Customer Loyalty Comprehension Meaning and definition of customer loyalty, Significance of Customer Loyalty, Customer Loyalty Ladder, Loyalty Principles, Benefits of Customer Loyalty, Customer Loyalty and its relationship with customer satisfaction, Customer retention and Brand Loyalty, Factors affecting customer loyalty formation, Rai-Srivastava model of customer loyalty formation, Drivers of Customer Loyalty.

1. Customer Loyalty
Meaning and definition of customer loyalty, Significance of
Customer Loyalty, Customer Loyalty Ladder, Loyalty Principles,
Benefits of Customer Loyalty, Customer Loyalty and its
relationship with customer satisfaction, Customer retention
and Brand Loyalty, Factors affecting customer loyalty
formation, Rai-Srivastava model of customer loyalty
formation, Drivers of Customer Loyalty.

2. Definition
Customer loyalty is both an attitudinal and
behavioural tendency to favour one brand over
all others, whether due to satisfaction with the
product or service, its convenience or
performance, or simply familiarity and comfort
with the brand.
Customer loyalty encourages consumers to shop
more consistently, spend a greater share of
wallet, and feel positive about a shopping
experience, helping attract consumers to familiar
brands in the face of a competitive environment.

3. What is Customer Loyalty?
• Attracting the right customer
• Encouraging customers to buy, buy often, buy in
higher quantities and bring you even more
customers
• Providing excellent customer service

4. TYPES OF LOYALTY
• Monogamous vs. Polygamous Loyalty
– We live in a world of polygamous, not monogamous
loyalty. For example, a person might shop at
WalMart, Easyday and Relaince Fresh and unfailingly
shop at all three. The person is then loyal to them,
but not to others, and yet 100% loyal to none.
– polygamous loyalty is a better description of actual
consumer behaviour than either brand switching (a
conscious once-and-for-all change of allegiance to
another brand) … or promiscuity (the butterfly
tendency to flit from brand to brand without any fixed
allegiance).”

5. Contd..
• Behavioural and Attitudinal Loyalty
– In the past, many scholars defined loyalty in behavioural
terms. If a person made most purchases in a given product
category from one supplier, regardless of the reason, the
person was defined as loyal
– A second element of loyalty is attitudinal loyalty. Like
behavioural loyalty, attitudinal definitions have existed for
a long time. This second element of loyalty focuses on
how strong the psychological commitment or attachment
is to the brand. By itself, it too has limitations. For
example, how loyal are people who rave about a product
and promote it to their friends, but then for whatever
reason fail to buy it regularly themselves?

6. “Not all customers were created equal”

7. Customer Loyalty Programmes
• The systematic collection of customer data
in return for rewards or benefits, often used
to give customer additional privileges or
services to best/loyal customers

8. Some Bottom Facts
• Reduction of 5% of defective customers may result in
80% increase in profitability
• 60% to 80% of lost customers were satisfied
• 90% of customers who love a company will repeat but
only 30% of customers who like the company will
repeat
• 20-40% of your customers bring 80% of your profits

9.  It costs a business about 5-10 times more to acquire a new
customer
 Current customers of yours spend 67% more than a new
one
 According to the 2011 Colloquy Customer Loyalty Census,
of the $48 billion worth of perceived value in reward points
and miles distributed by American businesses annually,
one-third goes unredeemed by consumer

10. • A customer’s attitudinal preference towards a
company can be expressed as:
– Repurchase intention or purchasing additional
products or services from the same company.
– Willingness to recommend the company to others
– Resist lucrative offers from competitors.
– Willingness to pay a price premium.

11. Types of Loyal Customers
High
loyal
Latent
loyal
Spurious
loyal
Low loyal
+
+ -
-
Frequency of Purchases
Attachment

12. Ideas for building loyalty…
• You build customer loyalty by treating people how
they want to be treated.
• Does your customer service and marketing plan
include strategies and tactics for customer loyalty &
customer retention?

