What is customer loyalty?  I asked a number of business people the simple question, “What is customer loyalty?” The answers were mostly similar. Most agree that customer loyalty means the customer will come back, again and again.

However, what customer loyalty doesn’t always mean is that the customer is loyal to you, and only you. In other words, they may do business with you, but are also still doing business with your competitors.

The concept of “wallet share” came to mind. I’ve been talking (and writing) about the concept of “wallet share” versus “market share” for many years. Quick explanation: The concept of market share has to do with how many customers that are able to buy your product actually buy it.  For example, if there are 100 customers in a given area that could buy your product, and 60 of them buy it, then you have 60% market share.

Wallet share takes the concept of market share to another level. Of those 60 people who buy from you, how many of them will still buy from someone else? If they only buy from you, then you have 100% of their “wallet share.” If they split their loyalty between you and someone else, you only have 50% “wallet share.”

At the highest level of loyalty, your customer only buys from you. In other words, they give you 100% wallet share.

So customer loyalty has two tiers…

Read more here.

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