Task 1: Critically evaluate the key concepts/theories on the topic of the effectiveness of loyalty programmes on customer loyalty
Definitions
1. Loyalty
Reichheld (1996) descripts loyalty to a value-creation theory and he does not agree loyalty as the pure profit-theory, which brings together the company’s resources go to one unique goal: profit-creation. Reichheld’s loyalty is always focus customers. The basic aim of a company is the creation of value for the customer. Therefore, the business profit become is a consequence of value creation. can picture 2. Customer loyalty
There are many description and theory of customer loyalty. We should research and compare which theory is suitable for our business.
Let us list down what
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It’s subjective opinion or psychology of customers. Satisfaction is often confused with loyalty. The range of customer’s emotion is shown with surprise, contentment, happy, unhappy or relief. The entire gap between perceived quality and expected quality is influenced customer satisfaction. Customer loyalty is always is frequency buying action.
The figure below shows the predominant linkage of this process.
2.4. Satisfaction-Loyalty link
When organization always provide high-quality products and good services, customer will create their satisfaction and increased customer loyalty. we would be tempted to believe that is a simple, linear relation between satisfaction and loyalty. According the research of (Jones & Sasser Jr., 1995) , relation satisfaction and loyalty is different according to time and circumstances. Unless they are totally satisfied, there is always a chance you will see your customers be lured away (Jones & Sasser Jr., 1995).
(see figure "The effect of satisfaction" below). 3. Loyalty model
The key in this loyalty model is the creation of value for the
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2 . Loyalty employees Company strong growth enables firm to attract and retain the best employees. Staff gain the Pride , high salary pay and satisfaction during the service long-term employees are the treasure asset to the company. Younger employees get to know their long-term customers; learn to deliver more value to loyalty customers.
Loyalty employees know how to reduce costs and improve quality in produce and service.
They can enriches and increase the customer value proposition and bring out supper productivity. Through the re-education and training course, all of employee gain the powerful in productivity and knowledge. Loyalty customers gain the more cost advantage and benefit, this resist competitors very hard to match. Promoted cost bind to loyal customers to sustainable growing.
Organization’s product, service and brand retain and attract the local and international investors.
Loyal investors Loyal investors act as partnership; provide sustainable power of financial support, continuous development in new market, more benefit into the company, strong cash
Customer loyalty comes from the personal relationship that is developed between the customer and the business. One method used to understand the customer relationship is called customer relationship intensity and Life-cycle segmentation (UOP, 2007). This process includes classifying all the customer relationships into one of five groups.
A loyalty program is best seen by the consumer when benefits are clear, bringing more value than the costs of participation. A membership card could be a relationshi...
Brand Loyalty: By keeping long term vision in mind to regain customer loyalty and overall brand image by retaining current customer...
When a customer is loyal he or she will definitely repeat purchase and even advertise your organization through word of mouth. Customer loyalty is the act of customers buying repeatedly as opposed to choosing those of competitors (Wyse, 2012). The impact of customer satisfaction on customer loyalty was showed in a study conducted by Mitchell (2004) who revealed a positive relationship between customer satisfaction and loyalty. Customer loyalty requires that firms or organizations meet their customers’ needs and demands in order to maintain a long lasting relationship (Campton, 2004). Coldburn (2013) also showed that satisfaction and loyalty goes together. The author indicated in his/her study that as far as customers expectation of a products or services are met, they remain loyal to the organization. An increase in satisfaction then lead to an increase in a company’s profits (Cacioappo, 2000).Eckert emphasizes that loyal customers according to are more likely to purchase or to recommend the purchase of a company’s products and services to someone else. The opposite is also true. Dissatisfied customers are likely to tell others the experiences they had with firms. Firms therefore will need to improve their customer satisfaction in order to grow loyalty and attract new customers (Agarwal,
Tam, J 2004, ‘Customer Satisfaction, Service Quality and Perceived Value: An integrative model’, Journal of marketing Management, vol. 20, no. 7-8, pp. 897-917.
Motivation of its employees to provide exceptional services to their customers by supporting their development, providing opportunities for personal growth and fairly compensating them for their successes and achievements.
In order to retain back these potential consumers or loyal consumers businesses go through these customer retention techniques. As a result if the customer retention is improved by at the least even a small scale, the outcome is indeed a huge increase in the profit. Maintaining a close contact with its own customers, enables an organisation to know the personal satisfaction of their regular customers as well as the ability to respond quickly to their needs and demands. For businesses to keep customers loyal towards them, businesses will have to build a good relation or interaction with their customers. No interaction with its customers means no growth in an organisation. It is the base for any consumer motivation and consumer
In 2012, Boonying Kongarchapatara & Randall Shannon in their paper, ‘Investigating the Effectiveness of a Loyalty Program Through the Relationships of Program Design, Implementation, and Customer Loyalty’ emphasize on the factors which affect the customer loyalty programmes through their design and implementation phases.
4. Bloemer, JoséM M., and Hans DP Kasper. "The complex relationship between consumer satisfaction and brand loyalty." Journal of economic psychology 16.2 (1995): 311-329.
There is a simple answer to this. In short words loyalty equals profitability. It is a general phenomenon that if you are loyal to somebody then he or she should be loyal to you. In the similar way when company wants customers to be loyal with them, then they have to do the same with its customers. Keeping this phenomenon in mind an organization maximizes its backward looking metrics like:
A customer relationship management is a process that acquire, keeps and grows customer through delivering superior customer value and satisfaction.(nigel pericy) one of the concepts used is the loyalty program, the unlimited goal of the program is to increase profit revenue and market share(Stephan a). Moreover the use of loyalty program has three main advantages for customer orientation approach. The most significant one is to enable firm to build long term relationship with customer, in order to obtain a lifelong demand for a specific product produce by firm. The second advantage is a side effect caused by the first , where satisfied loyalty program member advertise to other people through the word of mouth. Hence this could increase the number of customers joining program as well a reduction and cost of firm to advertise therefore it slightly achieves its three main ultimate goals. And the final significant advantage it is that it provides firm with a database which enable them to predict future need to maintain market share and compete with other firms. Also this would reduce cost of market research, which is generally hard to obtain. For example data on customer purchases. Moreover firm that have use this concept and have a positive effect are TESCO, Starbuck and etc… However firm must maintain quality of good and service in order to maintain customer satisfaction which can lead to
I believe that to effectively achieve brand loyalty, a retailer must first train its sales asso...
...ough quality or enough service, satisfaction will result. However, we have evidence to support that quality and service alone can not produce recurrent satisfaction. Satisfaction is a distinct and separate issue.
The customer retention are important things in order to maintain customer keep in touch with the retailer. Thus, the retailer need to have a proper loyalty program plan to make sure the objective can be achieved. Unfortunetly, some of loyalty program can lead to the problem for customer and it will reflect to the retailer itself. The problem that may occur within loyalty progam can give an impact to retailer and the customer loose their intention to repeat their purchasing process.
Lawfer, M., R. (2004). Why customer come back: how to create lasting customer loyalty. United State of America: Career Press.