13. Customer loyalty programs
• E-mail newsletters with specials
• Buy 10, get 1 free
• Discounts
– Bundles
– Incentive to pay on-time
• Special customer contests
• Special events for loyalty club members
• Simple, uncomplicated
• Other ideas?

14. Other ways to build loyalty…
• Personal thank you cards
• Personal bill messages
• Taking advantage of the latest tools available to
you to gather customer information.
• Showing that you care and remembering what
they like and don’t like.
• Ask your customers how you’re doing – and take
it to heart!
• Treat your team well so they treat your customers
well.

15. How does good customer service help build
customer loyalty?

16. Lessons in Customer Service…
• Customer service is the provision of service to customers
before, during, and after a purchase.
• The process of ensuring customer satisfaction with a product
or service.
• Customer service has often been done badly because it has
been defined badly.
• Once a customer is disappointed in your service, you may
never gain loyalty

17. How do you feel when you get BAD customer
service?
• Get angry or confrontational?
• Report to manager?
• Be snotty back?
• Ruin your day?

18. How do you feel when you get GOOD customer
service?
• Surprised?
• Grateful?
• Appreciative?
• Want to hug the person?
• Want to cry?
• Loyal

19. Diversify to develop great service and therefore
customer loyalty
• Customer Support & Technology
– On-line help
• Chat
• Connect for Support
• Skype
• Web Self-Care
– 24-hour support
– Web Self-Care
– Mobile Applications

20. How do you establish trust with customers over
the phone?
• One of the hardest parts of the job
• Mostly dealing with people you might not ever meet
face-to-face
• Reassure them you understand their situation
• Ask them what they want … simple, but effective
• Avoid being argumentative
• Ask them how you can make them happy, and work
the compromise from there

21. Personalize your service & gain loyalty
• Small enough to care, large enough to provide a
quality product & service
• Now is the time to focus on new products and
services
• Implement customer service focused procedures
and processes
• Pro-Active customer service
• Transition NOW to becoming a Technology
Company
• Continue to evaluate competitive opportunities

22. So, how do you build customer loyalty?
• You build it by truly caring about the customer
and figuring out how to make them more
successful, happy and joyful.

23. Significance of Customer Loyalty
• Acquiring new customers is an important activity
but retaining these customers is crucial for
business.
• According to Reichheld and Sasser (1990), in a
particular industry, profit increase of 25% to
125% can be achieved if potential switching is
reduced by 5%.
• Singh and Sirdeshmukh (2000) says that customer
loyalty is turning into “the marketplace currency
of the 21st century”.

24. Contd..
• Advantages of customer loyalty:
– Helps in customer retention
– Unremitting returns
– Emissary customers (positive remarks to other potential
customer)
– Premium prices (less price sensitivity with loyal customers.
Also avoid taking risks with the new company)
– Lowers cost of sale (no cost involved in acquiring loyal
customers)
– Reduces marketing time
– Provides opportunity to cross-sell and up-sell
• Today success of business is dependent on how
successfully the firm is able to create customer loyalty.

25. Customer Loyalty Ladder
• Suspect
• Prospect
• Customer
• Client
• Advocate
Advocate
Client
Customer
Prospect
Suspect

26. Customer Loyalty Ladder
• Suspect
Anyone who reads or hears an ad, looks at a brochure or
encounters some other type of promotion is a suspect

27. Customer Loyalty Ladder
• Prospect
Someone who pays attention to your promotion

28. Customer Loyalty Ladder
• Customers
Those who buy your product or service

29. Customer Loyalty Ladder
• Client
A customer who buys a second time

30. Customer Loyalty Ladder
• Advocate
A customer who gives unpaid advertising for the
products or services of a business

31. It takes a least 3 times as much money to attract a
new customer via traditional forms of advertising as
to re-attract a repeat customer

32. It takes at least 30 times as much marketing money to
attract a new customer via traditional forms of
advertising as to have a satisfied customer find new
customers for you
Satisfied Customer Referral
Traditional Advertising

