1. Customer loyalty

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Customer loyalty
Customer loyalty is the feeling of attachment to or
affection for company’s products, services or people.

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Advantages of loyal customers
The company’s loyal customers are also its most profitable
customers. With each additional year of relationship, the
customers become less costly to serve. They become the true
business builders because they buy more and bring in more
customers through referrals & word of mouth.

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Advantages
• Increase in revenues as a result of repeat purchases &
referrals.
• Reduction in cost due to lower acquisition expenses.
• Increase in employee retention because of improvement in job
pride.

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Reasons for shift in
customer loyalty
• Dissatisfaction from products /services/people
• Entry of new products / competitors
• Reduction in brand dominance
• Company image / poor financial results
• De-regulation
• New technologies

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Soft part of quality
With the advancement of production technology, the differences
in products of various brands will diminish. In this environment it
is the soft part of quality, i.e method of delivery and after sales
service, which will become the differentiating factor in brand
building and earning customer loyalty.

7. Customer categories...
Loyal : Loyal customers experience high degree of satisfaction and keep coming
back to the company. They also act as “free advertisement” for the company.
Defector : Defectors are customers who are not fully satisfied with the company’s
products and services.
Adventurous: they are customers who are fully satisfied but still would like to
change the products or services. They never stick to one brand.
Adventurous: they are customers who are fully satisfied but still would like to
change the products or services. They never stick to one brand.
Captive: they are customers who can not shift loyalty because of monopoly of the
company. They are compulsive buyers and have to accept the product irrespective
of their satisfaction levels.

8. Customer loyalty and behavior
Customer Satisfaction Loyalty Behavior
1. Loyal High High Stay with Co.
2. Defector Low to medium Low to medium Leave the Co.
3. Adventurous High Low to medium Leave the Co.
4. Captive Low to medium High Stay with Co.

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Strategies for creating customer
loyalty

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A. Offering more value to
customers
The best way to maximize customer loyalty is to offer more &
more value to the customers. The value is the combination of
two variables:
1. The benefits enjoyed by the customer.
2. The price paid by the customer

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B. Long term perspective
The organizations must take long term perspective for sustained
relationships with their customers and design the products
accordingly. Many organizations compromise on quality for short
term benefits and as a result they loose their markets to their better
competitors in the long run.

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C. Customer rewards
Although customer rewards are considered as cheap promotional
devices, yet more and more company’s are jumping on to the band
wagon. From Airlines offering frequent flyer programs, Telecom
company’s lowering their fees and Automobile companies offering
gold coins are the examples of organizations trying to lure their
customers.

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Customer rewards...
For the rewards to really earn the customer loyalty, the
organization must develop a system in which
customers are continuously informed about rewards of
loyalty & are motivated to earn them.
From a customers prospective 4 elements determine
the rewards value:-
1. Cash value
2. Aspirational value
3. Relevance
4. Convenience

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