Maximizing your profit as a company can be done in two ways customer-wise; attracting and retaining them. The latter one can be done by creating a long-term relationship with your customer. One could argue that by maintaining this so-called loyalty a consumer will become dependent on his supplier. The question is whether a by impulse driven consumer really loses his independence or that long-term relationships do not imply loyalty.
Customer loyalty is often strongly linked with repeat purchases, however this is not the whole story. It is a two-dimensional construct containing behaviour, in this case repeated purchases, but also relative attitude. Relative attitude can be explained as an object appraisal function. Factors that create relative attitude can be split up into three categories. There are cognitive antecedents – associated with information like ‘brand beliefs’, affective antecedents – the feeling a consumer has towards a product, and a conative antecedent – think of factors as sunk costs or expectations. In this model the customers are divided in four loyalty groups. Those with high relative attitude and high repeated purchases, those with neither and a combination of both. The purpose of this is to see whether a customer is truly loyal and thus predict retention and defection. A consumer who purchases always at the same store, but has a low relative attitude is not someone who is dependent on that supplier. Moreover it will even abandon its supplier when it finds another brand or product where it does have a strong relative attitude (Dick & Basu, 1994).
In order to test if the effects of relative attitudes with respect to loyalty an experiment was conducted. Customers from different supermarkets in Britain and New-Z...
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...iment, there can be concluded that loyalty is more than buying a product over and over. Providing incentives in the form of discounts and gifts will lead to repeated purchases, but does not affect the relative attitude at all. Instead of these loyalty programmes firms should focus on designing better products in order to influence the relative attitude. In the end the big queues at the releases of Apple were not because of the discounts they gave.
Works Cited
Dick, A., & Basu, K. (1994). Customer loyalty: towards an integrated framework. Journal of the Academy of Marketing Science, 99-113.
East, R., Sinclair, J., & Gendall, R. (2000). Loyalty: testing the Dick and Basu model. ANZMAC Conference, (pp. CD-ROM). Griffith University, Gold Coast.
Garland, R., & Gendall, P. (2004). Testing dick and basu's customer loyalty model. Australasian Marketing Journal, 81-87.
Customer loyalty comes from the personal relationship that is developed between the customer and the business. One method used to understand the customer relationship is called customer relationship intensity and Life-cycle segmentation (UOP, 2007). This process includes classifying all the customer relationships into one of five groups.
Introduction. Customer loyalty is basically defined as a deep held commitment to re-buy or re-patronize a chosen product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior (Oliver, 1997). It is a main driver for customer retention, which, in its turn, represents a basic force that accumulates a customer base for the company. As the experience suggests, the presence of the customer base is a valuable asset, because a lot of statistical data and marketing researches have proved that it is harder and much more expensive to acquire a new customer rather than retain an existing one. In this aspect, any business without a focus on customer retention is left on market’s mercy: any market movements will affect the sales in a more intense manner. There is also a risk that your competitor may eventually satisfy the existing customer’s needs and take away a part of your market niche. Moreover, customer loyalty gives a sort of discretion to the company’s R&D policy and marketing strategy: you can try to introduce different features to your products, experiment with different types of ads, and no matter what the results would be, — the customers will stay stick to your production line. Of course, an organization does not have an absolute control over the loyalty of its customers, bec...
-the potential of Loyalty Programs to coerce consumers rational behaviour is put into question. Rational Choice theory provides a compelling argument which claims that numerous reward facilities genuinely strive to satisfy the consumer’s needs in full. Experiments support the statement listing the variety of benefits enjoyed by the program’s members, who prove to be rational in choosing one or more reward schemes looking after their satisfaction first. Loyalty programs appear to hold a firm position in the market, maintaining the balance between their designer’s goals and benefits provided to the consumers.
Soman,D & Marand, S (2009). Managing Customer Value: One Stage at a Time.: World Scientific Publishing. p9-14.
Ninety percent of Canadians are enrolled in at least one loyalty program. Market research has shown that loyalty programs are growing to be very popular in today’s market. A loyalty program is a program offered by a company to customers, who make frequent purchases. Loyalty programs are of benefit to both the consumers and the business. The consumers benefit by receiving coupons, special access to sales and new products whereas the company benefits by gaining an abundance of knowledge about the consumers, through their purchasing habits. Loyalty programs have proven to be very successful for several companies such as Target, Starbucks, and Shoppers Drug Mart. The senior management in sales and marketing believe that initiating a loyalty program
Weinstein, A. (2012). Superior customer value: strategies for winning and retaining customers (3rd ed.). Boca Raton, FL: CRC Press.
Ha and Winters talk about the customization of customer loyalty programs. The article examines customer response to the perceived value, cash and emotion, of the reward they receive. Customization allows companies to specifically target customer preferences based on the rewards they can redeem points for. Providing the customer with choices will allow the customer to feel in control resulting in loyalty. The article provides techniques to implement and improve loyalty program customization in order to improve customer loyalty.
Consumers with brand loyalty are indifferent with too many choices in shopping as they tend to ignore other brands and chooses product from their preferred brand.
Richards, K., & Jones, E. (2008). Customer relationship management: finding value drivers. Industrial Marketing Management, 37, 120-130.
Many businesses now comprehend the fact that satisfying customers with constancy and loyalty is not sufficient to make customers stick to their product and services but rather delight and please them which is only achievable when the customer is totally satisfied (Blackwell, Miniard, and Engel, 2006).
Frederick Reichheld’s theory of The Loyalty Effect has taught me essential strategies to become a profitable and successful business. Loyal investors, owners, customers, and employees all come together to make a loyal, successful business. As a computer engineer, I would be a loyal employee to help my company move forward and progress. Working in the café, I would be on the owner level and have to treat my employees and customers with fairness and respect. Without the loyal returning customers, my business would most certainly fail. Whether I am working as a computer engineer or owning a café, Reichheld’s theory of loyalty will help an all aspects of either job.
John, J. (2011). An analysis on the customer loyalty in telecom sector: Special reference to Bharath Sanchar Nigam limited, India. African Journal of Marketing Management , 3 (1), 1-5.
MAKLAN, S. & KLAUS, P. 2011. Customer experience: are we measuring the right things? International Journal of Market Research, 53, 771.
we would be tempted to believe that is a simple, linear relation between satisfaction and loyalty. According the research of (Jones & Sasser Jr., 1995) , relation satisfaction and loyalty is different according to time and circumstances. Unless they are totally satisfied, there is always a chance you will see your customers be lured away (Jones & Sasser Jr., 1995).
Lawfer, M., R. (2004). Why customer come back: how to create lasting customer loyalty. United State of America: Career Press.