33. Most business owners spend less than 5% of their
marketing dollars on their customers and spend 95%
of their marketing dollars trying to find new customers

34. Traditional Investment
Advocate
Client
Customer
Prospect
Suspect
5% Marketing $
95% Marketing $

35. Customer Loyalty Ladder
Goal:
Invest in developing satisfied customers

36. It takes at least 30 times as much marketing money to
attract a new customer via traditional forms of
advertising as to have a satisfied customer find new
customers for you
Satisfied Customer Referral
Traditional Advertising
Remember:

37. How Can You Accomplish This?

38. How?
• Know who your customers are
• Know that your best customer is your most recent satisfied
customer
• Know that your best word-of-mouth advertising comes from
your most recent satisfied customer
• Act in a way that moves people up the ladder

39. Lesson Learned
The most recent satisfied customer who has purchased
products from you is the least expensive marketing
way to find new customers. People love to tell if they
are happy.
Your worst customer, who will rip you apart to all
their friends, is your most recent unhappy customer.

40. Advocate
Client
Customer
Prospect
Suspect
Traditional
Advertising
Nontraditional Advertising
A great marketing company
spends money here

41. Recommendation
30% of your marketing dollars should be spent on
keeping customers…..keeping them happy.
Not 5%…..30%.

42. Invest in Keeping Customers
Advocate
Client
Customer
Prospect
Suspect
To Keep Customers:
30% Marketing $
To Find Customers:
70% Marketing $
To climb the loyalty ladder, business owners must exceed customer expectations

43. Marketers’ Roles in Delivering Quality
• Correctly identifying customers’ needs and requirements
• Communicate customer expectations properly to product
designers
• Be sure orders are filled correctly and on time
• Provide customers with proper instructions, training, and
technical assistance
• Stay in touch with customers after the sale
• Gather customer ideas for improvements and convey
them to the appropriate departments
43

44. Customer Satisfaction and Loyalty
• Satisfaction stands for gratification, pleasure or
fulfillment of desire.
• It evaluates what is received and what was expected.
• 7P’s interact with the customer evaluation from
the customer’s end  leads to
satisfaction/dissatisfaction
• Customer satisfaction/dissatisfaction is the cognitive
judgment of a customer resulting out of an
interaction between customer’s personality and a
company’s marketing practices in the prospective of
the expectation the customer had with the product
and perception of the benefits received.

46. Satisfaction vs. loyalty
Highly
competitive Low
differentiation
Delighted
customers
probable good
loyalty program
Low customer
value
Alternative
available
High barriers to
change due to
excellent loyalty
program
Vulnerable to
change
High satisfaction
low satisfaction
Low loyalty High loyalty
46

47. Contd..
• Following points distinguish satisfaction from loyalty
– Customer satisfaction is the measure of how adequately
customer’s expectations are met whereas Customer loyalty
is all about customer’s intention to revisit and readiness in
taking participative activities with the organization
– Customer satisfaction is a requirement for customer loyalty
formation but it does not guarantee repeat purchase.
– Satisfaction  Retention  Commitment Loyalty

48. Customer Retention and Loyalty
• Most businesses suffer from a peculiar sort of myopia
where they fail to align their marketing efforts with
customers’ preferences. It ultimately hurts the potential
base of customers’ willingness to return.
• Reichheld (1996) said that rise in the rate of return of
consumers has direct or indirect result on company
revenue.
• Customer retention and loyalty confer remarkable
economic perks to an organization.
• Accenture conducted a study including 16 retail banks of
north America and found that moving customers higher up
the ladder of loyalty, results in 20% rise in profitability per
consumer.

