CUSTOMER LOYALTY AND RELATIONSHIP MARKETING.

As the Director of Customer Relationship Marketing for your company,
you have been asked by your CEO to explore the potential of a loyalty
programme………….

 

TABLE OF CONTENTS

TOPIC                                                                                                                            PAGE

1.0 INTRODUCTION……………………………………………………………………………………3

1.1 BACKGROUND INFORMATION……………………………………………………………….4

1.2 AIMS……………………………………………………………………………………………………4

1.3 SCOPE………………………………………………………………………………………………….4

2.0 CUSTOMER LOYALTY AND RELATIONSHIP MARKETING…………………………….4

2.1 LITERATURE BASED EVIDENCE………………………………………………………………5

2.1.1MANAGING VALUE THROUGH LOYALTY PROGRAMS……………………………..7

2.1.2 CUSTOMER BENEFITS AND SACRIFICES INTHE VALUE EQUATION…………….8
2.1.3 BENEFITS OF RETAINING CUSTOMERS…………………………………………………..8

2.2  SURVEY FINDINGS………………………………………………………………………………..9

2.3 EXISTING LOYALTY AND RELATIONSHIP MARKETING PROGRAMS……………..9

3.0  CONCLUSION………………………………………………………………………………………9
4.0  RECOMMENDATIONS…………………………………………………………………………10
5.0  REFERENCES………………………………………………………………………………………11

EXECUTIVE SUMMARY

Major companies today are seeking to retain their market share so that they can be guaranteed of their customer bases. This is what will assure them of the suitability of their products and services in meeting the consumer needs. To achieve these objectives companies must endeavor to attract more customers through the use of the already loyal consumers. They will develop tailor made reward schemes to make sure they recognize and appreciate loyal customers. In so doing they know that the loyalty of these customers will attract others and their increase will guarantee sales volumes especially in the long run. This means the company will achieve its set targets in the areas of revenue growth and profitability. The company must therefore identify the major players in their production and distribution processes and come up with sustainable mechanisms that will ensure continuous engagement with them. They will the design a suitable loyalty program that will add value to the consumer of their products. This program will ensure the customer will be loyal and faithful towards the company because the company will view him more of a partner than a consumer. Any information he gives to the company will be treated with confidence and seriousness to ensure satisfaction. The sentiments of one customer may be a reflection of many.

INTRODUCTION

There are various ways that service providers adopt to ensure their products satisfy the desired wants of the consumers. A company can adopt to develop a relationship strategy with the consumers by continuously engaging them in feedback in order to assess the suitability of their services to the customers. There will then be service improvements in the areas highlighted by the customers and this will increase the levels of satisfaction to the customers. The company can also establish a reward program where it accords special recognition to those customers who have been loyal to its products and services. This can be done through a loyalty program initiated by the company where customers are rewarded based on their loyalty levels with the company. The company will devise the appropriate loyalty measurement method it will adopt and the specific benefits accorded to each level.

BACKGROUND INFORMATION

Crinitis is a food and beverage company originally from Italy. It mainly deals with Italian traditional foods especially the Italian cuisine. It has several branches worldwide and they specialize in the Italian traditional foods.

AIMS

The aims of this study is to develop a report on the benefits of a customer loyalty and relationship marketing program and also give recommendations on the best program that the company should adopt.

SCOPE

This study will seek to look into the main benefits of a customer loyalty and relationship marketing program to a company using relevant and available information.

CUSTOMER LOYALTY AND RELATIONSHIP MARKETING

This is a marketing concept that adopts the “pull” strategy rather than the “push” strategy used by many companies (Shamaila, 2011). It aims at addressing customer concerns and make them feel more connected to the company. The company seeks to develop a partnership with the consumer of the goods or services by closely following the customer trends like the frequency of visits to the company premises, amount spent on the company’s products and also the number of items ordered. After analyzing all the information the company will engage with the client to seek relevant answers. The company will then be able to provide goods and services that address any special requirements from the consumers which might have been overlooked earlier.

LITERATURE BASED EVIDENCE

According to James, 2010 relationship marketing is the art of developing personal relationships between producers of goods and services and their customers. This is mainly done to ensure the production activities that companies engage in address key consumer concerns to ensure that the satisfaction derived from the consumption of the goods and services is maintained and improved. This will ensure customer loyalty which will push the sales volumes for the company’s products up and translate to higher productivity. The consumer is very central in any company’s operations and their behavior towards the products of the company is very important. This is because this behavior will determine the levels of acceptability of the product to the consumers in relation to availability of substitutes and the various levels of competition in the market (Zhang, 2008). For relationship marketing to succeed the company must have a deep knowledge of who the competitors are, the customers and also the company should check its internal control systems and gauge whether they are functional towards meeting the consumer needs. There should also be more emphasis on dialogue between the service provider and the customer to ensure enough bonding and a degree of coziness between the two. The producer should also be very creative in the provision of his services and also very sensitive to customer requirements. This will distinguish between relationship marketing and the usual after sale service that most companies engage in for mere formality purposes (Wagner, 2009). Relationship marketing must also be very distinct from transactional marketing. In transactional marketing the company usually focuses on realizing the set profit margins but in relationship marketing the key focus is the customer’s attitude and sentiments towards the products and services on offer from the company. The customer in relationship marketing is seen as a partner to the business and his views and sentiments are the main targets the company is after (Steffes, 2011). This will ensure long term engagement between the company and the consumer and it will translate into higher sales volumes because those who associate with the company will always bring others who will be eager to get the experience.  For the company to attain the desired objectives in relationship marketing it must establish a wider interaction network all geared to customer retention and satisfaction. In doing this it should interact proactively with its suppliers and distributors (Laith, 2005). These are also key stakeholders in the business and they play a very vital role at the grassroots. They link the company with its customers through the retail outlets that the company may establish. The company should also establish and develop strong relationships with its employees. They form a strong link between the company and the customers because they are the ones who will carry out the company’s agenda (Teddy, 2009). This is in recognition of the fact that for the success of the company’s relationship marketing program there has to be a very strong link between the employees and the customers. Also as the company engages in quality customer service, the marketing activities being carried out should be in tandem with these customer service activities. Therefore the company must integrate the provision of good quality services with excellent customer service skills and marketing. For the success of these initiatives the company should invest heavily in research and modern technology (Rajesh, 2010). This will ensure that they continuously engage with the consumer and they will have all the relevant information that pertains to the consumer.

