A Perspective on Evidence of Consumer Loyalty and How Marketers Can Use It

Introduction

The competitive business climate of today frequently makes brand managers to turn their focus to near-term issues. Accomplishing the month’s objectives such as; returns objectives and attaining a targeted figure of consumers at a good number of times force administration to drop focus of extensive term strategic chances and on to critical items. As a result, most brand ambassadors seem not to see the bigger picture of what their job’s real mission is. Instead of developing an impenetrable bond with their user audience, they dwell a lot on achieving monthly targets. A marketer’s primary daily duty should be concentrated on building and maintaining bonds with customers so that these bonds end up being (Oliver, 1999). By doing this, marketers will ultimately increases the chances of their brand withstanding hard times such as economic downturns and recessions, competitive threats, and reasonable price increases. (Collins 2001)

Consumer Loyalty is a term used to define the behavior of frequent customers and those that offer good testimonials or rankings to a Company, or product. A good number of consumers help companies a great deal by volunteering information to the rest of the public about a company’s products or services that they value (Rob, 2007). However, loyalty of customers consists of several aspects, it is both a process, and to some extent a program (or a group of programs) aimed at keeping consumers going back for product or service as a result of satisfaction.

Customer loyalty can be used as a one time incentive to lure customers, but giving out free samples is more popular, as a consumer purchases one product he/she might get another piece free or get to try another for free. One other incentive program towards accomplishing customer loyalty is through the offer of a product for free for given period so that the consumer can try it without having to buy it (Rob, 2007). This may in addition be termed as product name fidelity; these kinds of inducements are meant to guarantee that consumers come back, not only to purchase the similar goods over and over but also to attempt other goods or services presented by the business (Barry, 2009).

Brand loyalty is when a consumer decides to favor one product brand over another. This happens as a result of consumer’s fixed perceptions that the brand offers him/her the right product specifications, for example a mobile phone brand may be favored because of its features, size, user friendliness, or level of quality at the right price (Fredrik and Earl, 1990). The perception created builds into the basis in which another buying habit if formed by the people. Many consumers buy a product for testing purposes initially, it may be in the smallest version of the product, when they think that it is good enough for them to use, they will definitely come back and might buy the same product in even larger quantities as a result of surety.

Evidence of Consumer Loyalty

A good example of customer loyalty is in the Chinese market. The Chinese buyers are Loyal to domestic brands than the international imported ones. As big companies are planning to move into the Chinese market and doing surveys, it has occurred to them that it is very difficult to beat the local brands due to this significant aspect. Such products that have commanded this large following includes, Haier, Heartex, Tsingtao and Master King (Barry, 2008). This factor beats the almost eternal believe that the east always preferred overseas goods.

A company like Haier draws most of the loyalty from it’s customers from CRS activities it carries out within its community. For example, during the 2008 Beijing Olympics Haier promise d to build an Olympic Hope School for each gold medal that their athletes won. This was a partnership deal that they went in with Project Hope which is a China Youth Development foundation sponsored NGO whose primary aim is to promote the poor population in getting educational facilities (Reichheld, 2007).

Haier announced in 2007 that it would launch a project called “1 Gold Medal, 1 Olympic trust School”. That is for every gold medal won by a Chinese athlete it would match it up by building one primary school in China. This was practiced by an NGO called Project Hope (a sponsored program by the China Youth Development Foundation for the non-governmental organization). This organization was started with the main aim of trying to support educational programs in the under developed parts and poverty stricken parts of China (Reichheld, 2007).

By the end of the Olympics games China had bagged up to fifty one gold medals that translated to that number of schools for Haier to construct. These schools were supposed to be located in disaster stricken areas such as the Sichuan Province and fifteen others in the earthquake prone Beichun County. Haier does not only support local courses, it has gone to an extent of proving some sponsorship to the American national Basketball Association (NBA). This was meant to promote and create brand awareness in the American market (Reichheld, 2007).

In survey done by several institutions including AlixPartners’, of market all market preferences including service or product, price, shopping experience , product and store/in-store access, Chinese consumers concentrate on the product as their first priority ahead of factors such as price and durability (Reichheld, 2007). This has made customers support Haier because they are sure that their money goes to a worthy course.

