Customer loyalty is still alive but fickle

Becoming a customer-centric organisation is key to building great customer experience, improving customer relationships and growing the company's bottomline.

Brand loyalty is a critical success factor for businesses across all sectors. It is, therefore, not surprising that a major aspect of the strategic planning of organizations involves customer relationship management (CRM), which is a strategy designed to boost revenues and increase customer loyalty, among other business objectives.

A 2018 report by Yotpo, a New Yorkbased eCommerce marketing platform, refutes the conventional wisdom that brand loyalty is dead. Up to 90 per cent of consumers surveyed considered themselves to be brand loyal. With the high level of competition in today's business environment and the rising market fragmentation, it is understandable that loyalty might be seen as a diminishing concept. Nevertheless, customer loyalty is what underpins business success and every company aims to attract and retain loyal customers.

Customer loyalty generally relates to the attachments, relationships, connections and preferences a consumer may exhibit towards a product or service over a period of time. There are several factors that drive brand loyalty. This article intends to highlight key research findings on the drivers of customer loyalty. CRM professionals and organisations that want to attract loyal customers should pay close attention to these findings.

According to a research from PricewaterhouseCoopers (PwC), when you give customers a great experience, they usually would buy more, they are more loyal and they share their experience with friends. For instance, research has also shown that up to 86 per cent of customers who use software as a service (SaaS) are willing to buy more when they are guaranteed a great customer experience (CX).

The 2019 Annual Digital Trends report by Econsultancy and Adobe shows that Business-to-Business (B2B) companies stated customer experience as the single most exciting business opportunity for 2020. Another research by Walker, a CX consulting firm, found that for the next decade, starting in 2020, customer experience will overtake price and product as the key brand differentiator.

What is clear from all this is that these organisations expect a huge return on investment (ROI) in CX initiatives, potentially doubling their revenues next year. Better customer experience is very important because it will increase loyalty to their companies. A study by Temkin Group, a leading CX research firm, found that companies with annual revenues of about $1 billion can expect to, on average, earn an additional $700 million within three years of investing in CX.

Customer loyalties also vary in terms of customer behaviours and attitudes. This is because no amount of marketing or mass customization can satisfy the specific needs of customers at the same level. Thus, customer loyalty levels differ. The Temkin Experience Ratings (TxR), an open standard for measuring CX, shows how loyalty levels change based on customer experience across industries.

As it turns out, price can also determine patronage. PwC and others have also shown how price has an effect on purchase decisions of customers. But beyond price and quality, which are often top of mind for customers, the next thing customers think about, according to PwC, is whether their interactions with brands would bring about positive experiences. These choices are particularly influential in sectors such as healthcare (78 per cent), banking (75 per cent), restaurants (74 per cent) and hotels (74 per cent).

The major factors that drive customer loyalty, according to the Yotpo report, are product (78 per cent) and price (63 per cent). Customer service — which is different from customer experience – is responsible for 26 per cent of customer loyalty decisions. Advertising and marketing constitute just 4 per cent. While this does not diminish the importance of ads and marketing, I like to now highlight how price constitutes a major factor in the Nigerian carbonated soft drinks (CSDs) market, driving different market strategies by the manufacturers and various levels of loyalty across the customer spectrum.

The major players that have dominated the market for decades are Coca-Cola (or Coke) and Pepsi, the former even more so than the latter. The Coca-Cola Company, which offers over 500 brands in more than 200 countries and territories, has been

operating in Nigeria since 1951, and in Africa for over 90 years. It is one of the world's largest beverage companies, with net revenues of $31.9 billion in 2018, down 10 per cent from the previous year.

PepsiCo Inc., also an American beverage company, grew its worldwide revenue by 1.8 per cent in 2018 to $64.66 billion. The Pepsi brand was introduced in Nigeria in the earlier 1990s. The sweet cola-flavoured carbonated beverage was created as Pepsi-Cola in the United States in 1898 to compete with Coca-Cola, which was invented much earlier in 1886.

A number of cola brands have been introduced in Nigeria ever since the introduction of The Coca-Cola Company and PepsiCo. Many of challengers fizzled out, no pun intended. Some new challengers have taken advantage of the low-income status of many a Nigerian consumer and the economic downturn by undercutting the competitions' prices to gain market share.

In a market that is estimated at over 35 million daily drinkers of CSDs, a price war ensued when the smaller competitors introduced 150cl pet bottles for N100 at a time when the beverage giants were selling 100cl bottles for, on average, N150. Not unexpectedly, these new products became a hit with consumers who were sensitive to prices, not minding their various longstanding loyalties to the established brands. Of course, ColaCola and PepsiCo responded with their own aggressive strategies to recapture their share of the market.

The forgoing discourse shows that customer loyalty, apart from varying amongst customers, is also fickle. It is, therefore, incumbent on companies to do their level best in absolutely caring about CRM given its strategic importance. And even more so, becoming a customer-centric organisation is key to building great customer experience, improving customer relationships and growing the company's bottomline. It is also the key to increasing competitiveness, profitability and longevity.

Looking at your business through the eyes of customers can help in increasing customer loyalty.

Akachi Ngwu, is an author and entrepreneur. Email: aon@marcommsderivatives.com.ng

The 2019 Annual Digital Trends report by Econsultancy and Adobe shows that Business-toBusiness (B2B) companies stated customer experience as the single most exciting business opportunity for 2020.