Do Business Well

The following findings, kindly supplied by Gurpal Dhensa, Brunel University, are based on an exploratory study into the nature of loyalty which was conducted by means of face-to-face interviews with managers from both dotcom companies and a traditional high street retailer in September 2001.

In earlier times, marketers could understand consumers well through the daily experience of selling to them. But as firms and markets have grown in size, many marketing decision-makers have lost direct contact with their customers and must now turn to consumer research for enlightenment. Organizations now spend more money than ever to study consumers and develop strategies that meet individual needs. Organizations that understand their consumers and can elicit loyalty from them are those that are best placed to succeed in today’s highly competitive market. However, according to Newell (2000), customers are becoming cynical about loyalty schemes such as those operated by the major supermarkets. They do not want to be treated equally, they want to be treated individually. In fact, some of the very things organizations are doing to build relationships with customers are often the things that are destroying these relationships. In a multichannel environment, a company needs a unified view of customer activity in order to obtain an accurate picture of that customer’s interactions with it across a range of different online and offline platforms. If the information is incomplete or inaccurate, then the customer will be suspicious of relationship-building initiatives and trust will not be developed.

The marketer’s rationale behind loyalty programmes is that customers can be offered special services, discounts, increased communications and attention beyond the core product or service in exchange for the development of loyalty to the firm that will pay dividends over the longer term (Schiffman and Kanuk 1997). Schiffman and Kanuk go on to explain that placing emphasis on developing a long-term bond with customers allows them to feel some kind of ‘personal connection’ to the business. But retailers and e-Retailers have noted that consumers do not always act or react as marketing theory suggests they will. Marketing researchers studying the buying behaviour of consumers soon realized that many consumers balked at using exactly the same products as everyone else. Instead, they preferred differentiated products that reflected their own special needs, personalities and lifestyle. Customers have become more sophisticated and xpect companies to provide them with targeted and value-added service Whitehead 1999). If retailers and e-Retailers do not take on board changing cusomer needs, then the customer will simply go elsewhere. It is very easy to walk into another retail outlet or click into a new Internet site.

What is meant by the term ‘loyalty‘ anyway? A satisfied customer is not necessarily a loyal one. Another consideration is the extent to which the online environment differs from the retail one in terms of developing customer loyalty. hat seems to be needed is for retailers and e-Retailers to start at the begin- and try to understand the parameters of loyalty and how it has changed, efore developing specific programmes. As Reichheld et al. (2000) state, ‘before ou can build a relationship with a customer you need to show that you deserve

e consumer’s trust‘. Without that trust, the highest levels of customer service will not necessarily engender loyalty. Primary data from an exploratory study by ensa (2001) have highlighted that respondents want ’something else’ insteadof points from e-Retailers. Even though the sample of respondents was small, s is still important information for e-Retailers and the future of their busisses. Reichheld et al. (2000) have stated that there is no difference between line and offline consumer behaviour in terms of how loyalty can be developed, but how many companies have actually asked their customers how they can earn their loyalty? This policy must surely represent the future of successful loyalty programmes. Here is one example.

Hyundai, the car manufacturer, asked customers to contribute ideas to help develop the a new model of car, the Santa Fe. According to McLuhan (2001), loyalty is considered by Hyundai to be vitally important to the bottom line. In October 2000, 20,000 Hyundai car-owners were mailed a letter inviting them to help develop the company’s first sports utility vehicle. The campaign targeted customers who it believed would be interested in the vehicle itself, as well as those who were likely to change their car within two years. The 1,800 respondents were then mailed with instructions on how to offer their views, which would guide the marketing strategy for the model. The mail pack was presented in a large tube, containing a covering letter, detailed questionnaire and a product guide. Also included were four collages depicting possible user groups, two sample newspaper advertisements and an invitation to ‘write your own ad’ headline. Customers would be able to see to what extent their responses had influenced Hyundai’s thinking when they received feedback results before the vehicle’s launch. The campaign met Hyundai’s objectives of promoting customer loyalty, as seen in the success of the overall marketing activity, which achieved a response rate of over 50 per cent.

Possibly related posts: (automatically generated)
Building Loyalty Online: an Exploratory Study

• Web Sale Measuring your Return on Loyalty
• Networking Ecommerce: Listening to and Hearing from your Customers
• Incentives and Rewards, and their Impact on Internet Customers Loyalty
• Challenges of building online customer relationships
• Marketing planning stage: implementation through the marketing mix
• USING NARRATIVE PRINCIPLES TO ENGAGE YOUR CUSTOMERS
• Online Relationship Marketing
• Internet Marketing, as the voice of all customer communication, Ecommerce the power of Networking
• Relationship Marketing
• Buying Growth

5 Comments »