Customer loyalty – managing, understanding and profitability

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Know your customers
Know your customers

It is of vital importance that organisations understand what drives both value and delight for their customers. Adopting a customer centric vision enables an organisation understand their customers, deliver customer delight and drive for loyalty.

One fundamental issue we forget is that different customers have different requirements and will be delighted in different ways. Segmentation and data analysis are critical if an organisation is to generate loyalty from different customer segments.

Positive switching barriers should be implemented to increase the likelihood of customer retention.
Customer segmentation based on profit is imperative. Operating costs for customer segments should be monitored to ensure they are not disproportionate to the profit the organisation receives from these customers.

By profiling current profitable customers a customer acquisition strategy can be produced and implemented.

Appropriate monitoring of customers is important to ensure that customer defections are not masked by customer acquisitions. This is essential for the sustainable growth of an organisation.

A win-back strategy is recommended as previous customers are less costly to win-back compared to the costs of acquiring of new customers.

Analysis of defecting customers allows an organisation to profile at risk customers. Where appropriate preventative measures can be put in place to reduce customer defection.

By considering these ideas, managers should be better informed to manage loyalty in a profitable manner within their organisation.


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