Brand loyalty

Definition:The extent of the faithfulness of consumers to a particular brand, expressed through their repeat purchases, irrespective of the marketing pressure generated by the competing brands. What Does Brand Loyalty Mean? When consumers become committed to your brand and make repeat purchases over time. Brand loyalty is a result of consumer behaviour and is affected by a persons preferences. Loyal customers will consistently purchase products from their preferred brands, regardless of convenience or price. Companies will often use different marketing strategies to cultivate loyal customers, be it is through loyalty programs (i.e. rewards programs) or trials and incentives (ex. samples and free gifts). Companies that successfully cultivate loyal customers also develop brand ambassadors consumers that will market a certain brand and talk positively about it among their friends. This is free word-of-mouth marketing for the company and is often very effective.

 Brand Loyalty
Brand recognition: Consumer awareness and identification of a brand. Brand preference: Consumer reliance on previous experiences with a product to choose that product again. Brand insistence: Consumer refusals of alternatives and extensive search for desired merchandise.

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Why talk about Loyalty Mature Industry

increasing competition

Focus on getting more customers

Market share Vs. share of customer

Competitive advantage
Price Service quality Loyal relationships

What does loyalty mean to businesses ?

Repeat Purchases ?

Retention of Customers ?

Create Profitable Customers ?

Acquisition of Customers ?

LOYALTY

More Information on Customers ?

Just Another Marketing Program ?

Reward Loyal Customers ?

Reality ..could be all of the above !!!!

What is a Loyal Customer

Definition: customers with a long record of purchases from a preferred provider caused by their psychological and emotional bond with that provider Are there various types of loyalty?

Some insights --- Customer & Company perspective

Customers new perspective of Rewards ( Loyalty )
1. Cash value 2. Redemption options 3. Aspirational value 4. Relevance 5. Convenience ---- Immediate gratification ---- More Choice ---- Feel Good factor ---- Does it make sense ---- Ease of availing reward

Loyalty initiatives are not short term marketing tools. They should

deliver tangible value in proportion to the value the customer brings to the company
offer right mix of Product, Price, Service Delivery & Relationship benefits Communication to be transparent, timely and focussed Consistent across all customer touch points

Loyalty initiatives must also be profitable

Treat profitable and unprofitable customers differently

What does loyalty mean to the customer today ?

Complete Customer Relationship Experience
Customer cost of using your product

Primary drivers

Price
Purchase price Effort Time

Product / service*
Physical product Service product Service delivery Service environment

Brand**

Relationship

Ethics Image Reputation Positioning

Loyalty Programs Co Brands Alliances Special treatment Affinity Customer community

Ask yourselves..are you truly Customer Centric?

Do you measure your customers
1. Lifetime Value & Cost to the business 2. Preferences, Dislikes, Usage Patterns 3. Satisfaction levels

Can your Products & Delivery systems provide ..

1. End to end solutions / Address future needs 2. Competitive & flexible pricing plans 3. Ease of access / acquisition --- Options to use most appropriate services / channels

Are your business processes geared up for ..

1. Settling customer issues, with 1 phone call or web-site visit? 2. Responding immediately & appropriately to "moments of truth" when customers' business is on the line?

Do you monitor your Loyalty programs to see .

1. 2. Address the right customers If they are profitable?

Are all loyalty programs successful?

The success lies in identifying the right kind of program that suits your Industry as well as your customers

Not all loyalty programs are profitable.

The correlation between loyalty programs & profitability is as less as 0.2 - 0.45. This varies across industries.

Decide when to send a customer out of the loyalty program as well.

Event history model can be used here - - T T= Time period between the first purchase and last purchase n = No. of purchases made in the time period

The profitability of customers varies across industries & so should the investment on a Loyalty program.

Technology in Loyalty Marketing

Loyalty marketing today goes hand in hand with technology Some latest technology breakthroughs: Transaction databases customer interaction management-

Shoppers Stop - First citizen

Objective:
Ensure stickiness by increasing rewards to customers on every purchase they make at the shop.

Eligibility:
Any customer who purchase goods worth a predetermined amount.

Modalities:
Earn points which can be redeemed against their bill amount. Three tiers with increasing value per point at each level. Members are given special sale previews, birthday gifts & unique focussed offer.

Results:
Has generated a database of over 4 lakh members who contribute to nearly 50% of the total sales of Shoppers Stop

The Consumer Adoption Process

Adoption process: Stages that consumers go through in learning about a new product, trying it, and deciding whether to purchase it again.
Awareness Interest Evaluation Trial Adoption or rejection

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 Consumer innovator: People who purchase new products almost as soon as the products reach the market Diffusion process: Process by which new goods or services are accepted in the marketplace

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 Categories of Adopters Based on Relative Times of Adoption

The Love Triangle

Social Network

Provider

Customer

Action Outline
1. Select your market segment
Identify most valuable customers (what criteria?) Identify customers who might become valuable

2. Design a relationship-building service culture

Identify what type of treatment promotes customer loyalty Identify what loyal customers want to give to you

Identify potential for the development of a brand community

3. Implement a loyalty treatment

Design specific communication strategy and message Train staff to understand the importance and the process Create opportunities to invest and receive investments Generate a sense of community among your customers

4.

Measure effects of program and redesign

Maintain constant communication with your loyal customers Monitor costs and results of your program

Types of Investments

Give to your valuable customers

1. 2. 3. Make sure that your special customers receive special treatment Send cards for birthdays rather than just for the holidays Make them feel unique (use name, compliment them for helping)

4.

Educate them about front and back stage

Receive from customers

1. 2. 3. 4. Give them opportunities to get to know you (your staff) Help them become advocates of your company (merchandize, web) Seek their opinion Allow them to commit to you with a long term program

Love Status Services

Types of Resources

Information Money

Goods

The Love Triangle

Social Network

R.I.M.
Provider Customer

Differentiated Strategy to Loyalty Segments

Not all customers were created equal

High loyals most profitable, make them feel like family (20% of your customers) Latent loyals find out why they cant come more often, find other ways they can help, dont discount Spurious loyals come but dont care, make them connect with you, make them wish for special treatment Low loyals dont get distracted with them, but make sure they are satisfied (approx. 40-60% of your customers) ?

Types of Loyal Customers

Frequency of Purchases

High loyals
Attachment

Latent loyals

Spurious loyals

Low loyals

What to expect from loyal customers

Behaviors:
Come back frequently Buy most expensive products Recommend provider to friends Give important suggestions

Emotions:
Are attached to the provider/staff Trust the provider Resist changing despite competitors persuasion Willing to forgive mistakes