Example two illustrates the disadvantages of consumer disloyalty. This is in the case of America’s Wal Mart. Wal-mart’s on going business and specifically their marketing strategies seem to raise more concern (Dick and Kunal, 1994). From survey the retailers have scored poorly in consumer loyalty. Despite their managing to stay afloat during the economic decline their strategy is not at all aimed at keeping their consumers loyal to them. The reason that they manage to stay afloat is because of their cheap prices and nothing else. This strategy has seen Wal-mart stock share price go up steadily.

As it has always been through history a bad economy is usually good for these retailers and this one is no exemption there management hints that this is a result of a three year strategic plan. The only problem is that customers are not contented with their customer service, ethics, and quality of their products, but their prices. The only disturbing thing is will these customers stay on when the economic situation becomes better, but probably no as most Americans them might not be driven by prices only.

The New York save Life Insurance Corporation is the one of the most successful insurance firms in the United States. The company was awarded in 2008 the prestigious Customer Loyalty and Engagement award which the firm came out at the top in this competitive sector. This award showed that successful companies are not only those that concentrate on making money, but those that are providing to notch customer loyalty programs also get a good share of growth and success (Barry, 2008).

General Motors is an additional successful company that ranks highly in customer loyalty programs. Back in 2002 the company topped surveys done by several firms including R.L. Polk & Co. company rankings. GM defines loyalty as a circle of consumers that lease or buy a brand new motor vehicle of a given model that they had purchased earlier (up to 10 years). The information that was basically based on data from vehicle registration showed that up to 60% of their customers who had bought or leased a new car for the previous 10 years came back for another one in that duration (Barry, 2008).

How Marketers can use consumer Loyalty

In some instances, the realization of loyalty of customers can be done by giving out or selling a quality product with a firm guarantee. It can also be reached through offering free samples for consumer to try, shopping coupons, financing options with interest rates, trade exchanges with high valued items, warranties on items with the possibility of extension, other forms of consumer loyalty programs would include allowing the customers a trial period in which they can return the items at no cost and many other incentive programs. The most important goal of customer loyalty programs is to keep customers happy so that they can come back to buy frequently and add to the company’s number of loyal consumers by persuading other customers to use that organizations services or products. This would in the long-run translate to increased profits and the same time creating customer satisfaction (Dick, and Kunal, 1994).

Customer loyalty can be used as a one time incentive to lure customers, but giving out free samples is more popular, as a consumer purchases one product he/she might get another piece free or get to try another for free. One other incentive program towards accomplishing customer loyalty is through the offer of a product for free for given period so that the consumer can try it out without having to buy it.

Having a good customer service program in place would be another better way of attracting, and retaining customer loyalty. If a when a consumer has a problem, the company is supposed to do whatever it can to correct the situation and try to make things right and when a fault is discovered by a consumer on one of the products , replacements or refunds should be made to maintain customer loyalty (Fredrik and Earl, 1990). This should always be maintained as company policy and standard process in order to maintain a good reputation of the business. Marketers may use consumer loyalty to;

To increase Sales for expansion

All company’s have growth as one of their aims in the long-run. To increase the volume of sales accompany might have to streamline their operations first by improving on their production. They would also have to cut on their cost by managing inventory and working on their labor issues. Then they would also have to improve on their effectiveness by finding better methods and adjustments to be made or find different methods of production or operation. (Alexander 1979)

In addition, the company would like to work on their marketing and specifically to increase the number of their loyal consumers by improving the effectiveness of their marketing. This will enable the firm to provide ready market for their commodities or service. This will also mean that their customer loyalty programs will be meant to be for the long-term because of the need for growth. As a result of improving their production capacity, and effectiveness, a solid customer base will go a long way into boosting this growth.

From statistics, an average company in the United States has a decline in their customer base by 13% annually (Collins, 2001). This shows that an increase in competition increases the challenges that affect company also increase. For a company to achieve even the smallest growth it needs to increase its consumer base, which includes both current and new ones. Therefore, if a company can increase its customer base this can improve growth and hence customer loyalty, this will lead to consistency and an increase in sales as the company’s products are purchased repeatedly and in large numbers.

