Customer Loyalty

In: Business and Management

Submitted By Brunner
Words 1337
Pages 6
Customer loyalty has become a central goal of modern business. With each additional year of a relationship, customers become less costly to serve. Over time, as the loyalty life cycle plays out, loyal customers even become business builders: buying more, paying premium prices, and bringing in new customers through referrals (O’Brien & Jones, 1996). A rewards program can accelerate the loyalty cycle, encouraging first or second year customers to behave more like a company’s most profitable tenth-year customers – but only if it is planned and implemented as part of a larger loyalty management strategy (O’Brien & Jones, 1996).

4/5 consumers agree that companies should reward loyal customers instead of offering the best deals to new customers. This is particularly relevant to FMG who strives to compete on quality, not price.

FMG has the need to adapt its current loyalty program to be more in-line with modern discussion around the topic. West (2004) found that when monetary rewards are given they tend to be spent on day-to-day living and the reward is not as morale boosting as hoped. Our current 1% discount per year model thus fails to provide our clients with the intended feeling of goodwill towards FMG. Moreover, as customers become accustomed to receiving a reward under a loyalty program they begin to view the rewards as an entitlement (Haisley & Loewenstein, 2011). This implies that while our reward magnitude is increasing over time, their perceived value will not increase a proportionate amount.

In adapting the current loyalty program, it is important the value of the new reward program is not perceived as of lesser value than the clients current 1% per year. Haisley & Loewenstein (2011) find strong evidence for ‘deteriorating aversion’. This explains the strong distaste for worsening trends, so strong that receiving a gift of perceived lesser value…...

Similar Documents

Customer Loyalty Malasia

...CUSTOMER LOYALTY : THE CASE OF MOBILE PHONE USERS IN UNIVERSITI UTARA MALAYSIA Prepared by Meguellati Achour Pn. Nor Pujawati Md. Said Dr. Ali Boerhannueddin Abstract Service quality, switching barriers, and brand image are the major antecedents of customer loyalty, and loyal customers may buy more, accept higher prices and have a positive word-of-mouth effect. Also we know that the cost of selling to new customers is much higher than the cost of selling to existing customers, also the cost of attract new customers is much higher than the cost protect existing customers ten times. Although this fact is apparent to everyone, many companies are still losing customers at a formidable rate. In this context the main aim of this research is to examine the relationships between these factors and customer loyalty in the Universiti Utara Malaysia sector. Based on the theoretical model, a comprehensive set of hypotheses were formulated and a methodology for testing them was outlined. These hypotheses were tested empirically by questionnaires to demonstrate the applicability of the theoretical model. The results indicate that service quality, switching barriers, and brand image are separate constructs that combine to determine the loyalty, with service quality and switching barriers exerting a stronger influence than brand image. Finally hypotheses H1, H2 were supported, while hypothesis...

Words: 4026 - Pages: 17

Walmart Customer Loyalty Program

...    Walmart Customer Loyalty Program Save Money, Live Better, Reward Yourself! Travis Godderidge Rick Hayes Darrell Johnson Chad Mikels HBM 581 Services Management Section 2 Team 5 February 24, 2013 [Type  text]         Table of Contents Executive Summary Background Research Companies researched, program names and descriptions Description of the Proposed Program Company overview Target customers Suggested Program Names Features and Benefits Terms and Conditions Duration of the Program Initiating and Marketing Tracking Device for Customers Estimates costs to implement and sustain the loyalty program Summary and Recommendations References 1     2 3 8 9 9 9 10 11 12 13 14 15 16     Executive Summary In the fierce world of global discount retail competition, differentiation is critical to long term success and survival. Walmart was founded on the differentiating factor of the lowest prices for the highest quality products. While this has served Walmart well and will continue to do so with global sourcing and supply chain management to secure the best products at the best prices, an expansion of the services provided to the customer and the ability to obtain demographic spending information and trends will prove invaluable to Walmart’s continued success and rapid global expansion. Additionally, programs that help retain customers once the customer has entered the store will increase market share more......

