One of the biggest leaks in the bottom line of a business P&L can be attributed to concerns around loyalty, from both customers as well as the people in your business.
The amount of money that is earned and lost in business on account of loyalty is quite incredible!
Whether it’s via customer retention, staff turnover, or our loyalty towards suppliers that translates into savings, even towards trades services that help with rent roll maintenance, there are so many elements to your business that loyalty can affect.
Studies have shown that the cost to hire a new employee has drifted to more than $23,000 per candidate, and it can be up to 14 times harder to engage a new client than re-engage an existing or previous client.
Clearly, this is a topic needs a lot more attention.
Now, back in the day, a person’s word was a person’s bond, with loyalty being one of those things that was a cardinal sin to break.
Today, almost everything has become disposable, including products, services, relationships and even marriages are easily dispensed of, with the swipe of a finger!
So the first question that you need to ask yourself isn’t ‘how’ you can create loyalty, but what the definition of loyalty is these days.
Key components of loyalty
Whether you study customer loyalty theories or read however many books on personal relationships, there tends to be a common theme around three key elements or steps – affinity, attachment and trust.
Each of these elements are given off the back of a series of actions that are specific to each one and can be achieved in a number of different ways.
But it is safe to say, that in order to make the step from one to the next, there needs to be a strong existence of the former before anything can move forward.
Do different generations look at loyalty differently?
Absolutely they do!
Every generation has that inherent want to be loyal to something, be it a team or an organisation, because, by nature, we’re pack animals.
However, each generation sees loyalty differently, and therefore how we earn it changes depending on the generation each team member belongs to (generally speaking, of course).
In a number of articles and studies, it has been shown that Baby Boomers have a strong lean towards the team and see being part of a team as tremendously important.
Whereas Millennials and Gen Z’s place a lot more importance on the feeling of growth, both in financial terms but, in a lot of cases, they’re looking to avoid feeling ‘stagnant’.
And Gen X? They love comparisons to make sure they’re kicking goals!
So if each generation has different wiring, then how does this translate to our workforce?
Internal (Staff) loyalty – Is it all about money?!
Ask 10 business owners why staff leave, and right now 9.5 of them will put it down to one thing – they’ve been offered more money to go elsewhere.
But, unless these people are being offered three to four times their current remuneration package, there are far more things that come into play way before remuneration becomes an issue.
So if it’s not about money…then what is it?
Let’s not be naive – of course money plays a role in a team member’s decision to stay or leave, but if we were to approach loyalty from a purely financial perspective, then we’ll back ourselves into a very expensive corner and become slaves to wage demands.
It’s a band-aid solution to a broken leg problem!
But if we are to do things like create a culture that makes our staff feel like there’s more to life at work than the pay cheque, then we need to take a look at how we’re feeding into the feeling of belonging to a business and what contributes to that for each individual.
From a human perspective, if we were to look at the six basic human requirements that Tony Robbins takes from Maslow’s Hierarchy of Needs, at the very top of the list is ‘certainty’, followed by ‘variety,’ and then significance.
In the 2023 Price Waterhouse Cooper (PwC) ‘Hopes & Fears’ study, they ascertained that there are four key areas that employers need to focus on in order to feed into these three essential requirements for a human in today’s business environment.
On the surface, this looks like standard rhetoric that we hear ad nauseam, but when you cross-reference them with our three key elements that create loyalty (affinity, attachment and trust), then simply bringing AI systems into the business to keep up to speed is not going to keep staff happy.
I bet that if you dig into your business to discover the ways you navigate these four areas across those three elements, there will be huge gaps in your support structures and you will need to work out how to satisfy them.
Most leaders do plenty to build affinity with their employees and teammates – going on team-building jaunts, celebrating awards, providing kit and the various standard things – but connecting with them requires you to build attachment by finding the reason they’re working with you in the first place.
If you take the most common concern around cost of living, you might doubt that you can show actions that you take within your business right now to build affinity, attachment and trust.
The cost-of-living crisis is understandably a key concern for employees, and you might assume that increasing salary is the solution.
However, it also highlights that up-skilling in ‘financial wellness’ ought to be in every leader’s playbook, if they want to retain talent.
Realistically, unless you make a substantial increase in salary, a token $5000 – $10,000 will feel good for about a week until they realise that the net income makes little more than a small dent in their issues.
There’s an interesting correlation between the desire to upskill and the concerns around financial hardship, in that there appears to be less financial hardship coming from those that actively look to upskill.
Throwing money at the wage bill is not the solution.
While there may be a financial attachment, it’s not going to be a healthy one, and only it provides short-term endorphins as opposed to addressingnlong-term issues.
To create ‘affinity’ for your team around this, you could start by listening to their concerns, and then provide educational opportunities like inviting speakers/facilitators in to educate and create action/accountability around money behaviours.
Then create an ‘attachment’ for the team by setting a clear path to financial growth (including growth opportunities within the business on a timeline), and from there, build ‘trust’ by helping them grow according to that timeline.
Customer loyalty – Understanding the value in your existing data
Forbes reported that an existing customer is 14 times more likely to re-engage with a business that a it is for a ‘cold’ customer to engage for the first time.
If you look at your current prospecting methods, you could argue that almost all of it goes into the ‘affinity’ basket, and from there you jump straight to asking for the trust of the customer with their biggest asset.
Providing market sales, free appraisals, flyers, social media posts, cold-calling and more, are all plays that give you the hope that you will stay front of mind, but give you very little chance of creating any real attachment to your brand.
Current technology within the industry has shown this to be true!
If you look at the likes of RiTA (AI prospecting software), the initial research on existing data shows a big percentage of stock comes onto the market with a competitor, despite being in the client’s database.
Prospecting (or ‘affinity’) tasks are tremendously necessary, but if you were to assess the volume of resources that are spent on them and re-distribute those resources to reflect where the increased probability of success lies, it would be a different story.
What can we do to create more attachment?
Two words – relevant personalisation.
This applies to almost every generation!
If you can provide a stable level of personalised messages, gestures, information and thinking, then whether the prospect wants to admit it or not, they are more likely to feel a sense of attachment to the business.
And personalisation doesn’t simply mean adding their first name to an email or SMS.
Like with any information presented at a listing presentation, it will all fall on deaf ears unless you can create a link between the information and their specific story or situation.
Because you’ve been too focussed on ‘building trust’ with your people, you have missed a piece of your operations, be it for clients or team members.
You’ve tried to jump from affinity directly to trust, without creating the actions that build attachment through the relevant personalisation of your actions, both internally and externally.
The solution?
Setting processes and practices that focus on the relevant personalisation of either your management or customer connection to build a natural level of attachment that will lead to trust.
I spoke to a few lads who were in their late 20’s at my gym the other week and asked them what loyalty looked like for them.
They joked at first and said ‘money’, but then quite quickly altered their demeanour and said, “I want to know that my manager has my back”.
I’m pretty sure that feeling isn’t going to be found in the bottom of a pay packet.
