How is Corporate Culture and Customer Loyalty Connected?

This article is about how corporate culture and customer loyalty are connected. Interestingly it is the same bonds that connect corporate culture and employee loyalty.

Why are customers loyal to a company?

Customers are loyal to a company when they feel valued by the company and when they feel they can trust the company. Trust takes a long time to build and no time to destroy, which is why a transparent, honest and consistent corporate culture is essential for the long-term success of any company.

Customer loyalty is further strengthened if the customer can identify him- or herself with the values that the company has. And here I am not talking about all the rubbish that appears on company websites and in company presentations. I am talking about the real values that the company has.

What are a Company’s real Values?

Real values are the values the company willing to defend – willing to make sacrifices for. A company might brag that customer service is a value, but if the only thing the company cares about is short-term profit and consistently is letting the customers down, then it is not a value.

If however, customer service really is a value, employees and customers will be able to tell stories about how customer satisfaction was put in front of anything else. When values are real you have no need to write them down. You only need to write down your values if you don’t have them – if they are just wishful thinking.

So values are real if people know them by heart and fake if you have to write them down.

Most customer loyalty programs don’t work

Most customer loyalty programs don’t work because they are separated from the corporate culture of the company. As outlined above, customers become loyal when they can mirror themselves in the company. If a company is on a mission that the customers can relate to and appreciate they will develop loyalty because this bond creates an affiliation that can be very powerful. That is why we often see successful companies that were started by enthusiastic people with a dream of making a difference often end up as disasters when they are sold to investment firms that only care about the financial profit. It goes like that because the employees lose their spirit. The customers can feel that and start looking for another company where they can get their values confirmed and stimulated.

Most customer loyalty programs are all about offering discounts to those customers who stay longer and spend more money. This is an extremely short-sighted and not-too-intelligent strategy. Anybody can replicate that strategy, which means it is a race towards the bottom.

The intelligent customer loyalty program

If you want to develop an intelligent customer loyalty program you have to connect the factors that make your customers loyal together with the true corporate culture of your company. In order to identify the true culture of your company, you have to conduct a cultural due diligence process where the cultural DNA of the organisation is described in detail. When you know your real values you can decide if you want to build customer loyalty based on these values or if you need to go through a corporate cultural change process first. Download the presentation on how we in Gugin facilitate the cultural change process in companies here.

When your culture is right your employees will feel enthusiastic because there is a clear link between what you say and what you do. That lowers the cultural friction in the organisation and makes everybody feel good.

Your customers can feel that and they want to be a part of it. They can become a part of your great corporate culture by engaging with you, buying your products and services and sharing stories about how your product or services has improved their life.

How do you develop the Corporate culture and Customer loyalty together?

There are a number of different factors that contribute to the corporate culture. Together they make up what we call the cultural DNA. Interestingly, many of the factors that contribute to development are also factors that contribute to the development of customer loyalty.

If you take a look at the model on the right. The way you solve problems in your organisation affects both the internal company culture and how customers will perceive you. If you prioritise solving your customers’ problems quickly and effectively it will, of course, increase customer loyalty at the same time as it will create a norm and a value in your company that customer service is important, valued and rewarded.

So you will end up rewarding employees who provide great customer service and you will reward loyal customers in one or the other way.

You see, everything is connected and you have to start with developing the right corporate culture before you can expect your customers to become loyal. Gugin has worked with a number of companies on this in many industries, including the aviation and hospitality industries. And the picture is clear. They donøt become really successful until they connect the two – corporate culture and customer loyalty – and in that order.

So what shall you do now?

Firstly you have to develop a customer loyalty strategy that clearly defines what kind of loyalty you want from your customers and answers the question “Why should a customer be loyal to my company?” If your answer is related to financial incentives you have to start over again.

When you have found the right answers to that question you have to check how well your current corporate culture can deliver that foundation for the loyalty you want from your customers. Gugin can help you with that. Most likely you will have to go through a cultural change process, which we will be happy to facilitate for you as well. In fact, it is very unlikely you will be able to do it on your own because you are emotionally attached and highly involved.