Build­ing cus­tomer loy­alty

Finweek English Edition - - COMPANIES & MARKETS -

RE­LA­TION­SHIP mar­ket­ing or CRM is a way of do­ing busi­ness, a strate­gic ori­en­ta­tion that fo­cuses on keep­ing and im­prov­ing the re­la­tion­ship with cur­rent cus­tomers thus en­sur­ing cus­tomer loy­alty (Zei­thaml & Bit­ner, 1996).

Cus­tomer loy­alty cre­ates in­cre­men­tal prof­its and is im­pacted by four fac­tors (Love­lock & Wirtz, 2007). One, in­di­vid­u­als pur­chase more as their fam­i­lies grow or as they be­come af­flu­ent. Two, ex­pe­ri­enced cus­tomers make fewer de­mands on sup­pli­ers. Three, pos­i­tive wordof-mouth rec­om­men­da­tions help com­pa­nies to save on ad­ver­tis­ing and, four, long-term cus­tomers are more likely to pay reg­u­lar prices, and highly sat­is­fied cus­tomers are of­ten will­ing to pay a pre­mium.

Build­ing cus­tomer loy­alty starts with en­sur­ing a good fit be­tween the cus­tomer’s needs and the com­pany’s ca­pa­bil­i­ties. The em­pha­sis should be placed on value and not just on vol­ume, with a tiered ser­vice ap­proach. In other words, not all cus­tomers should be tar­geted with the same level of in­ten­sity and the com­pany must be sure to keep all the prom­ises it makes.

A trust re­la­tion­ship will en­hance the qual­ity of the re­la­tion­ship and will help to pro­tect the re­la­tion­ship in dif­fi­cult times ( Wong & So­hal, 2002). CRM helps com­pa­nies to dif­fer­en­ti­ate them­selves from their com­peti­tors and it helps cus­tomers with the eval­u­a­tion of prod­uct qual­ity, sat­is­fac­tion and pur­chase in­ten­tion. Per­ceived ben­e­fits en­hance cus­tomer loy­alty and re­ten­tion.

How­ever, it is al­ways im­por­tant that com­pa­nies take the cost of re­la­tion­ships into ac­count. Re­mem­ber that the de­vel­op­ment of a re­la­tion­ship takes time, money and re­sources. Once the or­gan­i­sa­tion com­mits it­self to a re­la­tion­ship strat­egy, the ex­pec­ta­tions of re­turns from this strat­egy need to be re­al­is­tic. In or­der

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