There’s widespread belief that customer loyalty is a thing of the past. Customers, we are being told, are now driven more and more by price and convenience, and less and less by relationships.

This interpretation of market forces is, of course, absolute rubbish.

If customer loyalty were truly dead, so to would be Apple, Starbucks, Four Seasons and thousands of other organizations thriving in highly competitive market segments. Customer loyalty is, in fact, quite alive, and a more important factor than ever in business success. What has changed is our understanding of customer loyalty’s true nature. Up until 15 years or so ago, any company that had a steady, reliable customer base was said to have ‘loyal customers.’ In a great many cases, however, customers weren’t doing business with that company because they wanted to; they were doing business with them because they pretty much had to. Options were limited – in some cases to just a single supplier. When you think about it, these companies didn’t have loyalty, they had hostages.

The companies that are excelling in today’s economy, and those recovering from the recession quickest, are the ones which grasp loyalty’s true nature. They understand that loyalty is when customers come to you repeatedly because they want to, not because they have to. They understand that in order to keep customers coming back they have to engage them on the customer’s terms and provide true, meaningful value. Do you want to increase the loyalty of your customers? Ask yourself these two questions:

1. Why should your customer do business with you instead of your competition?

2. What do we bring to our customers that nobody else does?

Your ability to create true customer loyalty will be in direct relationship to your ability to answer these questions. If you can’t answer them, you better think of something soon, because the hostages are free, and won’t be hanging around much longer.

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