The Anatomy of a Habit

Customer loyalty results from habit, which is a mental shortcut that saves an individual the burden of thinking.   The first time a need arises, they invest time and effort in identifying and evaluating options and choosing the best one.   If the outcome is satisfactory (not necessarily exceptional), they skip all of this effort and go back to the option that worked for them last time.

Because people are creatures of habit, many providers take their regular customers for granted – assuming that if they were satisfied last time, they will come back again.   Very often, this works out in their favor, but they could still improve their customer retention and increase their share of wallet if they put a little more thought into the way that habits work.

Habit is not a reflex action that occurs in a split-second and is flawless and reliable.   It is a conscious choice not to invest effort in a decision and to repeat a previous behavior.  Essentially, there are seven components:

1. Trigger – There is a cue that signifies a need to take an action.
2. Recognition – The person recognizes they have had this need before, and recalls what they did the last time.
3. Recollection – The person remembers how things worked out last time
4. Decision – Based on their recollection, the person decides to do what they did before rather than exploring other options.
5. Action – Providing the decision is to repeat the behavior, they attempt to do what they did the last time the need arose.
6. Reward – The person receives (or does not receive) the benefit they sought as the results of their action.
7. Evaluation – The person considers whether the need has been fulfilled, and if they are pleased with the value for effort.

Each of these components can be worked upon to improve the vendor’s chances of getting repeat business, and getting business in more situations from the same customer – or said another way, they can improve the chances of gaining a loyal customer by reinforcing the customer’s habit:

1. Trigger – Do you know what motivates people to buy?  Can you help create or intensify that stimulus?
2. Recognition – When serving customers, do you do something that would cause them to remember you?
3. Recollection – When serving customers, did you create the greatest satisfaction at the lowest cost (to them)?
4. Decision – Nothing here: if you failed to support recognition and positive recollection, then you stand no chance of influencing the decision.
5. Action – Is the action the customer needs to take simple and straightforward enough that they remember it?  Can you provide anything to help them remember how to contact you and what to do to receive service?
6. Reward – Does your service actually deliver a solution to the customer’s need?
7. Evaluation – Did the customer receive a good deal in terms of the cost (money and effort) they had to give?

The problem(s) that arise when a firm takes its loyal customers for granted is that they become inattentive to the causes of customer loyalty and do not provide adequate support for a habitual reaction: they do not remain in the customer’s mind the next time they have a similar need, they failed to provide complete satisfaction at a reasonable cost, they failed to provide anything to remind the customer how to do business with them the next time the need arises, and so on.

It’s my sense that a company, particularly one that has problems with customer churn rates, would do well to consider the anatomy of habitual behaviors and consider taking active steps to reinforce habits, rather than taking for granted that a customer who was served in the past will automatically come back again.   In direct terms, the reason for low customer loyalty is high vendor neglect – and the latter must be addressed to remedy the former.