To retain the trophy Customers

Creating a group of loyal consumers can be compared to creating a healthy bank account balance which you can draw upon. It requires understanding of your customers buying behavior, trends and frequency. With this knowledge a company can assimilate unsuspecting one-time buyers into prospective customers and lastly into loyal customers. Your loyal customers can act as an unofficial perfect campaign team always there to put up a good word for you to the rest of the public when you are and when you are not aware.

Furthermore you ought to be able to persuade 20% of your loyal consumers to be in a position to provide about 75% to 80% of your business by making regular purchases (Barry, 2008). Consumers’ loyalty can also play a major role when you are thinking of rolling out a new product in your market. If your are able to conduct a survey within your loyal consumers, you should be able to have a successful rollout as you will be able to tell before hand how much you’ll be able to sell to make a reasonable profit margin.

Having this top cream of customers can also allow you to be able to concentrate on other aspects of your business. This would include the issuance of discount programs for example. A firm might have the capacity to offer discounts to it’s consumers who are not loyal because this group of consumers might be attracted by price more than anything (Oliver, 1999). On the other hand the loyal consumers will also continue buying because they are not attracted by price and anyway they had already made their decision to buy.

To learn consumer behavior patterns

Buying behavior refers to the trends, and decisions that people are engaged in when buying a service, product or a brand. Then consumer buying behavior is the ultimate customer’s trends, and the way he/she makes the decision to make a purchase (Chak, 2003). By knowing their customer’s personalities, lifestyles, attitudes, opinions, social class, culture and reference groups, a firm may teach its marketing team on how to handle clients effectively without making them feel out of place, offended or being judged. The knowledge of consumer buying behavior enables the firm to know the reason consumers make a particular purchase, the factors that made the consumer make that decision and lastly the dynamism of that particular society. (Handy 1981)

Consumer loyalty is a decision a customer will make knowingly and unknowingly. It is just shown through the consumer trends in the purchases they make. In the competitive business environment of today, increasing consumer loyalty enables marketer to sustain an easy and longer positions in the market they are operating in.

By studying these behaviors the marketing team can develop an effective plan because they can predict their clients’ reaction to activities such as the introduction of a new product. Their customers may take it positively because they could predict and work out an effective way of presenting the new product. Knowing consumer behavior will also tell the firm how long a product can stay in the market before being obsolete (Alexander, 1979); hence they will know the best times to introduce a new product.

To be able to determine the prices to set

The privilege of premium pricing is one that is available to only the best companies with the best quality products. This is so because consumers loyal to their brands are generally not price sensitive, but other factors such as consistency of quality and availability of the product when they need it. Majority of loyal customers are readily willing to pay for their preferred brand at any price, this is because have some perceived unique value in the brand which they don’t have for other brands (Dick and Kunal, 1994).

To reduce future costs

Brand loyalists seek their most favorite brand and are not keen on the advertisements and promotions. When a company has achieves customer loyalty it reaches a different level where it seeks to retain its customers rather than seek customers. This is basically done through maintenance of aspects such as quality, offering special reward systems, and giving their consumers some sort of recognition or status for using their products. These outcomes lower costs particularly for advertising, marketing and distribution. According to it can cost a company more to attract new customers than it would to maintain older ones. (Alexander 1979)

Conclusion

There are a lot of diverse ways to win customer using a diverse number of programs to achieve it. However the best methods are those that are aimed at changing and forecasting consumer behavior. Being able to make your consumers have a genuine reason to come back for your manufactured goods or service is the main aim of a consumer loyalty program. Failure of such programs might have devastating effects on an organization no matter the size.

Having a good share of your customer’s attention and keeping them wanting to be associated with your product saves you time and money. This also comes with other advantages such as; being able to communicate to customers meaningful messages which are personalized to their needs increasing convenience, the firm will have to put in little effort to get consumer demographic information which can lead to forecasting consumer behavior, and with these in place the firm can and enjoy easy access to consumer retention and acquisition methods (Handy, 1981).

It is difficult to get customers back once they are lost, hence a company should make sure that they retain their loyal customers. The company should do whatever in necessary to ensure that they retain consumers’ confidence. The marketing department should develop an aggressive marketing plan but remember to keep their customer’s privacy private. In addition the company should also review their customer loyalty and retention programs to ensure that they keep up with the dynamism of markets. (Collins 2001)

Bibliography

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