Loyalty programs:
The product, policies and procedure revolve around center of Loyalty management and customer retention. Loyalty programs are integrated carefully. The types of Loyalty programme are: Appreciation, Rewards, partnership, rebate & affinity. Usage of different cards is the easiest way of e-payment. Special reward point can be once accumulated are used for purchasing some products.
Relationship Hierarchy talks about this changing expectation of customers with the organization. The value exchange also changes with the hierarchy.
- Transactional Relationship is fleeting, least valued and cost oriented.
- Satisfaction based Relationship has moderate value and operational excellence oriented.
- Emotional connect Relationship is high value and experience orientation
- Shared Value Relationship is on the acme and has the highest premium value through co-partnering.
Loyalty Pyramid is mapped on the basis of Relationship Hierarchy.
Source: Google Images
It includes:
- Switchers exhibits Transactional Relationship with no feeling of loyalty.
- Satisfied Buyers has no reason to break off the relationship but switch with stimulus & inducements.
- Emotional connect leads to selective brand loyalty and shows friendly approach. Long-lasting connectivity may be generated through proper loyalty programs and wise handling at touch points.
- Shared Value Relationship leads towards high Customer commitment. The customers spread word about brand/product/service on their own due to experience and become spokespersons or ambassadors for the company. The company needs no much advertisement campaign in long run. Partnering with the company tends to get incentives/discounts for strong alliance with each other.
Selective customers who have loyalty characteristics ensure long length of relationship with brand, suggesting others to use it’s product or develop repurchase intent.
first focus on behavioural aspect is dealt through segmentation of Customers and later on suitable demographic, psychographic and geographic sub segments.
Behavioral segmentations deals with loyalty and also be based on proportion of purchases, frequency of purchases, Types of purchases and average value of purchases by a channel.
Generating cooperative and collaborative relationship with customers is prime force for sustaining in competitive rivalry. Marketing scholars are studying nature and scope of relationship marketing and emphasizing on value preposition and having alliance of collaborative nature between buyers and sellers. Many researchers have tried to study varied aspects of marketing like B-B Marketing, B-C Marketing, distribution channels, sales promotion, service marketing, advertising, scanning the marketing environment, analyzing consumer market.
There is a need to understand how to deal with global competition and design competitive strategy with global marketing offerings for the customers. Integrated marketing communication is used to hit target audience. IMC focuses on marketing process from the angle of receiver. Response hierarchy model deals with cognitive, affective and behavioral response stages. Marketers with right sequence of (learn-feel-do) perform better job of planning communication. Five M’s of advertising include Mission, Money, Message, Media and Measurement. Good advertisement fetches better advertising effectiveness. The advertisement must connect itself with the psyche of the target customers.
Source: Google Images
The ladder in above figure shows degree of loyalty and respective nomenclature of the roles played by customers at different level of the ladder
Loyalty as the basis of segmentation
The most suitable ground on which segmentation can be based is the loyalty of customers. Through loyal behaviour customer’s decision making and bond with brand can be traced. The loyal customers can be surely benefited. The crux is Customer’s significance over a period of time than in a single visit.
Generically, Customer Loyalty aim is retaining and making the customers loyal towards a brand or a product. Indeed, because of nowadays systems characterized by higher competition levels and increasing difficulty in acquiring new customers – becoming in the long run hard to please and more careful to make choices .The companies become much more stable and competitive if they are likely to rely on a certain percentage of loyal customers. Out of doubt, the companies meet economically higher convenience in investing on making the customer loyal rather than acquiring new ones.(A. Leverin and V. Liljander ,2008)
Linking profitability and loyalty:
- High profitability and short term customers(Butterflies)
- Low profitability and short term customers(Strangers)
- Low profitability and long term customers(Barnacles)
- High profitability and long term customers(True Friends)
Customer Relationship Groups
Source: Google Images
Approaches to customer value
- The total value of customer’s relationship with the company
- The potential value of relationship
- The Profitability of relationship
- The insights a customer can provide to the company
- The influence a customer can wield over other customers
Types of Customer Value
According to Jagdish sheth and Banwari Mittal, customer plays three roles:User, Payer & Buyer.
There are three different ways to provide value for each one of them :
- Users seek performance, social and emotional value
- Payers want price value and credit & financing values
- Buyers desire service value and convenience and personalization value
Customers engender value from three sources:
Economic, functional & psychological
Key Principles of Relationship Management
The Key Principles of Relationship Management to be studied are:
- Manage customer as an asset
- Rate customers on the basis of their profit stream-Current and future potential
- Customize relationship to individual customer-using information based decision making capabilities
- Implement innovative ways and means to get close to the customer to hear the ‘voice of customer’
Techniques and applications to manage relationships:
Acquisition Stage:
- Product features, quality and costs needed to be assimilated by customers through effective sales promotional stance, right advertising campaign, reciprocal communication
- Customers must demur the inconvenience ,incongruence & other issues in the acquisition process
- Still if customer does not want to continue the relationship with the company the reason must be probed in depth.
Post Acquisition Stage:
- Post Acquisition Stage:
- Single Product/Service User:
- a.Educating: To assist customer in product/service awareness & knowledge acquisition is necessary for getting them educated through user guide, Handbook, brochures, online support, customer care, websites, blogs, product demonstration and so on.
- b.Grievance Management: Product defects and service deficiency necessitates=>
- Celerity in query Handling must be exercised through interface
- Request fulfillment & facilitation within confined timeslot
- Alacrity in complaint handling has to be worked out
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- Relationship recognition: Customer expect reciprocal relationship through
Giving him importance through special deals, better rebates/discounts, loyalty programs to the company
2.Multiple Product/Service Relationship:Detection ,acknowledgement & recognition of ‘share of wallet’ instead of a separate transactions
- Unique Customer Identifier like loyalty cardsFrequently Called NumbersVaried accounts at one click of button
- Exercising personalized needs: Individual needs are traced out of a group and delivery process is organized around it
- Added business benefits as return of loyalty, delight existing customers and attract new customers.
Following capabilities are to be built by an organization:
- Transaction history
- Socio economic characteristics
- Behavioral Traits
- Identification of customer uniqueness
Long term potential for additional services
Summary
It is observed that Loyalty programs as well as the types of Loyalty program play important role in serving customers. The following customer centric concepts are evolved through Response hierarchy model, The ladder of degree of loyalty, customer relation group and throws light on customer relationship.
PC: Google Images
©2019, Dr. Amit Medhekar. All rights reserved.
