Brand Loyalityby Kaku Ram

8/3/2019 Brand Loyalityby Kaku Ram

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• 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.

http://www.businessdictionary.com/definition/consumer.html

http://www.businessdictionary.com/definition/purchase.html

http://www.businessdictionary.com/definition/marketing.html

http://www.businessdictionary.com/definition/pressure.html

http://www.businessdictionary.com/definition/competing.html

http://www.businessdictionary.com/definition/brand.html

http://www.businessdictionary.com/definition/brand.html

http://www.businessdictionary.com/definition/competing.html

http://www.businessdictionary.com/definition/pressure.html

http://www.businessdictionary.com/definition/marketing.html

http://www.businessdictionary.com/definition/purchase.html

http://www.businessdictionary.com/definition/consumer.html



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• 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.



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



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 !!!!



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?



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



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



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?



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.



Technology in Loyalty Marketing

• Loyalty marketing today goes hand in hand with technology

• Some latest technology breakthrough’s:

Transaction databases – customer interaction management-



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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• 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



Categories of Adopters Based on Relative Times of Adoption



The Love Triangle

Social Network

CustomerProvider



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. 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?



Types of Resources

Love

Status

Information

Services

Goods

Money



The Love Triangle

Social Network

CustomerProvider

R.I.M.



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)

?



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

-

-+



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?

Documents

Brand Loyalityby Kaku Ram