Customer loyalty

Customer loyalty can be defined as the process by which an emotional bond and trust is created between the consumer and the brand. This sort of conduct is conceived by the level of interest that a person has in gratifying the same need during the repeated purchase of the same product, a brand, or the periodic frequency in the same establishment. Brand loyalty is a measure of a consumer's level of attachment to a particular product, service or company. This happens when the company evoke positive emotions about their products or services, encouraging people to buy more and more often.

Jacoby and Chestnut describe brand loyalty as "a non-random behavioral response expressed by some decision unit over time in relation to one or more alternative brands, being a function of psychological decision and evaluation process". Loyalty occurs when there is a favorable correspondence between the individual´s attitude towards the organization and their purchasing behavior for its product and services. It is an ideal situation for both the company and the customer. By providing a positive and pleasant customer experience, the company manages to establish a bond of trust.

Building customer loyalty

Knowing how to build that customer loyalty is critical, as it helps the company to reduce customer acquisition costs and maximize return on investment. Markets currently work based on several factors, such as: economic, social, political, cultural, technological, demographic, etc. All this causes great difficulties in relation to the consumers to whom is directed. It is also important to add the environmental factors, such as competitors, suppliers and distributors, who work tirelessly to get the approval of consumers and thus be more profitable. Thanks to the current competition, products and services compete with each other to be leaders of the sector, using innovative strategies and with differentiating utensils and tools compared to the rest.

Due to the aforementioned competition in the markets, companies are forced to continually strive and improve trying to attract new customers by promoting new offers, improvements or processes so as not to lose their interest. It is universally acknowledged that clients are not as loyal as they used to since their preferences are constantly changing. This is one of the reasons why businesses invest on customer loyalty programs and create strategies to be better than their competitors in a sustainable way. For all this reasons companies are very conscious about their relationship between loyalty and fidelity: it is essential to know the tastes, motivations, desires and expectations of consumers and potential customers.

For organizations to achieve the task of retaining their customers, it is highly relevant that they incorporate loyalty management or fidelity, requiring specific market research activities that favor knowledge of needs, perceptions, motivations, desires and interests of customers. That the client remains in the company is due to an idea of value that is created in his mind such as: the product itself, the service and attention, the recognition of the brand, the reputation of the supplier, the variety of products. The company must take into account all these elements within the customer loyalty plan.

Customer loyalty is an ongoing process that the company must work on to achieve the desired results. Some tips to gain customer loyalty are:

• Keep the promises offered in the products or services. It helps to create a trusting bond with the customers.
• Create a community around the brand. A space for the consumers establishes an emotional bond with the products and services, sharing ideas, tips, etc.
• Offer flexible payment plans: for example, customers can pay for a product little by little through flexible monthly plans.
• Personalized treatment, creating unique experiences with the information the company knows about their customers.
• Continuous improvements. Obtaining insights from the customers will allow the company to make decisions about the products or services in a way that boosts customer loyalty.
• Design a loyalty program, recognizing the behavior of the consumers either with rewards or benefits or providing exclusive experiences that are related to the brand, as courses, activities, workshops, loyalty cards, discount cards, reward programs, etc.

Examples of Customer loyalty

• Retail Loyalty Programs: Retail loyalty programs are a popular example of customer loyalty. These programs encourage customers to shop at the same store and reward them for doing so. For example, many stores offer rewards cards which allow customers to earn points every time they shop. The points can then be exchanged for discounts, free products, or other rewards.
• Loyalty Cards: Loyalty cards are another type of customer loyalty program. These cards are usually issued by a company to their customers, offering them discounts and other benefits when they use the card. For example, many restaurants offer loyalty cards which allow customers to collect points every time they dine at the restaurant. The points can then be used to receive discounts or free items.
• Referral Programs: Referral programs are a great way to encourage customer loyalty. Referral programs offer customers incentives for referring friends and family to a particular business. For example, many online retailers offer referral programs which give customers a discount when they refer someone to the website.
• Social Media Engagement: Social media is also a great way to encourage customer loyalty. By engaging with customers on social media and responding to their comments, companies can build a relationship with their customers and foster loyalty. For example, some companies offer exclusive discounts or promotions to customers who follow them on social media.

