Is it important to invest in customer loyalty?


#1

In your opinion, how important is it to invest in customer loyalty for automobiles or another industry/product that most people buy only every few years? Who is involved in building customer loyalty in the auto or other business and what types of actions are used?


#2

Customer loyalty is a result of continious positive emotional experience and satisfaction of using a product/service that enforces the repetitive buying process. According to (Kotler, Keller, Koshy, & Jha, 2009), it is the key for any company to get long-term market success. The cost of creating a new customer is a costly deal; hence a company wants to retend its existing customer through the Loyalty program.

Customer loyalty on the automobile industry or similar kind of industry, the product of which is not consumed regularly but on an extended period is very uncertain. According to Torres-Moraga, Vasquez-Parraga, & Zamora-Gonza (2008, p. 312), the loyalty on the innovative products, including automobiles and Electronic equipment are insignificant while is significant with other regularly consumable goods. We can see the success of many new Automobile companies in India and Nepal, while initially only Maruti was into existance. It can be oviated that Maruti 800, once a leader in this region is moreover obsoletated even though there has been large number of models launched by Maruti lately. Moreover, one brand cannot create an equivalet subsitute of all competitor’s product in this “patented” age technology for even a slight innovation in them. They need to be concentrated into a segment. In a next research by (Wu, 2011, p. 174) on Chinese consumers, who are thought to be brand loyal to Japanese and European automobiles, only 7% people among 150 respondents were found to be brand loyal to one brand. Most of them were seen switching the brands.

Nevertheless, we can still find existence of various brands over the period, which has been performing well. For example, Mercedes, Audi or BMW, has been constantly known as established brand from years. Hence, I think this has been a result of its value creation over the years. For example, Audi has a good branding, through affective advertisements, sponsoring the football club,etc which has helped in creating a distinct image of its product in mind of customers and create a high value of its offering. So, looking at this, I think investment in customer loyalty is good.

There are several players that help establishing customer loyalty. Mainly the key people are: manufacturer, dealers, motivated sales person, satisfied customer and target segment of its marketing plan.

The actions used in building an effective customer loyalty according to (Clark, 2006) are

Focus on acquiring data, not just repeat visits

It means getting the information on their changed needs, what they want or enquiry of new product when the customers pay visit

Target customer acquisition more accurately
Using existing loyal customer base data to acquire new customers.

Move customers up the spend bands
Moving customers from one level to other by providing lucrative offers of its loyal customers. According to report , the top spending band’s contribution to sales increased by 41%, the next band down increased its contribution to sales by 45% and the lowest spend band decreased its contribution to sales by 7% (because customers from the lower spend segments had increased their average weekly spend and moved into higher spend segments).

Build real customer relationships based on relevance
Building effective relations with customers. For example sending birthday wishes and cakes. Sending cards during festivals

Reduce promotional and advertising costs on unrelevant areas
Using the Advertisement budget in a better targeted way rather than using in marketing tools that creates no value to the target customer. Eg: the Audi cars cannot me said effectively marketed by extensively distributing its fliers to the passengers of the Ring-road bus. This is a cost, that needs to be saved and allocated in perspective. While this can also create a bad impression of the Products

Judging the marketplace’s influence on customer loyalty :

The better is the relationship of company with the customers, the more the customer is likely to be loyal. The companies can run support system, complaint registration and maintenance system as part of this criteria.

Promoting the brand to build customer loyalty

A strong brand has likely to have more loyal customers. Influencing the elasticity of a purchasing decision by differentiating products and avoid commodization

Becoming truly customer-centric

Adopting programs that is customer centric like in marketing, sales and service application helps in differentiation of product and increase the customer loyalty.
Ensuring the success of a loyalty programme
It incluses several services like gaining consumer buy-in, rewarding only the right behaviour, rewarding and recognising customers in the right circumstances, spotting defection patterns, , well timed and relevant communications, keep the programme simple to understand and use, measuring campaigns and results continually, having unique and uncopyable benefits on offer (as a barrier to entry for competitors in the same space), empowering your staff to make the right decisions under all circumstances, and of course making the customer’s life easy.

Building a database and constant follow-up that can really create loyalty

Several companies sends you flyers when your automobiles is approaching time to change its mobile or needs servicing.
Some other programs are

Intelligent deselection of the least profitable customers
Win back profitable customers that have defected
Set fairer tiered pricing policies
Intelligent response to competitive challenges
Improving product range and stock selection
Better merchandising and store layout planning
Geographical targeting for new store locations
Developing a core offer that can’t be refused
Influencing customer satisfaction levels by better and profitable deals

Rapid market penetration with a coalition programme

Successful CRM (customer relationship management)
Using gift cards and store value cards for loyalty

Avoiding technological problems with loyalty platforms

Hence, Customer loyalty though is a difficult job in less frequently bought products, they can be controlled by adopting above mentioned techniques.

References

Clark, P. (2006, March). The 30 major factors behind a successful customer loyalty programme . Retrieved from The wise Marketer.

Kotler, P., Keller, K. L., Koshy, A., & Jha, M. (2009). Marketing Management: A South Asian Perspective (13 ed.). Noida: Pearson Prentice Hall.

Torres-Moraga, E., Vasquez-Parraga, A. Z., & Zamora-Gonza, J. (2008). Customer satisfaction and loyalty: start with the product, culminate with the brand. Journal of Consumer Marketing , 25 (5), 302–313.

Wu, G. (2011). Country image, informational influence,collectivism/individualism, and brand loyalty:exploring the automobile purchase patterns of of Chinese Americans. Journal of Conumer Marketing , 28 (3), 167-177.