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Sunday, July 17, 2011

Customer Loyalty: Attitude or a Behavior?

The concept of customer loyalty can be approached from one of two different directions: attitudinal or behavioral. “Although each of these directions is valid,” says Don Peppers of the management consultant firm Peppers & Rogers Group, “they have different implications and lead to very different strategies for businesses.”

Defining loyalty as “attitudinal” implies that loyalty is a state of mind. In other words, customers are “loyal” to a brand or company if they have a positive, preferential attitude toward it. In terms of economics, this would mean that someone is willing to pay a premium for Brand A over Brand B, even when the products they represent are virtually equivalent.

The behavioral definition of loyalty, on the other hand, relies on a customer’s actual conduct, regardless of his or her attitudes or preferences. By this definition, a customer is “loyal” if he or she buys from a company and continues to buy from it. In this sense, loyalty revolves around re-purchase activity. In the behavioral definition, loyalty is not the cause, but the result of brand preference.

According to Peppers, the behavioral definition of customer loyalty is more useful and practical because behaviors can be observed, while attitudes can only be measured by using polls and surveys. But this doesn’t mean attitudinal loyalty is unimportant. After all, positive attitudes do tend to drive positive behaviors.