Personality Essay: What Is Customer Loyalty?

1595 Words 7 Pages

Customer loyalty comes from both a tendency in behaviour and attitude to favour one brand or product over others in the marketplace. This might be due to satisfaction with the performance or convenience of the product or service or simply due to familiarity or comfort with the brand name over time. Customer loyalty gives a brand competitive edge in the market and induces customers to shop more consistently and spend greater amounts while having a positive shopping experience.

Types of loyalties :

Monogamous vs Polygamous loyalty: As the names suggest monogamous is loyal to only one particular brand while polygamous is loyal to more than one brands. Mostly these days people have polygamous loyalties. For example
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According to what we read above and what common belief is that customer loyalty has a positive relationship with the profitability of the firm. It is generally taken for granted, but recent studies have shown that even though it might appear to be true in most circumstances, not all loyal customers are profitable. Work by Heiner Evanschitsky and John Glanfield, both now at Aston business school, has challenged the conventional thinking by saying not all loyal customers are profitable.
Studies showed that more then half of the customers who made purchase for over 2 years and were hence labelled as loyal were hardly generating any profits for the company. The relationship between loyalty and profitability is much weaker then most loyalty programmes claim.
In another study conducted it is found that customers who were labelled as loyal, decided to give up on the brand once the loyalty benefits and discounts were taken away. This shows that these customers are loyal to the benefits they are getting out of the transaction and nit the brand itself. if they see more benefit from another brand, their loyalties can easily switch.
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Common belief and understanding tells us that loyal customers means more profit for the brand or company as we know that existing customers are cheaper to maintain then acquiring new customers and they also tend to buy more, the longer they stay. This concept is only true partially.
Companies need to understand that they cant take it for granted that if they manage customer loyalty, it will assure them profitability. The only way to strengthen the link between profitability and loyalty is to manage them both efficiently at the same time.
Their is no correct method of making loyalty profitable. It varies from business to business. Some business have a high volatility rate then others and need to focus more on how to make customers stay.
Also a lot of it has to do with the definition of loyalty. A loyal customer shouldn 't just be the one who regularly buys from you. They might just be buying out of the discounts or benefits they get out of you or because you are near their house and not because they feel loyal towards your company. Loyalty need to be more on an emotional level where you feel a connection with a brand or company and a small discount or mistake is not enough to drive you to the closest

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