MANAGING VALUE THROUGH LOYALTY PROGRAMS

The implementation of loyalty programs by a company increases the transactional values for the company especially in the long run.  The initial customers will often tend to bring their colleagues who will also want to share the experience. This will translate into more sales volumes for the company as their frequency of visits will also increase.

The company will also be able to plan ahead effectively especially in its marketing initiatives. The loyalty programs will enable the company have a clear picture of the approximate number of customers it has and also the company will be in apposition to approximate the expected growth in its customer base using previous trends provided by its loyalty programs data. The company will have much valuable insights into customer expectations and behavior.

The data provided to the company through loyalty programs is very important as it acts as a source of intelligence to the marketing teams who are able to carry out their marketing initiatives with greater precision and accuracy. The marketers no longer rely on instincts to pursue their operations. They are able to identify the issues that require attention and act on them promptly and this definitely adds value to their service.

CUSTOMER BENEFITS AND SACRIFICES IN THE VALUE EQUATION

The customers derive a lot of benefits from the value equation in that when the company upgrades its products and services in response to the customer requirements, they benefit immensely. This is because the levels of satisfaction got from the improved product or service is enjoyed by the customer. Also when the company adds value to its services it ensures that the customer gets a good and deserved return on his money.

The customer’s loyalty to the company’s products may make him spend more on a product despite the availability of substitutes in the market. This is mainly due to the trust that exists between the company and the customer. The customer is also exposed to risk because he will be willing to buy the company’s new products immediately they are out. This is due to the closeness of association between the customer and the company. If the goods or services on offer turn out to be non effective thee customer may suffer losses.

BENEFITS OF RETAINING CUSTOMERS

The company will benefit immensely due to the retention of its original customers. They will add to the transactional values for the customers because the frequency of purchases will increase. These customers will also bring others who will want to emulate them. The company will be able to meet most of its targets in sales volumes and also profitability especially in the long run. The retention of these customers will mean the products of the company will have wide appeal and the market penetration levels will be high. This will increase the company’s market share as more and more customers will like to be associated with their goods and services.

SURVEY FINDINGS

This survey found out that people usually like being associated with successful brands in the market. This is regardless of the costs involved because what they insist on is the quality of the product. Companies should always inform their loyal customers on any impending price changes or new brands to enable them prepare adequately.

EXISTING LOYALTY AND RELATIONSHIP MARKETING PROGRAMS           

The Glaxo Smithkline Company has a loyalty program where it rewards all its suppliers with discounts based on sales volumes in their territories. However there are difficulties in controlling the information flow regarding how the new suppliers know about the company’s existence. Coca-cola Company also has a reward program where it rewards its sales team based on sales volumes.

CONCLUSION

A successful customer loyalty program must reward all those involved in the process. This will involve the employees of the company, the suppliers and also the consumers. They are an integral part the service delivery process and they must be involved. The reward schemes adopted by companies should also be sustainable. They should be maintained throughout to ensure the desired results are realized. The company must therefore accommodate the expenses associated with them in their budgetary provisions. The companies must also devise ways of engaging with the customers throughout to ensure there is feedback. This feedback is what will be relied upon by the company to develop new products or improve the existing ones to ensure customer satisfaction.

RECOMMENDATION

The company should adopt a more inclusive loyalty program that targets all the segments of its customer base. They should make sure the rewards involved cover more segments of the market. This is only possible if they can invest in more research and technology to connect fully with all their customers.

 

References

James, R (2010)  Relationship Marketing. London.Pewin Publishers Ltd, P.11

Laith, P (2005) “Customer Loyalty Perspectives” (Online) Available from http://www.marketresearch.com/ 9Accessed on 2nd May 2012

Rajesh, W (2010) Business Loyalty Levels.Berlin .Hemann  Books Ltd, P.71

Shamaila, T (2011) Impact of Loyalty Programs. Cambridge. Cambridge Press, P.26

Steffes, P (2011) Product Loyalty. Bristol. Alwinn Publishers Ltd, P.28

Teddy, M (2009) “Competitive Loyalty Programs”(Online) Available from http://www.businesstrends.org/ (Accessed on 2nd May 2012

Wagner, J (2009) Consumer Purchase Behavior.Dublin. Pearson Books, P.15

Zhang, M (2008) Customer Loyalty. Frankfurt. Lakers Publishers Ltd, P.24

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