Words: 4862 - Pages: 20

Customer Loyalty

...Importance of Customer Loyalty [Name of Student] [Institution’s Name] The Importance of Customer Loyalty Introduction Creating and retaining loyal customers is significant to the profitability of any business. Every supplier wants to maximize his profitability by creating and retaining potential customers. This assignment strives to understand the importance of customer loyalty in technology management. Discussion Customer loyalty can be reflected through measuring the management’s success in creating and retaining long term interaction with customers. Customer loyalty is significant to running a profitable business. However, this loyalty may be company specific or product specific. For this purpose, I researched a famous social networking website, facebook. Facebook’s management is able to efficiently create and retain its potential users. Facebook enhanced its brand loyalty by continuous improvement in the features and layout of the web page. Therefore, it is still drawing more and more potential customers, even today. Customer Loyalty is Linked to Competitive Advantage Loyal customers need to be targeted by a company’s thoroughly advocated retention program; as such customers tend to give more loyalty to the company. The company’s retention program may include interactive sessions with the customers by regularly communicating them the ideas to contribute towards the enhancement of the products. This opportunity will enhance customer loyalty, which......

Words: 637 - Pages: 3

Customer Loyalty

...Customer Loyalty in Indonesia (study case Honda beat and Telkomsel) Nur Endah Lizarifin Customer Loyalty Customer loyalty is the result of consistently positive emotional experience, physical attributebased satisfaction and perceived value of an experience, which includes the product or services. Customers exhibit customer loyalty when they consistently purchase a certain product or brand over an extended period of time. As an example, many customers stick to a certain travel operator due to the positive experiences they have had with their products and services. Customer loyalty is the key objective of customer relationship management and describes the loyalty which is established between a customer and companies, persons, products of brands, the individual market segments should be targeted in terms of developing customer loyalty. Four different reasons for loyalty should be promote Psychological Customer might also developing a sense of loyalty to a certain person working for a company. People can build up a good relationship with a bank advisor they have known for several years and who has always fulfilled their expectations. The fact that people develop a sense of loyalty can be described as a psychological reason to stick to a specific product. Economic In business to business markets, it might also be possible that customer loyalty results from the fact that switching to another company would lead to the company facing economic disadvantages. In this case,......

Words: 1358 - Pages: 6

Customer Loyalty

...Customer loyalty Customer loyalty is both an attitudinal and behavioral tendency to favor one brand over all others, whether due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand.  Customer loyalty encourages consumers to shop more consistently, spend a greater share of wallet, and feel positive about a shopping experience, helping attract consumers to familiar brands in the face of a competitive environment. Customer loyalty is all about attracting the right customer, getting them to buy, buy often, buy in higher quantities and bring you even more customers. However, that focus is not how you build customer loyalty. * keeping touch with customers using email marketing, thank you cards and more. * treating your team well so they treat your customers well. * showing that you care and remembering what they like and don’t like. * You build it by rewarding them for choosing you over your competitors. * You build it by truly giving a damn about them and figuring out how to make them more success, happy and joyful. What is Customer Loyalty. Understanding the true definition of customer loyalty There are many definitions of customer loyalty. Yet each of them fails to realize that loyalty runs hand-in-hand with emotions. Customer loyalty is the result of consistently positive emotional experience, physical attribute-based satisfaction and perceived value of an experience, which......

Words: 489 - Pages: 2

Sustainable Customer Loyalty

...Management Theory Sustainability of Customer Loyalty Presented to: Dr. Silva Karkoulian Prepared by: Siham Kibbi Aline Ibrahim Mohammad El Mogharbel Mounir Ghazal Date: 27/11/2013 Paper Outline * Introduction: Four major approaches toward achieving sustainable customer loyalty * Corporate Social Responsibility: CSR plays a significant role in developing customer's loyalty * Customer Relationship Management: Delivering superior customer value has become a major concern targeting the buildup of a sustainable competitive advantage * Product/Services Cost and Price: Pricing strategies are considered to be critical aspects for creating competitive advantage and customer loyalty * Human Resources: Promoting sustainability requirements through HR management * Conclusion: Management, employment, social responsibility, and affordable prices are all keys to give customers a reason to come back Introduction Behind a sustainable business, there are many successful strategies to achieve customer loyalty. Fostering our customers’ decision in keeping a relationship with our company is not an easy job. Thus, attaining sustainability of customer loyalty is a key for a major long- term success of our organizational goals. It is our responsibility to create an attractive yet profitable business which focuses on the ways that not only satisfy but also keep a high satisfaction level of our customers and urge them to......

