Customer loyalty in Indian Luxury Retail is a myth

By: Mr. Abhay Gupta, Founder and CEO, Luxury Connect

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Customer Loyalty

Loyalty means "unswerving in allegiance“

How many brands would consider any customer to be unswerving in allegiance?

We try to measure Customer loyalty, but can we?

The ‘Smartphone’ age has empowered customers to make informed purchases

It’s usual to compare prices and check reviews before buying

In such a scenario, does customer loyalty truly exist?

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Myth 1: A Satisfied Customer is a Loyal Customer

Most companies use the terms customer loyalty and satisfaction interchangeably. In reality, satisfaction is not the same as loyalty Focusing on drivers of satisfaction can be misleading for your loyalty plans.

Fact: 1. Satisfied customers often switch when competitive offers emerge or switching costs

decrease

Recommendations: 2. Understand the drivers of loyalty3. They are very different from drivers of satisfaction 4. Loyalty is an attitude 5. It leads a customer to consistently repurchase, increase

spending and recommend your brand

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Examples

Case 1: A satisfied customer is not always a loyal customer Sometimes you are really satisfied with something, yet fail to be loyal.

Case 2: A loyal customer is not always a satisfied customer A lot of Apple product users are loyal but often switch other brands

like Samsung for a variety in features and vice-versa.

Myth 1: A Satisfied Customer is a Loyal Customer

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Myth:2 Customers don’t know what they want

Facts: 1. Customers increasingly know what they want but do not tell you2. They are not afraid to switch brands for better prices-value proposition3. Sales person needs to decode what they say

Recommendations : 4. Take customer’s feedback5. Ask customers what else they would like to find in the store

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Myth 3: Customer Loyalty Programs Create Loyal Customers

Facts: 1. Market research shows that only 6% customers join loyalty membership programs 2. The positive effects wear off as soon as consumers come across better competitive

programs

Recommendations: 3. Focus on program penetration4. Lean towards program exclusivity5. Concentrate on acquiring category entrants

Improvements in loyalty from loyalty programs are fleeting unless programs can be made exclusive

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Myth 4: Personal Relationships between sales staff and customers is the best Way for brand to Drive Loyalty

Facts: 1. The traditional role of sales representatives has little impact on developing loyalty

for the brand 2. Teaching customers about the product category produces much better results

Recommendations: 3. Equip your sales representative to be a brand representative 4. Educate customers, not just serve or sell to them

The true potential of sales interactions is in leading the customer to learn something about the brand, as this has the greatest impact on customer loyalty.

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Myth 5: Employees Who Don’t Face Customers Cannot Affect Customer Loyalty

Facts: 1. Attitude of every employee in the organization can make or break the loyalty

program2. A research says, empowering employees who don’t face customers improved

loyalty scores by 14 percentage points

Recommendations: 3. CRM team should see itself as a “facilitator”

of customer loyalty activities4. It should equip all other teams to contribute to the

process5. Use systematic customer immersion programs6. Give staff first-hand knowledge of a customer’s experience

Involving other functions can not only drive loyalty, but also result in other benefits for the brand.

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Myth :6 Customer loyalty is impossible to track

Fact : 1. Customer loyalty can be tracked with membership, loyalty and rewards cards

Recommendations : 1. Ask - Is your membership base growing? 2. Are members spending more this month? 3. Are members cancelling their memberships?

All of these are metrics that can be used to track and gauge customer loyalty.

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Suggestions'

1. Loyalty happens organically. Like all good things, building loyalty takes time and

calculated effort.

2. Loyalty doesn’t happen until after conversion : Conversion is key, but it’s the

actions that lead up to conversion that produce loyal customers. .

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Suggestions'

3. Building loyalty is someone else’s job : Stop right there, fellow marketer! Building

loyalty is everyone’s job.

4. Building loyalty is too expensive for small brands. No way! There are many tools

small brands can use to compete with the big guys.

5. You can invest in loyalty once, and then forget it. “Set it an forget it” is so 1990’s.

Building loyalty takes time, and the brands who are leading the loyalty pack do it

through strategic long-term planning.