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8/3/2019 Brand Loyalityby Kaku Ram
http://slidepdf.com/reader/full/brand-loyalityby-kaku-ram 1/22
• Brand loyalty
• Definition:-
• The extent of the faithfulness of consumers to a particular brand, expressed throughtheir repeat purchases, irrespective of the marketing pressure generated by thecompeting brands.
• What Does Brand Loyalty Mean? When consumers become committed to your brand and make repeat purchases overtime. Brand loyalty is a result of consumer behaviour and is affected by a person’s
preferences. Loyal customers will consistently purchase products from their preferredbrands, regardless of convenience or price. Companies will often use differentmarketing 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 itamong their friends. This is free word-of-mouth marketing for the company and is oftenvery effective.
8/3/2019 Brand Loyalityby Kaku Ram
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12-2
• Brand Loyalty
Brand recognition: Consumer awareness and identificationof a brand.
Brand preference: Consumer reliance on previousexperiences with a product to choose that product again.
Brand insistence: Consumer refusals of alternatives andextensive search for desired merchandise.
8/3/2019 Brand Loyalityby Kaku Ram
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Why talk about Loyalty
• Mature Industry increasing competition
• Focus on getting more customers
Market share Vs. share of customer
• Competitive advantagePrice
Service quality
Loyal relationships
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What does loyalty mean to businesses ?
LOYALTY
Retention ofCustomers?
Repeat
Purchases?
Create ProfitableCustomers ?
Acquisitionof Customers?
MoreInformation onCustomers ?
Reward LoyalCustomers ?
Just Another
Marketing Program ?
Reality…….….could be all of the above !!!!
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What is a Loyal Customer
• Definition: customers with a long record of purchases
from a preferred provider caused by theirpsychological and emotional bond with that provider
• Are there various types of loyalty?
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Some insights --- Customer & Company perspective
• Treat profitable and unprofitable customers differently
• offer right mix of Product, Price, Service Delivery & Relationship benefits
• deliver tangible value in proportion to the value the customer brings to the company
Customers new perspective of Rewards ( Loyalty )
1. Cash value
2. Redemption options
3. Aspirational value
4. Relevance
5. Convenience
Loyalty initiatives are not short term marketing tools. They should
• Communication to be transparent, timely and focussed
---- Immediate gratification
---- More Choice
---- Feel Good factor
---- Does it make sense
---- Ease of availing reward
• Consistent across all customer touch points
Loyalty initiatives must also be profitable
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What does loyalty mean to the customer today ?
Primarydrivers
• Physical product• Service product• Service delivery
• Service environment
• Ethics• Image• Reputation
• Positioning
• Loyalty Programs• Co Brands• Alliances
• Special treatment• Affinity• Customer community
Price Product / service*
Brand** Relationship
• Purchase price• Effort• Time
Customer cost of using your product
Complete Customer
“ Relationship
” Experience
8/3/2019 Brand Loyalityby Kaku Ram
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Ask yourselves…..are you truly Customer Centric?
• 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 measure your customers …… 1. Lifetime Value & Cost to the business
2. Preferences, Dislikes, Usage Patterns3. Satisfaction levels
• Do you monitor your Loyalty programs to see ……. 1. Address the right customers
2. If they are profitable?
8/3/2019 Brand Loyalityby Kaku Ram
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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 theinvestment on a Loyalty program.
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Technology in Loyalty Marketing
• Loyalty marketing today goes hand in hand with technology
• Some latest technology breakthrough’s:
Transaction databases – customer interaction management-
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Shoppers Stop - First citizen
• Objective:
Ensure stickiness by increasing rewards to customers on every purchasethey 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 focussedoffer.
• Results:
Has generated a database of over 4 lakh members who contribute to nearly50% of the total sales of Shoppers’ Stop
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The Consumer Adoption Process
• Adoption process: Stages that consumers gothrough in learning about a new product, trying it, anddeciding whether to purchase it again. Awareness
Interest
Evaluation Trial
Adoption or rejection
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12-13
• Consumer innovator: People who purchase newproducts almost as soon as the products reach the
market
• Diffusion process: Process by which new goods orservices are accepted in the marketplace
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Categories of Adopters Based on Relative Times of Adoption
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The Love Triangle
Social Network
CustomerProvider
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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
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Types of Investments
Give – to your valuable customers
1. Make sure that your special customers receive special treatment
2. Send cards for birthdays rather than just for the holidays
3. Make them feel unique (use name, compliment them for helping)
4. Educate them about front and back stage
Receive – from customers
1. Give them opportunities to get to know you (your staff)
2. Help them become advocates of your company (merchandize, web)
3. Seek their opinion
4. Allow them to commit to you with a long term program?
8/3/2019 Brand Loyalityby Kaku Ram
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Types of Resources
Love
Status
Information
Services
Goods
Money
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The Love Triangle
Social Network
CustomerProvider
R.I.M.
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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 can’t come more often,find other ways they can help, don’t discount
• Spurious loyals – come but don’t care, make them
connect with you, make them wish for special treatment
• Low loyals – don’t get distracted with them, but make surethey are satisfied (approx. 40-60% of your customers)
?
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Types of Loyal Customers
Frequency of Purchases
A t t a c h m e n t
High loyals Latent loyals
Spurious loyals Low loyals
-
-+
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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/staffTrust the provider
Resist changing despite competitors’ persuasion
Willing to forgive mistakes?