Market Movers Ali Cudby Talks About the Types of Loyal Customers & Importance of Customer Retention

In this two part series, Al Lalani, Co-Founder of Annex Cloud talks with Ali Cudby, Author of "Keep Your Customers" about the importance of customer retention and how to keep your ‘lucrative loyals’ happy.

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Al Lalani:

I want to welcome Ali Cudby to the introduction. Ali, thank you for joining us. Ali is the author of Keep Your Customers. That's a book that just released, and it's an Amazon bestseller already and is an expert on the topic of customer retention and loyalty. Ali, welcome to the show.

Ali Cudby:

Thank you. I'm so glad to be here.

Al Lalani:

Wonderful. Ali, if we may talk a little bit about the current climate, it's very, very specific in terms of what's going on. And I know you wrote the book probably just before this came out, but in terms of keeping your customers happy and retaining your customers and loyalty, as you think about in the current situation over the last six weeks, what we've all gone through, how do you foresee the importance of what you were talking about in the book before this all happened, and how has this shifted over the last six weeks, in your opinion?

Ali Cudby:

Yeah. It's kind of interesting, actually, because as I was writing the book, and I've been in this process for a while, and a lot of people would say, "Well, customer retention... Can you just talk about lead gen? Can you just talk about new customer acquisition? Or, can you just talk about employee retention?" And I would say, "Well, that's kind of what I do." And all of a sudden, with everything going on with coronavirus, customer retention is where it's at. It's the thing that everybody is talking about because when the economy is good, it's easier to focus on new customer acquisition, and it's harder to retain your employees. Well, right now, the opposite is true. Everybody needs to focus on keeping the customers that they've worked so hard to earn, and the employee market has changed tremendously. So, all of a sudden customer retention is a very popular topic.

Al Lalani:

Wonderful. I spent a good chunk of time reading through your book because it's so great where it has a lot of amazing examples explaining some of these things in theory. So, it's very easy to follow, and you've got some real case studies that explain the application of what the terms you talk about, and the success you've seen in those applications. I really like that part. One of the things we can start the discussion off with is, we all talk about loyal customers as one bucket. And usually, we say we've got a set of loyal customers, and we're going to focus on our loyal customers differently. And then, we've got an average set of customers that are a little bit different, but you've divided those loyal customers into different types. In your book, you explain a little bit about those different types. Could you spend some time explaining that to us a little bit so we can learn from it as well?

Ali Cudby:

Sure. So you're absolutely right. Most customers fall into that average bucket. But even amongst the loyals, there are three distinct groups. And the first group are the ones that I call the lazy loyals. And lazy loyals are the people who buy from you out of convenience. And they may well be repeat buyers. And they may even be decent revenue buyers, but it's purely a convenience play. And the way that I like to think about it is, if you consider the coffee shop that's near your office at work. Not that we go to our office right now, but eventually, we'll go to an office again, and there will be a coffee shop. And you buy from that coffee shop maybe every day, maybe multiple times a day. Well, if you go to work in a new office across town, you may never go back to that coffee shop again. And there's nothing that they really could have done to keep you because your loyalty was to the convenience, not really to the shop. So, that's lazy loyalty.

And then, there's the next tier, which is limited loyalty. Those are people who might have some level of allegiance to what it is that you do, but it's not really emotionally connected. They have a rational reason for being a repeat customer, being a loyal customer. So maybe, you have, the example that I use in the book is with airline rewards and hotel rewards programs. You may not actually be that loyal to the hotel. You may just be loyal actually to the reward program because, let's face it, a lot of these business hotels are interchangeable. Do you really care if you're going to a Hilton versus a Marriott? Probably not. But, you care about having that status. And if they change the status, then your loyalty is not going to be retained. And so that's limited loyalty.

So what you're going for are those customers that are at the top of the chain, and those are your lucrative loyals. And those are the customers who feel connected to you as a company. And they want to be your customer. Not only do they show you that in terms of revenue, but they show it in terms of positive word of mouth, they showed in terms of referral, and those are the customers that you really want to understand and retain. You want to understand them in part because, no matter what you do, if you're talking to a lazy loyal, your marketing message isn't going to move the needle. They're just there from convenience. So, if you're getting confused about who you really want to talk to, you might say, "Oh, we want to talk to our best customers." But those lazy loyals are going to be noise in your data. So, you really need to understand who those lucrative loyals are so that you can speak most clearly to them, and keep them, and get more people that are like them.

