What is the Loyalty Ladder?

The Loyalty Ladder is a Framework that Classifies Customers, according to their degree of Loyalty to a Brand or Product.

 

The aim of this Model is to help companies understand how loyal their Customers are.

  • And more important: How much more Loyal they could be.

 

Although there are different representations of this concept, the most common Loyalty Ladder Classifies Customers into 5 categories.

Five Stages of Customer Loyalty

1. Prospect: People that just think about purchasing a Product.

  • But hasn’t yet done so.

 

2. Customer: Sporadic consumers.

  • People who occasionally buy the Product.

 

3. Client: Regular Customers.

  • People who buy the product for its characteristics (including the price).

 

4. Supporter: Loyal Customers who have a connection with the Brand or Product.

  • They Forgive the Mistakes made by the Company and certain defects that their products may have.

 

5. Advocate: Clients who Proactively recommend the Product to other People.

  • Supporters who speak well of the Company to others.

Loyalty Ladder

 

Let’s see the first example:

Loyalty Ladder example: Apple

 

How is it possible that, each time Apple releases a new iPhone (relatively similar to the old one, by the way) hundreds if not thousands of people crowd the doors of every Apple Store?

 

Because Apple Customers tend to be among the most Loyal Customers you can find.

  • Apple has lots of Advocate Clients.

 

We all have a friend who has an iPhone or a MacBook, who always tells us:

  • I would never use other phone or PC“.

 

How has apple managed to have such loyal customers?

  • By offering a very good product but also, by associating Values to its Brand.

Values such as: Alternative, Unique, Special, etc. Just look at their Ads.

 

* If you are interested about it, we suggest you to visit our “Branding” and “Push & Pull Marketing” Pages.

Before giving you some advice on How companies build Loyalty, we need to clarify an important concept:

  • The difference between Loyal and Captive Customers.

 

People tend to use the expression “client retention” without distinguishing these 2 terms.

  • And they are completely different.

Loyal vs Captive Customers

 

Loyal Customer: A Customer who loves a Brand or Product and buys it because he feels a bond with it.

 

Captive Customer: A Customer who needs a Product because he doesn’t have much alternative.

 

Example of Captive Customer

 

Why do you think Gillette makes that incredible offers?

Because once you have purchased its Razor, you will be Captive.

 

You’ll have to buy its Blades like it or not.

  • That doesn’t make you a Loyal Customer, but a Captive one.

Now comes the million dollar question:

  • How can you make your Customers Loyal?

How to move Customers up the Loyalty Ladder

Target the right Customers.

  • Not all customers will become Loyal Customers. Focus your efforts in the right people.

 

Establish an honest relationship with your Customers.

  • Don’t try to fool them. Make life easier for them, in the best possible way.

 

Build an image around your Brand.

  • Your Brand should never be an Sterile Logo. It must mean something.
    • Learn How to do it in our “Branding” Page.

 

Use Storytelling in your Ads.

  • These Ads must reinforce the image associated with your brand

 

Look for Customer Insights.

  • Find out What really drives your Customers when choosing a certain product.

Now, let’s look at some examples:

Loyalty Ladder examples

All Companies have all types of Customers.

  • Some of them are more Loyal while others are just Sporadic consumers.

 

However, there is always a group of Customers that predominates or, at least, characterizes a Company.

  • At Apple, as we saw before, Advocate Clients predominate.

 

Now, we will give you examples of Companies that are characterized by a type of Clients.

  • We will give you an example of each stage of the Loyalty Ladder.

 

Let’s begin:

Tesla - Loyalty Ladder Advocate example

 

This is a “weird” example.

Why?

Because most of the people who are crazy about Tesla… don’t actually own a Tesla.

 

Then, why is this “Tesla-craziness”?

Because Elon Musk.

 

Elon Musk embodies the concept that “anything is possible”.

  • SpaceX, Hyperloop, self-driving cars, his project to go to Mars, etc.

 

And, as if he were a prophet, lot of people “follow him”. And, with him, Tesla.

  • He is the Steve Jobs of today.

Disney - Loyalty Ladder Supporter example

 

Disney is a good example of a Company whose Clients are primarily Supporters.

 

Why?

People who love Disney movies:

  • Watch its movies regularly.
  • Feel engaged with one or some of its characters.
  • Go or plan to go to Disney World at least once in their life.
  • Enjoys sharing Disney movies with their children.
  • etc.

People associate the values of Family, Good Times and Childhood with Disney.

 

However, unlike the Advocate Clients, Loyal Disney Customers don’t continually talk about Disney.

  • Their life doesn’t revolve around Disney.

 

Why Disney Clients are “Supporters” and not just “Clients”?

 

If Disney releases a “bad” movie, its Clients will forgive it.

  • Their Loyalty wouldn’t be compromised.

The Values associated with it, make people feel attached to their Brand.

Walmart - Loyalty Ladder Client example

 

We believe that Walmart is the epitome of a company whose majority of Customers can be classified into the category of “Customers“.

 

Why?

  • People shop at Walmart because of the Good Value and Location.

That is all.

 

Generally speaking, there are not Values associated with their Brand.

 

We’re sure that Walmart have lots of Advocates and Supporters but remember:

  • We are talking about the majority of its Customers.

 

In fact, since Walmart has grown so much, we might even consider it to have some Captive Customers.

  • Customers who have no choice but to shop at Walmart.

Starbucks - Loyalty Ladder Customer example

 

This example can be controversial.

  • We are aware that Starbucks has lots of Supporters.
    • People that love having a large coffee while enjoying the free wifi.

 

However, we think that the majority of Starbucks Customers are Sporadic customers.

  • We think their Clients are highly polarized but, Sporadic Customers are the majority.

 

Also, most of people can’t afford to spend $5 regularly on a Coffee.

  • And today, there is free Wi-Fi practically everywhere.
    • In the past, it was a huge “Competitive Advantage” for Starbucks.

 

Compare Starbucks with Coca-Cola.

 

The majority of Coca-Cola Clients are Supporters.

 

Why?

Because they are Loyal to Coca-Cola. Both the Brand and Product.

  • Which are almost indistinguishable.

 

People don’t need free Wi-Fi or a good location to buy a Coke.

  • Also, Coca-Cola is associated to Happiness, Good Moments, Friendship, etc.

 

While Starbucks is associated to nothing.

Let’s summarize the companies studied:

Companies Ranked by Customer Loyalty

Summarizing

The Loyalty Ladder is a Framework that Classifies Customers, according to their degree of Loyalty to a Brand or Product.

 

The most common Loyalty Ladder Classifies Customers into 5 categories:

  1. Prospect: People that just think about purchasing a Product.
  2. Customer: Sporadic consumers.
  3. Client: Regular Customers.
  4. Supporter: Loyal Customers who have a connection with the Brand or Product.
  5. Advocate: Clients who Proactively recommend the Product to other People.

 

Tips on How to move Customers up the Loyalty Ladder:

  • Target the right Customers.
  • Establish an honest relationship with your Customers.
  • Build an image around your Brand.
  • Use Storytelling in your Ads.
  • Look for Customer Insights.

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