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
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Net Promoter Score is becoming an increasingly popular tool used by many companies who try to assess customer loyalty. The Net Promoter Score is based from a model developed by Frederick Reichheld in the book, “The Ultimate Question” (Beyond 2). The system helps measure customer loyalty between an organization and a consumer. The Net Promoter score was designed on an 11-point scale from (0 to 10) and it separates the customers into promoters, passives and detractors (beyond 2). Promoters are people who score 9’s and 10’s on the Net Promoter Score scale. The passives are the people who are 7’s and 8’s on the Net Promoter Score scale. The detractors are the people that are from 0 to 6 on the promoter score scale. One of the main goals of the Net Promoter Score scale is to recognize what each of the companies customers are defined as and to try and convert the detractors and passives to Promoters. The promoters are people who feel their lives are being enriched by their relationship with the company. They are very loyal to the company and have multiple purchases with the company. They tell many different people about the company to try and influence others to shop or use the company. They offer good feedback on how to stay successful or even become more successful in the future. The passive customers are people who make few recommendations to others about the company. Bring little energy to the company and are likely to go to a competitor if they offer a great discount on a product. The detractors are customers who feel that their lives are not enriched by shopping or affiliating with that particular business (Freimark 21). The detractors become dissatisfied with the company or experiences they have had with the company. They ta...
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.
Purchase behavioural helps companies to develop an effective strategy for their products. Figure 4 categorises the purchase behavioural with profitability. Furthermore, attitudinal loyalty is a significant factor for the future profits of companies. They want to know exactly which customers have high relative attitude and other crucial facts. The customers’ attitude analysis is presented on figure 5. Companies are using CLV (customer lifetime value) as it is a method, which can combine all elements and data of customers’ loyalty, behaviour, attitude and help them to increase their profitability (Kumar and Shah, 2004). Gregg is a model o business which loyal and returning customers is vital part of its stability and future development. However, Greggs is a hospitality brand, which has specific characteristics as far as sales and customers’ range are concerned. It has more than 1600 brunches on high street and urban areas. The majority of the brunches are aiming to serve local and tourist customers. Thus, they want returning customers for the local scale operations and for the tourist they are interested more for big and success brand advertisement for
Loyalty, it comes in different shapes and is generally seen as a highly regarded human trait. It is defined as a commitment to consistently purchase preferred products or services over and over again (Oliver’s, 1999 p.34). A Loyalty Program (LP) is a marketing exercise designed to reward returning buyers (using discount cards; points cards; club cards / discounts; gifts and exclusive services). Some argue that LPs are only made to make consumers dependent on specific brands. This essay provides evidence that LPs mean to deliver benefits to consumers covering a multitude of their needs beyond mere financial advantage. Further, the paper argues that the choice to join or leave LP ultimately rests with the end users. Frequently multiple brands within one category of products are supported simultaneously.
Brand Loyalty: By keeping long term vision in mind to regain customer loyalty and overall brand image by retaining current customer...
When a customer is loyal he or she will definitely repeat purchase and even advertise your organization through word of mouth. Customer loyalty is the act of customers buying repeatedly as opposed to choosing those of competitors (Wyse, 2012). The impact of customer satisfaction on customer loyalty was showed in a study conducted by Mitchell (2004) who revealed a positive relationship between customer satisfaction and loyalty. Customer loyalty requires that firms or organizations meet their customers’ needs and demands in order to maintain a long lasting relationship (Campton, 2004). Coldburn (2013) also showed that satisfaction and loyalty goes together. The author indicated in his/her study that as far as customers expectation of a products or services are met, they remain loyal to the organization. An increase in satisfaction then lead to an increase in a company’s profits (Cacioappo, 2000).Eckert emphasizes that loyal customers according to are more likely to purchase or to recommend the purchase of a company’s products and services to someone else. The opposite is also true. Dissatisfied customers are likely to tell others the experiences they had with firms. Firms therefore will need to improve their customer satisfaction in order to grow loyalty and attract new customers (Agarwal,
However, other studies meanwhile have shown that customer satisfaction may not always be a reliable indicator for customer loyalty (Bowen and Chen 2001). Writers such as Faullant et al (2008) have advanced the thinking that corporate image have a partial mediating effect on the relationship customer satisfaction and loyalty. This would indicate somehow that there could be other variables that might be present to account for customer loyalty apart from customer satisfaction such as corporate image, service quality etc.
Tam, J 2004, ‘Customer Satisfaction, Service Quality and Perceived Value: An integrative model’, Journal of marketing Management, vol. 20, no. 7-8, pp. 897-917.
Shankar, V., Smith, A. K., & Rangaswamy, A. (2003) ”Customer satisfaction and loyalty in online and offline environments”, International journal of research in marketing, Vol. 20, No. 2, pp. 153-175.
In order to retain back these potential consumers or loyal consumers businesses go through these customer retention techniques. As a result if the customer retention is improved by at the least even a small scale, the outcome is indeed a huge increase in the profit. Maintaining a close contact with its own customers, enables an organisation to know the personal satisfaction of their regular customers as well as the ability to respond quickly to their needs and demands. For businesses to keep customers loyal towards them, businesses will have to build a good relation or interaction with their customers. No interaction with its customers means no growth in an organisation. It is the base for any consumer motivation and consumer
A methodology is written to ensure that the findings created from a study are reliable and valid to ensure that the correct research instruments are utilised (Marczyk et al., 2010). The purpose of this chapter is to detail the process of this study to achieve the aim and objective using a combination of primary and secondary research methods. It is found that a large range of literature regarding the topic of brand loyalty and customer satisfaction. However, there is a shortage of literature within the specific fast food industry. The study found that individuals are loyal to different restaurants for different reasons and it was thought that primary research should be conducted to further research into what should be improved by the fast food industry to maintain loyalty from customers. The study incorporates the use of an inductive research approach, where a theory is created after the research is collected rather than a deductive approach, where a theory is created first only tested by the data collected ( Engel and Schutt, 2005).
In 2012, Boonying Kongarchapatara & Randall Shannon in their paper, ‘Investigating the Effectiveness of a Loyalty Program Through the Relationships of Program Design, Implementation, and Customer Loyalty’ emphasize on the factors which affect the customer loyalty programmes through their design and implementation phases.
5. Tucker, William T. "The development of brand loyalty." Journal of Marketing Research (1964): 32-35.
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.