49. Contd..
• Being customer centric involves three main challenges:
– Acquaintance with the customer
– Finding the customer
– Delivering differentiated customer experiences.
• Importance of customer retention are listed by Rowe and
Barnes (1998) as:
– The cost of gaining a new customer is about 6 times high as
compared to retain a customer.
– A dissatisfied customer will tell 10 others about the complaint.
– 91% customers whose complaints are not addressed, will not
return.
– 63%-85% switchers are dissatisfied customers.
– More than 65% of the customers who will not return do so
because of the way they are treated, not because of the
product.

50. Retention is not Loyalty
It's inescapable. Everywhere we look we see marketers
promise to "improve customer loyalty.". Peter Drucker said, "If
you can't measure it, you can't manage it.“
Usually we find that what people mean when they talk about
loyalty is really customer retention rate—whether the
customer sticks around and buys again. Retention is an old
and valued friend to data-oriented marketers, but it is not the
same as loyalty. And it's not as useful.
Understanding the difference between loyalty and retention is
important because of the implied assumption that they
correlate with business success (more revenue or profits or
both)

51. Contd..
Retention rate is usually defined as the percent of a customer population
who were “active” as of some earlier date and are still considered active a
year later. So retention is a number, like 81% (that's good) or 27% (that's
bad). Most important, retention rate is not a measure of individual
customer behaviour. It is a measure of the behaviour of an entire
customer population.
Loyalty on the other hand is a measure of the performance of individual
customers. A loyalty score is built of many parts. It can include how much
a customer has bought, how often they purchase, how many different
items they buy from your product set, how long it's been since they last
bought or visited your website, and their future value. It's obvious that
these numbers will vary from customer to customer.
Some companies are happy to define loyalty as the customer's
“commitment to the brand.”
(Mark Klein, founder & CEO, Loyalty Builders Inc. September 04, 2013)

52. Brand Loyalty
• The concept of brand loyalty involves buying
products from a single manufacturer
repeatedly instead of going to other suppliers.
• Such state us exhibited in repeat buying
behaviour, advocacy and other favourable
activities.

53. Contd..
• Brand loyalty stands for a withstanding purchase
decision based upon strong motivation to
repurchase.
• To become loyal to a brand, customers need to be
able to perceive that brand as a right option
which offers good quality at reasonable price.
• Attitudinal disposition, peer pressure and
familiarity with the sales person can lead to
brand loyalty.

54. Contd..
• Jacoby and Chestnut (1978) gave comprehensive definition
of Brand Loyalty which has 4 dimensions:
– Purchasing sequence
– Purchasing proportion
– Purchasing probabilities
– Behavioural variable
• Another definition by Olson and Jacoby (1971) has 6
dimensions:
– Biasness
– Retention
– Category spending
– Product attitude
– Expression over time and
– Decision making process

55. Brand Loyalty Vs Customer Loyalty
• Customer loyalty is about share of wallet whereas
brand loyalty equals share of mind.
• Customers who are truly loyal to a brand are
considered as truly loyal to the company.
• Customers who go for customer loyalty programs are
supposedly loyal to themselves and what works for
them.
• Customer loyalty mainly relates to a customer’s
spending power while brand loyalty has very little to do
with prices or money. It is more to do with the way the
brand is perceived in the consumer’s mind.
• Companies try to achieve customer loyalty by offering
free coupons, special offers, extended warranties etc.

56. To 20 Brand Loyalty Leaders-2014
1. Amazon: tablets
2. Apple: tablets
3. Apple: smartphone
4. YouTube: social networking
5. WhatsApp: instant
messaging
6. Amazon: online retail
7. Google; search engines
8. Kindle: e-readers
9. Samsung: smartphones
10. Dunkin’ Donuts: coffee (out-
of-home)
11. Facebook: social networking
12. Netflix: video streaming
13. Beats by Dr. Dre:
headphones
14. Call of Duty: Ghosts: major
league gaming
15. Amazon: online retail
16. Zappos: online retail
17. Apple: computers
18. Instagram: social
networking
19. PayPal: online payments
20. Twitter: social networking

