Is Loyalty a type of customer behaviour?

Last Updated: December 24, 2011By Tags: , , ,

It is a known fact that having a loyal customer base helps an organization in several ways, such as reduction in costs and an increase in profits. It’s true that a customer’s average consumption increases over time, hence bringing in more sales revenue. Also, a loyal customer base enables the organisation to cost reductions through reducing sales cycles, fast-tracking order processing, and increasing customer referrals.

But, the question is, is Loyalty a type of customer behaviour?

I am of the view that loyalty is a customer behaviour which is influenced by many different factors that cannot be easily identified or captured in a single satisfaction survey. For example, loyalty can be driven by:

  • The value of products vs. the customers’ perception of value
  • Product features and how well they match customer needs and wants
  • Service aspects and how well they meet customer needs and wants
  • Prices, products, or services vs. competitive positioning
  • Brand image, particularly where style, safety, or security are important
  • Economic factors, such as recessionary eras, that dampen spending and change buying behaviour
  • Legislative factors that impact access, obtainability, or prices

Several of the above are out of your control and balancing the ones that are within your control can seem daunting and beyond your capabilities. However, you must first walk before you can run and most companies today are at a crawl-level of competency regarding customer loyalty. So, before you go rushing to discuss innovative concepts to enable your company to run the loyalty race, you have to understand that loyalty is a type of customer behaviour. You fist will need to understand what behaviours your customers have. You also should have understanding as to what behavioural patterns drive your customer base. One you have some insight into these things its then time to think as to how you are going to introduce elements in your marketing and engagement activities to ignite the loyalty feeling.

Facing tough competition in this challenging economy, you should seek to convert occasional buyers into customers in order to maintain customer spending at a standard level. Then it’s a task to convert customers to loyal customers. Most businesses have already executed, or are at least thinking of executing, campaigns and initiatives which sow the seeds of loyalty. Over time this will help you to mould your customer behaviour.

Remember, the purpose is to attract, convert, and keep existing customers.

Chintan Bharwada

Chintan is the Founder and Editor of Loyalty & Customers.

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To achieve better sales and profits, most companies could be doing more to cultivate business from their existing customers. However, enthusiasm for customer-retaining strategies must not endanger sound customer-getting efforts. How companies balance the two is the big question. To intensify reaching old customers while still seeking new ones, for many firms, will mean changes in market analysis, planning systems, management incentives, and marketing and/or operations organization. In the rush toward growth, consumer marketers have tended to regard success as stemming from obtaining new customers while unwittingly minimizing the importance of satisfying old ones. It is time for more companies to distinguish between their getting and retaining functions, to assess the balance between them, and to remedy any deficiencies in customer retention. This process requires management to value the potential of current customers and to treat them in special ways to get them to keep coming back. Several major elements should be part of the new marketing mix for customer retention: Product extras Keeping customers frequently requires giving them more than the basic product that initially attracted them. Product extras for individual customers over time can play a sales-expansive role. Reinforcing promotions Product promotion works better when aimed at existing customers. If a marketer knows who these customers are, benefits can be obtained by giving them reinforcing communications. Sales force connections The sales force can play a decisive role in the customer-retention function. At a retail or service counter the salesperson is the focal point of the company's strategy and is the firm to the customer. Post-purchase communication A company must anticipate that some customers will encounter either minor or serious problems after purchasing. If the firm is not ready to hear and correct these difficulties, the customer may not repurchase  or may cancel the the relationship. Whether company or customer is at fault, standby post-purchase activities can be instrumental in saving these customers.

One Comment

  1. is Loyalty a type of customer behaviour | Loyalty & Customers | Customer Loyalty Shares | Scoop.it December 22, 2011 at 12:34 am

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