Words: 1821 - Pages: 8

Customer Loyalty

...At Big Bazaar we have always tried understanding our customer’s better keeping in mind their love for better bargains and getting maximum value out of each rupee they spend. This has always pushed us to think innovatively and striving to continuously giving our customers additional reasons to shop. Times are tough and we understand that this is the time when we need to stand by our customers. Hence, to share the burden of running our customer’s household the idea of Big Bazaar PROFIT CLUB was born. Big Bazaar PROFIT CLUB is the most innovative product that the Indian Retail Market has ever witnessed. It offers an unmatched value proposition to its customers. A unique membership program where one can pay Rs. 10,000 and can shop for Rs. 1000 per month for the next 12 months i.e Rs. 12,000 over a period of 12 months. This card can be used across 215 + Big Bazaars, Food Bazaars and fbb- Fashion at Big Bazaar stores across the country. In case you miss shopping in a particular month, the amount can be carried forward to the next month. Members of the Big Bazaar PROFIT CLUB will also receive the benefit of existing offers on their Payback cards and T24 mobile services. The Big Bazaar PROFIT CLUB Card can be used as a Gift Card for your friends and family, like children living away from home or parents residing in other cities etc. The Big Bazaar PROFIT CLUB Card can also serves as an excellent Employee Incentive program for your employees . It can also be extended to your......

Words: 293 - Pages: 2

Impact-of-Customers-Satisfaction-and-Customers-Retention-on-Customer-Loyalty

...ISSN 2277-8616 Impact of Customers Satisfaction And Customers Retention on Customer Loyalty Inamullah khan Abstract-The purpose of this study is to examine the importance of future customer’s relationship using customer satisfaction, and customer retention on customer loyalty in telecom industry of Pakistan. Questionnaires were distributed through electronic mail and self administered for data collection and linear regression analysis was used. The results show that customer satisfaction has significant while customer retention has insignificant impact on customer loyalty. The implications of the study are that a company should better manage their relationships with the customers as a competitive policy in mobile telephone marketplace. The weak side of the study is that it is limited to a single industry of mobile telecom industry. Key words: Customer satisfaction, Customer retention, Customer loyalty Jel code: M30 ———————————————————— 1. Introduction Customer loyalty is the focus in the research and It turn into an important concern for management only due to concentrated competition especially in service industry (Bodet, 2008). In emerging business, competition customer loyalty plays very crucial role for achieving the competitive advantages (Lin & Wang, 2006). It is significant important to analyze it in the context of customer retention and customer satisfaction, these two variables are of immense important to analyze the customer loyalty. Firms can maximize......

Words: 3664 - Pages: 15

Customer Loyalty and Defection

...Customer Loyalty Customer Loyalty by definition is a feelings or attitudes that incline a customer to return to a company, shop or outlet to purchase again, or else to re-purchase a particular product, service or brand. In general, the customer loyalty starts with a purchase, and ends with repurchase. Customer staying longer with the company tends to decrease maintenance cost, less prone to price fluctuation and good reference to other customers. “It costs five times more to acquire a new customer than to retain an existing one” (Pfeifer, 2005). For company to remain profitable it is essential for the company to retain its current customers; In other words take care of current customer base before go after new ones. In today’s global market place competition, it is more effective business strategy to retain customer rather than continuously trying to acquire new customers (Anderson, 2004). Empirical data study from (Hallowell, 1996), illustrates that there is a direct relationship between customer satisfaction to customer loyalty, and customer loyalty to profitability. An estimate of the effects of increased customer satisfaction on profitability suggests that attainable increases in satisfaction could dramatically improve company profitability. In this age of internet, customers are empowered with different source of information over the various communication mediums (Griffin, 2002). Now, a company must also allow customers to pull the marketing information they want,......