57. Factors Affecting Customer Loyalty
• Customer loyalty is a business mantra worth reciting and
rehearsing.
• Loyalty has a significance in terms of greater share of wallet,
higher satisfaction, profitable customer relationships,
diminished rate of defection and inimitable competitive
advantages.
• Peter Clark, co-editor of The Wise Marketer and co-author of
The Loyalty Guide report series, underlined six factors which
play vital roles in affecting loyalty and commitment of the
customers:
1. Core Offering
2. Satisfaction
3. Elasticity Level
4. Share of Wallet
5. The Market Place
6. Demographics

58. 1. Core Product
• A high level of loyalty is a matter of solid and reliable
core product that has higher appeal for customers than
loyalty cards and programmes.
• Companies holding an enviable loyalty base intently
focus on crafting the right product with a value
preposition desired by the target segment and strive to
deliver the brand promise consistently.
• The core product entails the following factors which
affect customer loyalty:
– Location and edifice (attractiveness of location and
ambience)
– The product or service (customized)

59. 2. Satisfaction
• Although, satisfaction is a vital business metric that is capable of
determining customer loyalty, but isolated measurement of
satisfaction is not effective in predicting loyalty.
• Many auto manufacturers claims satisfaction levels of about 90%
or more but few can claim the repurchase levels of even half
that.
• Customers may not use the product because of some other
reason apart from dissatisfaction.
• A higher level of customer satisfaction does not necessarily
correspond to a higher level of customer satisfaction.
• Still, in the absence of satisfaction, loyalty can never be attained.
• Customer satisfaction is the starting point of customer
satisfaction.
• This is the basic requirement of any customer to become loyal.

60. 3. Elasticity Level
Elasticity stands for the significance and credence
involved in a purchasing decision:
• Customer’s Participation: this is the decisive factor in
loyalty formation as it determines the level of
customer’s attention and seriousness towards
perceived expectations and the corresponding
evaluation of the product or service.
• Customer’s decisiveness: A state if uncertainty or
indecisiveness in customer decision making is largely
driven by the level of involvement as there are certain
decisions that call for higher involvement and thus
greater clarity is required about the expected
attributes and performance. Customers may be
confused and they decide to stay with a single brand.

61. 4. The Marketplace
Markets also have a power to affect the formation of
customer loyalty. Some elements are:
• Switching Prospects: the quality and quantity of easily
available alternatives strongly affect a customer’s intention
of staying or switching.
– Lower switching costs will result in higher instances of switching.
– Amount of time and efforts invested in a business relationship
cause a customer to think twice before switching.
• Inertia Loyalty: When customer chooses to stay with the
business just to avoid the trouble and uncertainty
associated with searching and dealing with an unfamiliar
brand.
– Banks- Customers display inertia loyalty as customers avoid
changing their banks.

62. 5. Demographics
• Jan Hofmeyr and Butch Rice (developers of The
Conversion Model) suggested that there are low
chances of educated and well-off customers
staying committed to a particular brand.
• Less affluent customers have small risk taking
ability and they cannot afford to try out various
brands freely.
• Also, younger customers have more variety
seeking attitude than old customers, hence
younger ones are less likely to be loyal to a
particular brand.

63. 6. Share of Wallet
• It is the share of money the customer is ready to
allocate to a particular brand in the category.
• Due to increased competition and saturated
markets, share of wallet is a metric worth
working for as it is less costlier and more
profitable to increase the share of what a
customer has already been spending than
attracting and convincing new customer to
allocate his/her money.

64. Significance of Customer Loyalty
• Acquiring new customers is an important business activity, but
retaining them is crucial for business.
• As we know that acquiring a new customer is more costly than
retaining them, therefore customer loyalty has its significance.
• Companies should strive to retain customers and build sense of
satisfaction and belonging towards the company. All these aspects
may lead to customer loyalty.
• Customer loyalty has been drawing attention from both the
corporate as well as academics as it holds a place of immense
importance in most businesses.
– Kotler (1997) linked loyalty to strategic aspects of business and said
that it constitutes underlying objective for strategic market planning.
– Petrick (2004) emphasized that better customer satisfaction and
customer loyalty result in greater profitability, favourable publicity, a
big pool of customers and lower marketing costs.
– Customer loyalty today is an essential condition to implement
effective business strategy.

