We will start this brief introduction with a definition of customer loyalty, what it entails and some factors that sustains customer loyalty in organizations.
Internet (and business literature in general) is full of definitions of Customer Loyalty – and they are all similar. For us, Customer Loyalty is the Likehood of previous customers to return and continue to buy from a specific business or organization (Non-profits/ NGOs also have customers: their beneficiaries)
In layman’s terms Customer Loyalty is the Consumer Behavior where one buys a specific particular brand or product or service over an extended / long period of time.
Obviously, Customer Satisfaction with your product or service itself along with superb Customer Support are absolute Essentials in creating and maintaining Customer Loyalty. Customers must be able to reach you are and there are various customer service skills a company can portray to make them service champions.
The SERVQUAL model (https://en.wikipedia.org/wiki/SERVQUAL) which comprises of empathy, reliability, responsiveness, assurance can help retain customers. But theory aside, simply human behavior, like saying a big ‘thank you’ to customers and saying ‘sorry’ when you go wrong, they do help make customers happy or even calm customers down in escalation situations.
Also, following up on your customers to find out if they are satisfied with your product or the service and always ensuring that your customer is king and is always right, helps to retain your customers.
But please keep in mind that a Satisfied Customer is never by default a Loyal Customer. You might be extremely happy with your new blue shirt- that does not mean you will go ever again in the same shop.
The Relationship- cycle with customers starts with creating awareness of the product. Customers then make the decision to ‘use’ the product by purchasing it, when they like the product; it ensures repeat sales and they tend to refer the product to others. This is a great factor in increasing market share which will make it difficult to lose your customers to competitors (but not impossible).
The 4 main factors that could sustain Customer Loyalty in/for your business.
There are 4 main different reasons / factors that could lead to sustainable Customer Loyalty in your organization:
- The Psychological factor – This describes the psychological reason for ‘sticking’ to a specific product or service.
For instance, Customers can develop a sense of loyalty to a certain person working for a company. People build excellent relationships with their relationship managers in the bank and this is why they stay with a particular bank for such a long a time without switching.
- The Economic factor – In B2B (Business to Business) marketing for example, when companies switch to different suppliers / vendors/ service providers, it results in economic challenges. In this case, customer loyalty is based on economic grounds.
But also in straight B2C (Business to Consumer) transactions, you have Consumers who are ‘loyal’ to a product or brand because it is simply the cheapest (at the moment).
- Technology factors – Customer Loyalty occurs here when a company has already adapted a technology favored by the consumer- e.g. it supports that e-wallet or e-payment method that I have already setup on my mobile phone, or I can order with my Facebook login, or I can pay with that particular network mobile money, etc.
- Contractual factors – Think of all sort of subscription services…this is more of ‘forced’ Customer Loyalty.
What are the 5 Benefits of Customer Loyalty to an Organization?
The main 5 reasons why Customer loyalty is very beneficial to any business, are:
- It makes you the market leader in your industry.
Customer loyalty goes a long way to make you the market leader in your industry. In today’s competitive world, it is difficult to distinguish your products from your competitors. Customers of today are very sophisticated, and they have a wide range to choose from (number of products or services, quality levels, prices, etc.) and your product today can easily be lost to your competitor tomorrow.
Customer Loyalty towards your brand affect customer purchasing decision. If your competitors have similar products, your product will still have highest priority among customers. A typical example is how well Unilever positioned the” Omo” brand in the minds of the beneficiaries. When customers go to mini marts to buy detergents, they refer to every detergent as “Omo”.
- It ensures repeat sales.
Loyal customers tend to make more than one purchase. Also, they tend to spend more without thinking due to the trust they have in the brand. Customer Loyalty does actively act as a defense strategy against competitor brands. For instance, the Club Beer from Accra Brewery, has positioned itself well to make it impregnable to attack; Star from Guinness Ghana Brewery has tried multiple promotions, attack strategies and change of taste but more customers still prefer the Club.
- It ensures customer retention.
Customers are the heart and souls of every organization and keeping existing customers is just as important as getting new ones but it cost less to maintain existing customers than recruiting new ones. Therefore, organizations must invest in customer loyalty in order to avoid losing customers to competitors.
- It improves brand image.
Brand image is how a customer perceives your products or service. Painting a good image helps businesses to maintain existing customers, acquire new ones easily by word of mouth and reduces marketing cost. Guinness Ghana for example engages in social responsibility such as supplying water to local communities and this goes a long way to sustain the brand image of the organization.
- It increases organization’s profitability.
Customer Loyalty is proven to have a direct impact in the increase the organization’s profitability. Customer Loyalty is crucial to every business because it can help your business make more money and save more money as well. The business tends to save more when existing customers recommend the product to others, thus reducing marketing cost. The business also makes more money when loyal customers and new customers buy from you and not your competitors. A typical example is how MTN Ghana shows love to their cherished customers by buying cakes and call cards for them on their birthdays. This makes it difficult for them to switch to other networks and they tend to recommend MTN to their friends too.
This brief introduction should have made you aware that in 2017 there are 2 realities:
- Happy Customers / even extremely Happy ones, they are not by default repeated buyers of your products or services,
- It is cheaper and more profitable to turn an ‘acquired customer’ into a Loyal one that to get a new customer to ‘replace’ the one that you just ‘lost’,
and that you need to address how you can make your customers Loyal.
Do you want 1000 Happy Customers or 1000 Loyal Customers? Think about it and redefine/ readjust for Customer-centric Strategies & Operations for 2018.
Thank you and Good Luck,
Disclaimer: any products and brand /company names mentioned here, are purely for demonstrative purposed and the author does not have any financial gain or connection of any kind with those orgranizations nor does she indirectly endorses them by simple mentioning them.
About the Author: Ms. Rosemond Addae, a 2018 MA Marketing Candidate at Legon, is an active B2B
Marketing Practitioner. She is also associated with a unique Customer Loyalty Startup : HireLoyalty (www.HireLoyalty.com)- based in Accra, which is coming out of stealth mode in the next few weeks offering both Consulting and Training in anything relating to Customer Loyalty.
She welcomes all your comments/ remarks/ feedback /suggestions at Press [at] HireLoyalty.com. HireLoyalty can be reached at +233 20 741 3060 or +233 26 835 2026
© 2017 Rosemond Addae and © 2017 HireLoyalty.