Customer loy alty isProcess description, indicators and steps

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In the conditions of high competition between producers of goods and services, the consumer becomes the key figure, and marketing technologies come to the fore. They are associated with such a thing as customer loy alty. This is the basis that contributes to the growth of sales, the formation of a positive image of the enterprise, increasing its competitiveness.

Customer loy alty - is it a fashion brand or a real basis for success?

Researchers were able to prove that a new buyer costs the company several times more than one who has already made a purchase and is ready to continue cooperation - and because of their loy alty.

In marketing, customer loy alty is loy alty, commitment to a particular company, brand, product. The first attempts to achieve such an attitude on the part of buyers were made almost a hundred years ago in the United States. However, this process flourished in developed countries in the last decades of the 20th century.

Western marketers linked customer loy alty with the company's customer focus, rightly believing that these are two sides of the same coin. Customer retention programs were built to meet the specific needs of the target groups - and this led to the desired result: the share of loyal customers grew, the company's profit increased.

In the 21st century, loy alty marketing began to gain popularity among Russian manufacturing and trading companies. This was due to a change in the economic situation in the country: the domestic industry began to work, the real incomes of the population increased, and effective demand increased. And now, focusing on Western experience, Russian enterprises began to implement ready-made programs that have proven themselves well in developed countries. But not all of them reached the final goal and a significant increase in customer loy alty was not always observed.

The lack of impact from these programs is not due to their inefficiency. The reasons lie in a different plane: companies did not study their consumers, did not understand their priorities when making purchases, and did not motivate staff to provide quality customer service.

Portrait of a loyal customer

The company in its activities should focus on the target audience - those people who will be interested in the offered goods or services. However, only some customers can become loyal customers. Their main features are:

• Satisfaction with cooperation/purchases;
• benevolent attitude towards the company, towards its products;
• building a positive image of the organization in private conversation or social media;
• Regular purchases;
• loy alty to the company when competitors with similar offers appear.

From the indicated criteria, the conclusion suggests itself: a regular customer is one who periodically makes purchases in the company; Loyal is a customer who receives satisfaction from regular purchases in this company. Consistency has rational roots and is based on the convenient location of the store/company, low prices, constant discounts, and high quality of goods. Customer loy alty is his behavior associated with an emotional component. It arises as a response to friendly and prompt service, quick problem resolution, attention to the needs of the buyer.

Loy alty building factors

Potential buyers want to see a set of certain characteristics in the offered products - high quality, a wide range of possibilities for its use, novelty, optimal price, etc. In addition, they expect a positive attitude from the company towards themselves and their problems associated with the acquisition and consumption of goods.

The task of management is to study the needs, requests that affect customer loy alty. This will determine the main factors that contribute to the formation of customer loy alty. Practical experience shows that these factors include:

• company quality priorities;
• breadth of assortment;
• possibility of ordering (production) of goods not in the catalog;
• positive customer interaction experience with the company's staff when placing an order;
• flexible system of discounts and bonuses;
• related services demanded by the buyer (delivery, including free; setup, installation of complex equipment; packaging or processing of products, etc.);
• success, fame of the company, its participation in socially significant projects.

This is not a complete list of loy alty factors, as buyers differ in their ideas about the ideal seller or manufacturer. To understand the priorities of customers, it is advisable to periodically conduct opinion polls in the target group. Only in this case, you can understand what is most important for the buyer - discounts, assortment features, additional services or the nature of the relationship in the chain "buyer - company employee".

Loy alty scores

Shopper commitment to a particular company can be measured using a variety of methods. The main indicator of customer loy alty is the NPS (Net Promoter Score) index, which was proposed only at the beginning of the 21st century.

Its essence lies in the fact that the client must decide how much he trusts the company, brand or product, how confident he is in them, in order to recommend to his best friends and close relatives. The answer is selected from the least likely recommendation (1 point) to the most likely recommendation (10 points).

