Customer Loyalty: is it really important?
Customer loyalty can be defined as a behavior or attitude of a customer to purchase a particular product of a specific brand over others which available in the market for a particular need.
Introduction: Customer loyalty can be defined as a behavior or attitude of a customer to purchase a particular product of a specific brand over others which available in the market for a particular need. The packaged good industry defines this consumer attitude as ‘Brand Loyalty’. Brand loyalty can be defined as “The degree to which a customer is loyal to a given brand in that they are likely to re-purchase/re-use in the future. The level of loyalty indicates the degree to which a brand is protected form competitors” (Yellow Pencil).
Brand Equity: In general brand equity is the value a customer places on brand. If the brand is trusted the equity will be positive but if the brand has a bad reputation the equity will be negative. The Marketing Science Institute (MSI) states that brand equity can be viewed by customers "...as both a financial asset and as a set of favorable associations and behaviors" (MSI 1989). While Farquhar (1989) contends that brand equity to a consumer follows from a positive evaluation of, or attitude toward, the branded product, Keller (1993) hypothesizes that consumer-based brand equity arises from a more favorable differential response to the firm's marketing efforts. Concept of brand equity is associated with the financial and accounting perspective like estimating the value of a brand also this concept is studied while working on strategic marketing activities.
Customer Satisfaction & Retention: It is difficult to achieve a sustainable competitive advantage in n today’s world of fierce competition where every company is trying to prove their product better than the others. Providing excellent customer service and retaining existing customers can help companies to achieve competitive edge over others in the market place. It's been estimated that the cost to land a new account is as much as six times the cost to retain an existing one. (Alan S. Horowitz).A minor increase in the customer number can create a big impact on the total profits that is why customer retention plays an important role. Now the question arises how to retain customers? Customer retention can be achieved by loyalty schemes and programmes all these activities involve developing strong customer relation, greater attention to details and customer expectations. All customer retention programmes should focus a particular customer base. It has been argued that loyalty schemes take time to produce immediate benefits for customers hence many customers move out these schemes very quickly. “Formal loyalty programmes can be challenging to implement and may not be an optimal way to achieve retention and profitability goals but when they are done right loyalty programmes can help converting more prospects into buyers” (Shari Altman).
Altman, S. (2005) Loyal Subjects, Multichannel Merchant, Vol. 1 Issue 6, p34-35, 2p.
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