Customer Loyalty - a 2 way Street

By

Sumanta Dutta
Faculty Member
ICFAI National College
Garia, Kolkata
 

"If we don't take care of our customers some else will"-Mr. Nicholas Utton, chief Marketing Officer of Master Card International.

To take care of our customer, organization needs to have a full understanding of their wants, needs and desire. Gaining and sustaining customer loyalty today is considered as an ultimate goal of all marketing activities.

"It is the practice of finding, attracting and retaining your customers who regularly purchase from you." A question often strike the mind that whether customer loyalty always ensure customer satisfaction? Or whether they are synonymous in nature?

Basically customer loyalty is not customer satisfaction. Customer satisfaction is the basic entry point of good business practices. Sabine Adams pointed out that when a loyal customer behaviors are positively reinforced it can create a continuing loop of action and generate reward in terms of satisfaction. There are only three ways to grow by inspiring the customers to stay loyal.

1) Increase the number of present customer base;
2) Persuade the current customers to buy in large volumes;
3) To encourage the current customers to buy more often.

Hence, the above business philosophy adopted by any business concern with a sharp focus on current customer base, because a large customers is often generated through referrals made by the current customers. This requires a dedicated effort to focus on present customer base as well as need to develop effective relationship marketing programs. Such efforts towards building a customer loyalty will certainly pay off in the long run.

A generalized ways through which organization can build an effective customer loyalty programs includes -

1) Communicate:

It is the promise that organization made to the customer to deliver. It creates a psychological perspective in the mind of the customers.

2) Customer Service:

Ensure that the product and service delivery are consistently at all times.

3) Employee Royalty:

It is a top-down approach. If the organization shows loyalty towards their employee, they will feel good about their jobs and pass the loyalty along to the customers.

4) Employee Training:

Train the employee in the manner the organization wants to interact with customers. Empower employees to make decision that benefit the customer.

5) Customer Incentives:

Give customers a reason to keep faith in organization. Various promotional roles are helpful in this regard.

6) Product Awareness:

Use market basket analysis to target offers and identify new product opportunities. Deliver the product as and when demanded by the customer on a regular basis.

7) Reliability:

It creates trust. If something goes wrong it is necessary to let the customer know immediately and compensate for their inconvenience.

8) Flexibility:

Be able to anticipate future customer needs and create flexible and adaptable organizational structures to these changing customer needs before they occur.

9) People centric:

It is the people that are recognized over technology. It is irrational to substitute it with mechanized system to deal with psychological problem related with customers.

10) Recognition:

Through various promotional activities it bring the customers near to the product offering

Future of Customer Loyalty

It is the "Loyalty based management" is here to stay. [A.V.Vedpuriswar, Dean ICFAI University].It is the facts relating to customers. It is based on motivation, behiviour, humanistic values and principles. From the view point of Padmanabhan a strategically managed "customer based relationship" programmes provide long term enduring values. As a result-

a) Customers are less inclined to move away from existing organization
b) Recommend the organization favorably
c) Helpful in implementing strategic change by monitoring customer needs based model
 

Right Approach in Gaining Customer Loyalty

By

Ruchi Bhatia
Lecturer
NSB School of Business
New Delhi
 

Every business organization, be it dealing in goods or is engaged in providing services or may be engaged in producing goods and services both, strive hard to achieve a greater market share, For this they try to build more and more customers by creating awareness and arousing desire among the targeted segment and finally influencing them to take the desired action in the from of purchase of goods or services of the provider. But a customer may purchase the first time for this very business and may shift his purchase, the second time in favour of a competitor. Therefore, gaining a new customer is not the winning the final round of the battle. It is equally imperative to retain the customer for a long period of time and if possible then, also to transform churners into frequent buyers of the brand. One can win the customer for ever only by making him loyal to the organization.

There are many approaches in building the customer loyalty. These approaches range from creating a customer centric service centers to coupons and loyalty cards and so on. But what happens when these measures fail? They have a daunting effect on the customer care executives and to some extent on the organization as well.

Taking up a short story:

Mr. A's son was about to tie his knots. So Mr. A and his family decided to do their purchases for suits and sarees from Chabbra 555. They shopped from Chabbra 555 for Rs. 45,000. After about a month of the wedlock ceremony, Mr. A received a voucher from Chabbra 555 giving a an offer for discount of Rs. 500 on a minimum purchase of Rs. 5,000 and stating that the offer is valid for next few days. But at Mr. A's place not even a single function is left, neither he is expecting any function in next few months atleast. Now the question arises, that Mr. A has already incurred so many expenses on his son's wedding, will he spend Rs. 5,000 to get a discount of Rs. 500 when he has no desire to go for purchase of any suit or saree. The simple answer to this is simply no. Whenever, he feels the urge to purchase any new suit or saree, it may be that he hinge on Chabbra 555 again, but as far as present case is considered this voucher is simply a waste paper for him.

Therefore, the positive chances of getting the voucher redeemed by the customer and repeating his purchase leading to loyalty cannot be surely set, as the redemption of voucher depends on the circumstances of the case and mind set of the people. However, by sending a voucher to the customer, atleast Chabbra 555 is capable of maintaining a good customer relation, which in the long run may help it to attain the repeat purchase by the customer and finally contribute something towards the attainment of customer loyalty.

Taking up the another case of loyalty cards issued by the petroleum companies, then surely lot many customers don't even count their points earned on these loyalty cards, some may even don't ask for their loyalty cards from the petroleum retailers. And apart from these people a group of people who forget to carry their loyalty cards at the time of their purchase, is not uncommon. All this point out towards the single fact that not even the issue of loyalty cards is going to be a successful endeavor in gaining customer loyalty.

Now, the question arises, what is the right approach in winning the loyalty of the customers.

First of all, provide the customer with right quality of goods and services for the first time and for every time. This surely, will be helpful in gaining customer loyalty. Secondly, receive his grievances politely, handle his queries quickly, completely and correctly. Thirdly, try to pamper the customer, if possible. Fourthly, build a database of customers. Accordingly send greetings and personalized letters on certain occasions like birthday, anniversary, festivals and like. Last but not the least, customer loyalty can also be attained by giving specific customers special surprises (not often). When customers develop a soft heart for the organization, is able to relate him to the same, then at that stage gaining a customer's loyalty will not appear to be a difficult task. This is the stage where one can cheer with the remark confidently, "yeah, we have won the battle". But again this is not the end of the battle. As gaining a customer is a never ending scenario, one has to be on their toe continuously, otherwise in the long run the battle will be won by the competitor.