Advantages of Customer loyalty

Customer loyalty has several advantages for both companies and customers.

• Firstly, companies can benefit from customer loyalty by having a steady stream of repeat customers. This can lead to higher profits, as customers who have already bought from a company are more likely to buy from them again in future.
• Additionally, loyal customers are more likely to provide positive word-of-mouth marketing, which can help a company acquire new customers.
• Finally, loyal customers can provide valuable feedback that can help a company improve its products and services, leading to more customer satisfaction and greater loyalty.
• For customers, loyalty can lead to advantages such as discounts and exclusive offers, as companies often reward their most loyal customers. Additionally, loyal customers can benefit from a sense of satisfaction and belonging, as they feel a connection to the company and its products.

Limitations of Customer loyalty

• Customer loyalty can be affected by external factors such as competition, pricing, customer service and other marketing strategies.
• It is difficult to measure customer loyalty accurately, since it is a subjective concept that may vary from customer to customer.
• Customer loyalty does not guarantee customer retention, as customers may switch to another company due to better offers or services.
• Customer loyalty can be easily lost due to poor customer service, a lack of communication, or a lack of understanding customer needs and preferences.
• It can also be difficult to maintain customer loyalty due to changes in customer preferences, competition and different market trends.
• Customer loyalty is not a guarantee of future sales, as it may not always lead to repeat purchases.
• Customers may be loyal to a brand but not purchase its products or services, which can lead to losses for the company.

Other approaches related to Customer loyalty

Customer loyalty can take on many different forms. Some of the approaches to building customer loyalty include:

• Creating an engaging customer experience: Companies should focus on providing an enjoyable and memorable experience to their customers. This can be done through providing extra services, such as free shipping, personalized customer service, and rewards programs.
• Providing excellent customer service: It is important for companies to provide a strong customer service team who can respond quickly and accurately to customer inquiries and complaints. Customers should also be provided with a variety of contact options such as phone, email, and live chat.
• Building trust: Companies should focus on building trust with their customers by providing consistent quality and reliable service. This also includes being transparent about their policies, products, and services.
• Offering rewards and discounts: Companies should consider offering rewards and discounts to customers who are loyal to the brand. This can be done through loyalty programs such as cash back or points for purchases.
• Engaging with customers: Companies should strive to engage with their customers through social media, email marketing campaigns, and other digital channels. This helps to build relationships with customers and can encourage them to stay loyal to the brand.

In summary, customer loyalty is an important part of any successful business. Companies should focus on providing an engaging customer experience, excellent customer service, building trust, offering rewards and discounts, and engaging with customers in order to create and maintain customer loyalty.

Footnotes

Customer loyalty — recommended articles

Relationship selling — Goals of marketing — Customer benefits — Client satisfaction — Creative strategy — Marketing advantage — Customer perception — Image of the company — Brand promise

References

• Baptista de Carrasco, M.V. and León de Alvarez, M.F. (2009), Lealtad de marca y factores condicionantes. Visión Gerencial, núm. 1, pp. 24-36. Universidad de los Andes, Mérida, Venezuela.
• Jacoby, J. and Kyner, D.B. (1971), Brand loyalty: A conceptual definition. Proceedings of the Annual Convention of the American Psychological Association. 6. 655-656.
• Khairawati, S. (2019), Effect of customer loyalty program on customer satisfaction and its impact on customer loyalty. International Journal of Research in Business and Social Science (2147-4478). 9. 15-23. 10.20525/ijrbs.v9i1.603.
• Lam, J., Robson, K., Plangger, K., Kietzmann, J., McCarthy, I.P., and Pitt, L. (2022), Play, games and gamification: possibilities for customer loyalty
• Mesén Figueroa, V. (2011), Fidelización de Clientes Concepto y Perspectiva Contable. Tec Empresarial, ISSN-e 1659-3359, Vol. 5, Nº. 3, pp. 29-35.
• Zanchett, R. and Paladini, E.P. (2019), Consumer loyalty programs: impact of different modalities. DYNA, 86(208), pp. 206-213.

Author: Zaira Bancells Guerrero, Mónica Guijarro Bernabeu, Gabriela Varela Barker