.

That is why organisations should be careful about celebrating loyalty in isolation. If customers are staying because switching feels hard, because they do not want to shop around, or because a competitor has not made a better offer easier to buy, then that loyalty can disappear quickly.

Expectation meets reality

Every customer has a job they are trying to get done. Brand awareness can earn consideration, but the first purchase is determined by the customer experience. When customers are looking to buy something, renew something or solve a problem, the only thing that really matters is whether their expectations match the reality of the experience. This is where customer experience sits: not customer service, not reviews, surveys and sentiment, but the real ways a customer experiences each interaction. That directly influences business growth.

Customer experience starts long before a customer contacts a business and continues long after. It begins with expectation, set by what people see and hear. It continues through how easy it is to buy, the follow-up communications they receive and how issues are resolved through support.

We see this in practice. When we worked on MoneySuperMarket's SuperSaveClub proposition alongside New Commercial Arts, customers were already conditioned to shop around. The opportunity was not to convince people to become loyal; it was to create an experience and proposition that gave them a reason to stay longer and engage more. Similarly, our work with the digital bank Zopa focused on overhauling its app as the main point of customer interaction, helping the business prepare to scale as it introduced new products.

What the metrics miss

One of the biggest mistakes businesses make is assuming customer experience can be measured through a handful of metrics. Reviews, net promoter scores and customer satisfaction surveys all have value, but they do not tell the full story on their own. A five-star review does not automatically mean the journey was frictionless, and negative reviews often represent only the small percentage of customers motivated to leave feedback.

When we look at the full picture, end to end, the challenge is more often found not in surveys and reviews but in unnecessary friction, confusing processes or operational inefficiency.

This is why many organisations invest heavily in acquisition, brand and marketing and still struggle to hit growth targets. They can attract customers and tell a compelling story, but the customer experience is more than that, and much of it happens once the journey to purchase begins. If, at that stage, a customer has to work harder than they expected to get what they want, they are more likely to quit and less likely to return.

Businesses do not grow because their customers are loyal. They grow because they consistently exceed what customers expect through the reality of their experience. That is what creates the first sale, and every one after it.