The Psychology of Loyalty

Conventional wisdom relentlessly reminds us that the key to success for a small business—or any business for that matter—is loyalty. It's so vital that there's an entire industry devoted to loyalty marketing—books, Webinars, and consultancies promising miracles. Most of that advice is practical and transactional, concentrating on discounts and the importance of customer service. Much of it is painfully obvious.

But not enough attention is paid to the subconscious underpinnings of loyalty. Following are some of the highlights of what is known from a psychological perspective.

"Loyalty is an emotional concept with strong unconscious components...not measurable through direct report," writes psychologist Joel Weinberger, an expert in unconscious processes and a founder of research firm Implicit Strategies. That means you can't ask people "Why are you loyal to this store?" and get an honest answer. They aren't consciously lying; rather, they are largely unaware of the associations that drive loyalty.

To inspire more loyalty, Weinberger says, a small business should create a caring relationship and establish a mutual basis "where obligations are involved." Both sides have accountability—each has to keep its word and behave "justly" toward the other. The brand needs to treat customers with respect, fairness, and consistency—all the characteristics of healthy interpersonal relationships. At the same time, the customer needs to respect the brand. For example, if a company makes the mistake of pricing an item too low and the customer takes advantage of it, that customer will not remain loyal because the chain of mutuality is broken. The customer will feel ashamed and shop elsewhere.

Thus loyalty and trust are driven not by price, but rather through a relationship where each side derives real value. If loyalty were just about price, Weinberger points out, "Red Lobster would be a huge winner—but its popularity ebbs as soon as its 'specials' do."

The premise that unconscious motivations drive loyalty is a relatively new idea. Behavioral psychology and neuroscience have shown that consumers aren't always rational creatures; we make decisions based on feelings and emotions.

Because behavioral psychology has opened up a new way of thinking about the choices and decisions we make, every small business that cares about loyalty and engendering trust must have a basic understanding of this discipline. Once businesses gain these insights, they'll be more successful in generating loyalty from their customers.

Following are three examples of how our behaviors guide our loyalties:

1. We tend to give too much weight to the first piece of information we receive. "Everything you learn about someone or something is filtered through the first impression," Weinberger says. For example, if a person gets 100 percent on his first test and 70 

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