Customer loy alty index distinguishes three types of consumers:

• critic/ill-wisher - dissatisfied customer who leaves bad reviews (probability of recommending to loved ones - from 1 to 6 points);
• neutral - the buyer is satisfied with the cooperation, but generally does not show recommendatory activity (from 7 to 8 points);
• loyal client (also called a promoter) - a satisfied client who recommends the organization to their relatives and friends (from 9 to 10 points).

Based on the results of the survey, NPS is calculated - customer loy alty as the share of promoters in the total number of respondents.

Another, no less important, indicator of customer loy alty is the level of their outflow. It is equal to the ratio of buyers who have refused cooperation (purchases) to the total number of customers for the year. The repeat purchase rate is calculated based on the number of times a particular brand is purchased per 10 total purchases.

Levels and stages of building customer loy alty

Marketers identify three ascending levels of loy alty, namely: satisfaction with a purchase, commitment to a particular brand, building partnerships between the client and the organization.

The formation of consumer loy alty implies the following stages of customer loy alty development:

1. Getting the attention of potential buyers through advertising on the company's products or services.
2. Accompanying a new client withthe moment of purchase, the use of discount systems.
3. Working with regular customers based on creating additional emotional value associated with repeated contacts. Signs of attention, small presents are important. The reasons for persistence should be investigated.
4. Maintaining the high quality of products and services by the company, studying and satisfying the needs of the buyer in order to turn him into the category of adherents.

At the first stage, the buyer learns about the existence of a product (service) with the desired characteristics, and he also creates an image of the product. If it is positive, then a purchase is made. For loy alty to arise, it is necessary to meet the acquired expectations.

The second and third stages are marked by the fact that they lay and consolidate the idea of the organization and its relationship to customers. The fourth unites, cements everything positive that was offered to the client earlier.

Main approaches to building customer loy alty

There are several basic approaches that allow you to create a loyal customer. The most common are the following:

• stimulation of consumption, aimed at constantly studying the demand of target buyers and developing proposals that can best meet it;
• differentiation of the offer, which allows creating a unique value for the product or service for the client and standing out from competitors, for example, through the use of new technologies;
• identifying customers who can be the most loyal, and building long-term cooperation programs with them;
• raising barriers to switching with loy alty programs.

These approaches are interconnected with each other. So, the most perfect loy alty program will not work if the buyer is offered products that are not interesting to him, that are not in demand for him. When a brand stands out among others like it, distinguished by quality, special useful properties, the number of its adherents will only grow.

Loy alty programs

The loy alty program is a combination of various marketing activities. It allows you to stimulate the commitment of the buyer to both the company itself and its products, declared values of life. This leads not only to repeat purchases, but also to maintaining a positive image of the organization by the consumer.

The most common are bonus programs that make it possible to receive points when making a purchase. When a certain amount of them is accumulated, they are exchanged for some commodity of the corresponding value. Some advanced foreign companies award points for a he althy lifestyle, its promotion in social networks based on personal example.

Sometimes the amount of purchases is taken into account; when it reaches a predetermined threshold, it will en title you to free shipping, participation in a win-win lottery, priority access to new products, an increase in the percentage of discounts andetc.

Instead of a conclusion: the main rules for creating a loyal customer

The main indicator of customer loy alty is their loy alty to the company, brand. Therefore, when developing measures for its formation, it is necessary to take into account the following simple rules:

• the offered product or service must fully comply with the buyer's idea of their quality, characteristics, benefits;
• staff behavior must be customer-oriented - friendly, helpful, aimed at solving customer problems;
• you should choose a loy alty program that provides both material benefits from regular purchases (saving money) and moral satisfaction from purchased goods and services (a prestigious brand is a quality standard; purchasing products from a company that cares about environmental protection environment, etc.).

This approach will bring results in the form of a noticeable layer of loyal customers that can increase the organization's profits and strengthen its positive image.