Words: 1316 - Pages: 6

Customer Loyalty

...Het effect van brandimage op McDonald’s Customer Loyalty Docent: | Drs. W. de Vries jr. | Groep 10: | Jammeren of juichen? | Afdeling: | Marketing | Namen: | Nikki PierrotMark SchutteDaan SchuurmanRico Temmink | Inleiding McDonald’s is een van de winnaars van de crisis (NOS, 2014). Althans zo omschrijven de media het. Namen als McDonald’s, Van der Valk en LIDL zijn sprekende namen en zijn in staat om tijdens crisistijd dubbele groeicijfers te realiseren. Volgens dhr. Grievink, directeur van het Foodservice Instituut (FSIN), is dit vooral gelegen in de duidelijke consumentenverwachting bij de dienstverlening van deze merken (NOS, 2014). In dit kader kan breder gekeken worden naar de rol van het imago op loyaliteit zoals klanten deze uitdrukken door herhaalde aankopen bij een bepaald bedrijf uit te voeren. Meer specifiek stellen wij onszelf de vraag: Welk effect heeft het brandimage van McDonald’s op customer loyalty met customer satisfaction als mediator? In dit paper zullen we opeenvolgend bekijken wat precies merkimago is en hoe dit er voor McDonald’s uit ziet; tevens kijken we naar het creatieproces van een merkimago en identificeren we de verschillende types van associaties die consumenten kunnen hebben ten opzichte van een merk. Vervolgens kijken we naar de rol van loyaliteit. Wat is het en hoe staat dit in verband met merkimago? In hoofdstuk 3 behandelen we de relatie tussen merkimago en klantloyaliteit en in het specifiek het belang van......

Words: 6731 - Pages: 27

Customer Loyalty

...Focus on Customer Loyalty For many years hospitality firms practiced conquest marketing. The goal of conquest marketing is to create as many new customers as possible. While marketing executives understood that it was important to satisfy the guests while they were on the property, they believed that guests’ satisfaction was the overall responsibility of the operations people. Marketing’s sole responsibility, they reasoned, was to continue to find new customers. Marketing has changed and marketing executives now realize that their sole responsibility does not end when the customer walks in the door. Instead, they need to be concerned with the whole experience of their guests in order to ensure that not only will guests return to the property, but they will also tell their friends to come and visit. This emphasis on the encouragement of repeat business is what is now called loyalty marketing or retention marketing. This type of marketing is the wave of the future. What do we mean by loyalty? Rob Smith, president of the loyalty marketing firm Focal Point Marketing, claims that loyalty occurs when the customer feels so strongly that you can best meet his or her relevant needs that your competition is virtually excluded from the consideration set and the customer buys almost exclusively from you – referring to you as “their casino” or “their hotel.” Loyalty marketing is important because loyal customers are more profitable than non loyal......

Words: 1311 - Pages: 6

Customer Satisfaction Lead to Loyalty

...Final Report Business Research Methods Topic Study the influence of Service Quality with product leads to customer loyalty in Telecom Sector (Ufone) Submitted by: Sr. # Group members: Reg. No.# Muhammad Adnan L1S13MBAM2049 Muhammad Asim L1S13MBAM0027 Nabil Abdul Majeed L1S13MBAM2012 Saad Rafique Ali L1S13MBAM0047 Huma Zafar L1S13MBAM2010 Sameera Waheed L1S13MBAM2050 Submitted To: Prof. Amna Zulfiqar Signature: Table of contents Page # Introduction 03 Importance/ significance 04 Explanation of Variables 05 Service Quality (independent variable) 05 Customer loyalty (dependent variable) 05 Relationship between service quality and customer loyalty 05 Objectives 05 Theoretical framework 06 Operationalization 06 Hypotheses 07 Research design 07 Purpose of study 07 Nature of research 07 Population 07 Sampling technique 08 Study setting 08 Time horizon 08 Unit of Analysis 08 Instrument 08 Data Analysis 08 Reliability 08 Description statistics 09 Correlation 10 Conclusion 12 Recommendation 12 Practitioner 13 Reference 14 Introduction For every person cellular service has become a need...