65. Contd..
• Some advantages associated with the customer becoming
loyal are:
– Helps customer retention
– Unremitting returns: A loyal customer acts as a perpetual
source of revenue and profit by staying with the company.
– Emissary customers: positive remarks about the co. to other
prospects.
– Premium prices: a loyal customer is likely to be less price
sensitive.
– Lowers cost of sales: Acquiring such customers do not cost
anything.
– Reduces market time: through positive referrals and
opportunities, customer acquisition becomes easier for the co.
– Provide opportunity for cross-sell and up-sell

66. Rai-Srivastava’s Satisfaction-Emotion
Quadrate Model of Customer Loyalty
CL = f (Satisfaction, Emotions)
• Satisfaction
– Stands for pleasure or gratification.
– Some researchers suggest that satisfaction is a two fold concept that is made
up of rational as well as emotional responses of customers.
– Satisfaction has most often regarded as most obvious portent of customer
loyalty.
– Customer satisfaction is a vital for any organization to survive and revenue
might drive the organization into myopia. So careful analysis of customer
satisfaction needs to be taken into consideration.
– It should be noted that all loyal customers are satisfied customers but all
satisfied customers may not be loyal to the company/product.
• Emotions
– The role and effect of emotions in determining the shape and intensity of
customer response is too important to be ignored.
– Emotions are psychological states of willingness arising from cognitive
evaluations of events or one’s views (delight, resentment etc.).
– Positive emotions are not only helpful in lessening a customer’s agitation in an
event of service failure but also induce positive behavioural intentions among
customers whereas negative emotions are bound to affect service quality
evaluations and the resultant level of satisfaction unfavourably.

67. Satisfaction-Emotion Quadrate
Pleased Loyalist
Indifferent Partisan
High
High
Low
Low
Satisfaction
Emotions

68. Indifferent
• Having Low Satisfaction- Low Emotions
• These customers are considered potentially disloyal as they
are most prone to succumb to competitive pressures.
• Their stay with the company can be merely because of
inertia, unavailability of desired alternatives, high level of
switching costs or some other obligatory forces.
• Such customers lie in the high risk zone of the company as
the resources invested in serving them can prove to have
been wasted.
• Also, these customers are not giving any benefits to the
company such as recommendations, exclusive
considerations etc.
• Example?

69. Pleased
• High Satisfaction-Low Emotions
• Primary basis of relationship is satisfaction.
• Continuing the relationship is a rational choice based
on decision making criteria of the customer.
• In B2C format, cost – benefit analysis are involved in
the decision to stay with the company.
• Though such customers show signs of loyalty towards
the company, their loyalty is subject to change with
expectations (an attractive offer promising greater
benefits).
• Example?

70. Partisan
• Low Satisfaction – High Performance
• It is deep attachment to the company or the brand.
Customer’s allegiance towards the company in this
category is highly driven by the effective processes of the
brain.
• Partisans are those customers who are ready to endure
dissatisfaction without inflicting any permanent damage to
their relationship with the company.
• It is possible only when the intensity of emotions is strong
enough to alter the evaluative criteria.
• Such customers are found to be highly enthusiastic for the
brand and may risk their own social identity by strongly
supporting and recommending the brand to others.
• Example: Movies and cricket in India.

