Do you have any values? If so, let them show

Taking a stand can actually help you create true customer loyalty.

In the quest for customer loyalty, companies want to know what they can do to establish and maintain their customer relationships over the long haul. That begs the question, what drives customer loyalty? According to a study my colleagues and I recently published there is more to creating customer loyalty than just awarding points. Our research found that true, enduring loyalty comes from six key relationship drivers:

  • Trust
  • Appreciation
  • Investment
  • Reliability
  • Empathy
  • Shared Values

Each one of these drivers could have a blog post of its own, but for today, I’m going to focus on shared values.

From a customer’s perspective, shared values means that they feel a connection to the companies they do business with. It starts with a customer seeing the value in the products or services a company sells but it goes beyond that. It also includes a company’s respect for the consumer and the community we share. In many ways, consumers believe that the brands they choose are a reflection of who they are.

Assuming many share your company’s same values, showing your customers what you stand for can actually boost your bottom line by creating a stronger emotional bond with your customers. But this is where things get interesting. That emotional bond with your customers is not going to come from values like Motherhood and Apple Pie. While those are lovely, they are so ubiquitous and vanilla that they don’t really differentiate you in the eyes of consumers. Values like these are taken for granted and therefore do nothing to help your customers identify with you more closely. The kinds of values that create more enduring customer loyalty are the ones that help customers more fully understand your company’s personality and outlook on the community. When customers realize that you see the world the same way your company does, stronger emotional bonds form, which leads to better customer loyalty.

Let’s look at a few real-world examples. In September 2014 CVS became the first national retail pharmacy chain to stop selling tobacco products in all of its stores. The reason? Selling tobacco conflicted with its core value of helping people on their path to better health. This was a bold move since at that time tobacco sales accounted for between $1.5B and $2B of CVS’s annual sales. This risk definitely showed up in the following quarter’s sales numbers, where general merchandise sales dropped. But in that same quarter pharmacy sales increased 4%, and a year later merchandise sales rebounded and continue to increase. CVS’s courage paid off, not only did it help more people quit their smoking habit (a study they funded proved their move actually drove cigarette sales down throughout states where CVS had a 15% or more share of the retail pharmacy market), it also helped customer loyalty and satisfaction. That’s a win for the community, a win for customers and a win for CVS. Who can’t like that?!

A more recent example comes from Dick’s Sporting Goods. Following the school shooting tragedy in Parkland, Florida, the sporting goods retailer decided to take a stand on the gun control issue. On February 28th of this year Dick’s Sporting Goods announced that it would no longer sell assault style rifles, high capacity magazines or firearms to anyone under 21 years of age. Wading into the waters of the highly contentious, heavily reported-on gun control issue took real courage from Dick’s. The move wasn’t easy. The retailer received boycotts and social media threats from certain groups shortly after their announcement. But those on the other side of the issue, which, it turns out, outnumber those against any form of gun control, came out in support of the retailer. According to a Sprout Social analysis, tweets sent in the aftermath of the announcement jumped 12,000% and 79% of them showed a positive sentiment.  

The financial markets responded favorably to the announcement as well, with Dick’s stock trading up for that day. Even more encouraging was the observed lift in store traffic shortly after the announcement. Two separate companies that track retail store traffic, reported a lift of between 3% and “a high single digit” for Dick’s stores for the week immediately following the announcement. Three months later, the retailer is still doing well. In late May of 2018 the retailer reported Q1 earnings that exceeded Wall Street’s expectations, raising shares 24% the day of the announcement.

There is no question that showing your true self to the public can have its risks – especially on highly charged issues like gun control – but when you do and your views align and resonate with a large number of your customers, your bravery and authenticity can really pay off in true, enduring customer loyalty.