Al Lalani:

No, this is great. Wonderful. I really liked the way you were dividing it. One of the things we talked about, just to add onto what you were saying, to the concept of lucrative loyals versus doing it by convenience. I wrote a recent post directly targeted to emerging brands on LinkedIn last week because this topic is near and dear to my heart. A lot of times now in grocery stores, this was a story that Campbell Soup was a little bit out of distribution, most recently. And a couple of soup companies have got a lot of distribution in grocery stores because of convenience because the main brand wasn't available.

Now, this is great. They got a sales spike that's there. But, that's a short-term win. Can they keep those customers in the long-run? And can they build a connection so that when Campbell Soup's distribution gets fixed through this challenge, will those companies just go back down to where they were, or will they be able to retain those customers? Was it just out of convenience? So, that's one. And the second thing is, we use the term internally called attitudinal loyalty versus behavioral loyalty. You are attitudinally loyal to a brand like Apple versus you're behaviorally loyal to United airlines. And so, I think those topics are very, very appropriate, and we completely concur with that.

One of the other things that I really liked that you talked about in the book is as a marketer, we live on data, especially on the B2C side. B2B side, we have a lot of specific other things that we look at beyond data. And I know you've got B2B and B2C in your book a lot about there as well. But, the new age marketers are so bent on just looking at data and making decisions, but you talk about this emotional connection and how to look for that in addition to the data and making those decisions. Could you explain a little bit more about what you meant there and how it's applicable to businesses?

Ali Cudby:

Sure. Let me talk about emotional connection in terms of data. There's research that shows that between 70% and 90% of a buying decision is actually based on how a customer feels they're being treated in the transaction. That feeling place is really important in the ongoing relationship. And we all know that inherently as customers, right? There have been times when probably everybody listening has felt like, "Man, I was loyal to this company, and they weren't loyal to me. They did something to undermine my trust. I don't feel valued anymore. Well, I don't want to be loyal to them anymore." Or vice versa. A company has done something to go out of their way to make a customer feel valued, and you remember that. It's resonant. It's something that is... It's intellectually, we all know it. We've all been there, but it's harder to apply in business because you have to be able to cultivate that emotional connection consistently.

And let's face it. A lot of businesses, like the data. Data's cleaner and emotions feel mushy. And so, it's like, "Oh, let me just stay in my data lane because that feels really clean." But if you don't have that emotional connectedness, then you're going to miss the real meaty part of loyalty. The way I like to say it and the way I say it in the book is, "You have to have that heart. You have to have that emotional connection, but you have to marry it with that smart clarity, and consistency, and data-driven outcomes." It's not either, or. It's both, and.

Al Lalani:

Wonderful. And at Annex Cloud, we've been talking a lot about emotional loyalty in terms of creating an emotional connection with that customer. You brought a different twist to it to add onto that, so that's wonderful. And Ali, I know we have a lot to talk about. We're going to keep this to bite-sized chunks. Thank you for joining us for this first section of our discussion with Ali Cudby. We will be back with another one very shortly. I'll see you very soon. Thank you very much.

Featured Speakers


Al Lalani

Co-Founder, Annex Cloud

Bridget Fahrland

Ali Cudby

Author, Keep your Customers

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For more than 10 years, Annex Cloud has been the worldwide leader in technology and service solutions that transform customer loyalty experiences for organizations, extending valued customer engagements, ultimately making beloved brands. Powered by the modular, comprehensive and scalable Loyalty Experience Platform™ solution suite, Annex Cloud customers capture and use zero- and first-party data to seamlessly deliver value-based individualized experiences across the entire customer journey—from awareness to purchase to retention, loyalty, and advocacy. This one-to-one engagement helps enterprises accelerate growth by increasing average order value, repeat purchase frequency, and customer lifetime value. Annex Cloud is recognized by respected industry analysts and integrates with more than 100 market-leading technologies to seamlessly integrate loyalty across the tech stack.

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Keep Your Customers shares a fresh perspective on the old problem of customer retention. The #1 Bestselling book by Ali Cudby provides real-world consumer behavior stories, business best practices and CEO-led case studies.

Keep Your Customers features interviews with renown venture capitalists Mark Suster and Kara Nortman of Upfront Ventures, CEOs from industries ranging from technology (ClusterTruck, PERQ) and consumer packaged goods (Soapbox) to retail (Esprit de la Femme, Urban Stems) and more.

Keep Your Customers is ideal for business leaders who want to grow without being stuck in the endless grind of new customer acquisition.

To learn more about Your Iconic Brand, visit youriconicbrand.com/annex

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