71. Loyalist
• High Satisfaction – High Emotions
• This type of customer loyalty sustains for a long run.
• In this case customers choose to stick to the company not
only because they are highly satisfied, but also of a feeling
of affiliation towards it.
• Low switching intentions/ high switching costs with no
significant advantage.
• Loyalty blooms to its full strength when loyalists
demonstrate manifestations of customer loyalty by
offering:
– Preference
– Patronage and
– Premium

72. Contd..
• Preference
– Loyalists with strong preference towards a particular brand
actually demonstrate behavioural loyalty outcomes such as
repurchase intentions, resistance towards switching and
exclusive purchasing.
– This form of loyalty is more action based instead of being
driven from an attitudinal predisposition of the mind.
– A person buying regular household items from the nearest
general store over a sustained period of time might be
termed as a loyal customer but his loyalty would be tested
if, in the vicinity, an organized store comes up with
discounted prices. If customer is still purchasing from the
nearest general store, that means preference of customer
towards that store.

73. Contd..
• Patronage
– Customers with high patronage intentions not
only recommend the service provider, but also
lend their support for betterment of services
through constructive feedback.
– A regular customer of pizza hut can be considered
as loyal when customer is willing to actively
recommend Pizza Hut by talking positively for the
brand. Also customer is interested in providing
feedback in order to improve services.

74. Contd..
• Premium
– One of the most prominent traits of loyal
customers is their insensitivity towards price
hikes.
– These customers are more interested in brand
value and other advantages associated with a
particular service provider.
– Customers seems assured that premium prices are
charged

78. Customer Profitability Analysis (CPA)
• Best conducted with an accounting technique
called Activity-Based Costing (ABC).
• Estimate all revenue coming from the
customer, less all costs that go into serving
that customer.
78

79. Customer Lifetime Value (CLV)
• Describes the net present value of the stream
of future profits expected over the customer’s
lifetime purchases.
79

80. Cultivating Customer Relationships
• Customer relationship management (CRM) is
the process of carefully managing detailed
information about individual customers and
all customer “touch points” to maximize
customer loyalty.
– Touch point—any occasion on which a customer
encounters the brand and product.
80

81. CRM Steps
1. Identify your prospects and customers
2. Differentiate customers in terms of their
needs and their value to your company
3. Interact with individual customers
4. Customize products, services, and messages
to each customer
81

82. IMPORTANCE OF CRM
• PARETO’S LAW
80:20 RULE
20% of customer account for 80% of turn over
20% of customer account for 80% of profit
20% of customer account for 80% of all your
problems
82

83. Acquisition is not the same as
retention
Acquisition Retention
Sales
analysis
merchandising
advertising
Customer
segmentation
Campaign
management
Channel
support
Trust and
privacy
Product
quality
Customer
service
Customer
satisfaction

84. The Customer Development Process
• Potentials
• Prospects
• First-time customers
• Repeat customers
• Clients
• Members
• Advocates
• Partners
84

85. Building Loyalty
• Interact with customers
• Develop loyalty programs
– Frequency programs
– Club membership programs
• Personalize marketing
• Create institutional ties
85

86. • Loyalty is about the conscious decision of your customers to
commit their continual repurchases to your brand. It is :
 Driving an extra few miles to do your shopping
Recommending it to your best friend
An emotional and rational ‘lock-in’
Sometimes encouraged by an incentive or reward
A better path to profit
 Loyalty is essentially a one-way commitment for which the
customer receives a reward, but it is also about relationships
Two-way interaction in which both sides create and exchange
mutual benefits
86

87. Inertia does not equal loyalty
• Satisfaction is important business success
• However, satisfaction itself is not the only thing that delivers
increased profits and a greater share of customer’s wallets
• Satisfaction is only a feeling that is most likely to disappear
quickly
• Satisfaction alone isn’t adequate customer loyalty must
combine with satisfaction for it to be effective
87

88. Database Uses
• Identify the best prospects
• Match a specific offer with a specific customer
as a way to sell, cross-sell, and up-sell
• Deepen customer loyalty by remembering
preferences and offering relevant incentives
and information
• Reactivate customer purchasing
• Avoid serious mistakes
88

89. Downside of Database Marketing and
CRM
• Large investment
• Difficulty in getting everyone to be customer
oriented
• Not all customers want an ongoing
relationship
• Assumptions behind CRM may not always
hold true
89