Words: 2288 - Pages: 10

Customer Loyalty in Uber India.

... 1.1 INTRODUCTION Customer loyalty is both an attitudinal and behavioral tendency to favor one brand over all others, whether due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand.  Customer loyalty encourages consumers to shop more consistently, spend a greater share of wallet, and feel positive about a shopping experience, helping attract consumers to familiar brands in the face of a competitive environment. Types of Loyalty To understand customer loyalty one must recognize there are different types and degrees of loyalty.  There is monogamous loyalty and there is polygamous.  There are also behavioral and attitudinal aspects.  A look at these concepts will clarify what “customer loyalty” really is, and this is important because having a solid understanding of the concept is critical if one hopes to design a reward program where loyalty enhancement is the primary objective. Monogamous vs. Polygamous Loyalty We live in a world of polygamous, not monogamous loyalty.  For example, a person might shop at Safeway, Thrifty Foods and Save-on-Foods and unfailingly shop at all three.  The person is then loyal to them, but not to others, and yet 100% loyal to none.  In their book Loyalty Myths, Keiningham et al. (2005) suggest that “loyalty can in part be thought of as the probability a customer will purchase a brand on any particular purchase occasion.  For example, a customer may tend to purchase......

Words: 17803 - Pages: 72

Customer Loyalty

...Ranking for Wireless Customer Loyalty in Leading Marketing When it comes to loyalty AT&T announced on February 4, 2010, that they have ranked No.1 for customer loyalty. AT&T is a premier communications holding company it is one of the biggest phone services companies in the United States and around the world it has subsidiaries and affiliates which works under AT&T operating companies. At&t services includes the nation’s largest fastest 3G network for wireless, Wi-Fi, high speed internet services, it also offers the most wireless phones that work in other countries. At&t excels in customer service loyalty because of its network quality, technology leadership and competitive plans. AT&T has allowed its customers to have access to nation fastest 3G network along at the same time to talk and surf over the internet. Among being competitive in the market against some of the other wireless phone companies including T-mobile, Verizon and Sprint, At&t has manage to be the leader in emerging technologies with the most smart phones. Founder and President of Brand keys stated, “At a time when brand has become a surrogate for added value, especially n the wireless category, we believe AT&T has been able to better meet the expectations that consumers hold for that fusion of technology and brand. They’re managed to do it believably and with a degree of engagement that have resulted in their No.1 ranking in our 2010 Customer Loyalty Engagement survey.”......

Words: 298 - Pages: 2

Customer Loyalty

...Abstract The Study of Customer Loyalty Factors in the Mobile Telecommunications Industry in China This article is a study of Chinese telecommunications service customer loyalty factors and the impact of the internal mechanism. The industry empirical study reveals the communications services industry, the impact factors of customer loyalty, and the interaction between these factors mechanism. With the increasingly fierce market competition and increase costs for customers, cultivate and maintain long-term customer loyalty is a business enterprise can be an important factor. On the one hand, enterprises have to get a good income, in addition to the core technology and improving product quality, but customer satisfaction, service quality and Enterprise Image will to some extent affect on customer loyalty, loyal customers are the main profit source. On the other hand, when supply exceeds demand in the market environment, the cost to acquire new customers than to maintain existing customer costs, but the profit contribution of new customers is far less than the original customer. Finally, the loyalty of customers through word of mouth to bring new business customers. Therefore, the development of customer loyalty strategies, research customer needs and maintain long-term two-way interaction with the customer relationship business and academia has been the focus of attention. Customer loyalty in the communications industry, more and more attention, is the communications......

Words: 11465 - Pages: 46