Customer loyalty in the tight business.

Surprisingly for 50 percent of our group I guess, probably not for the other 2 persons. Tights and customer loyalty, a happy marriage!

Saturday evening, a regular TV-night with the ordinary decoction of ‘idol’; X-factor. A night not to remember normally but now this wasn’t the case thanks to the performance of Cheryl Cole (famous UK pop star) or at least Cheryl Cole’s tights. She wore Wolford’s Bondage tights with a zebra print on it. This fact was staggering enough to hit the cover of several Sunday newspapers and to cause a rush for hosiery like the Californian one in 1848. The interest in tights has been growing since al long time. They used to be just a subtle addition to a skirt or dress. Now they have become a theme in themselves. Tight sellers found out women remain very loyal to one brand when it comes to buying tights. Merchandising director Luisa De Paula phrases it like this: “The hosiery category has significantly grown through repeat purchase, driven by customer loyalty with brands such as Falke”. The marketing manager of Waldorf come to the same conclusion, in the beginning of every season customers come back to check out to new trends or just buy another pair of basic stocks. Women being very loyal over the brand of their ‘socks’, I didn’t expect.

I cannot confirm these facts in the article, but maybe Liesbet or Annelies could?

Bob Dossche

(Financial Times)

Customer service as the building stone to customer loyalty

The airline industry has suffered very hard from the worldwide economic crisis.

First of all, fuel prices were exorbitant. Secondly, people preferred less expensive conveyances to travel, and the number of people planning a city trip declined dramatically.

Due to this economic crisis and the sharp concurrence between numerous airline companies, the relationship between companies and its customers has become very important in the airline industry. There even exists a prestigious ‘Customer Cup’, a trophy for the company who improved his customer service the most.

The six most important accents the companies were judged on are gate interactions, the boarding experience, delays and delay management, onboard interactions, baggage handling and baggage resolution. This year, American Airline had the honour to receive the cup, just like last year.

It is obvious that airline companies have to attach importance to an impeccable customer service in order to survive, since this is the basic principle to make their customers use their services again.

(American Airlines)

Annelies Martens

Customer loyalty model

I have searched what our good friend Wikipedia has to say about customer loyalty. Wikipedia talks about 'a loyalty business model', the quality of a product or service leads to customer satisfaction, which leads to customer loyalty, which leads to profitability.

Customer satisfaction is first based on a recent experience of the product or service. This assessment depends on prior expectations of overall quality compared to the actual performance received. Customers are said to have a 'zone of tolerance' corresponding to a range of service quality between 'barely adequate' and 'exceptional'. In general, customer loyalty is determined by three factors: relationship strength, perceived alternatives and critical episodes.


Liesbet Gillis (Wikipedia)

Case study: Starbucks

For my final blog I have decided to study Starbucks and I will try to  link it with my previous blogs. 

Starbucks has a simple marketing strategy: make your customers addicted to your products.  They do this by handing out monthly benefits to their customers. Fortunately Starbucks avoids the trap discussed in 'data friend or foe' by  giving incentives to their customer to buy a lot of small amounts. Therefore only customers who really want their products will go along with this strategy.  To accomplish this strategy they use a ‘Starbucks credit card’. This means that you can buy whatever you want in ‘Starbucks dollars’ and when your credit drops below a certain point it reloads and you pay actual dollars.  

On top of that Starbucks also tries to create ‘the Starbucks experience’. This  is based on 5 principles . It basically means that they try to surprise their costumers, pay attention to details and most importantly motivate their employees. The why is simple, motivated employees work harder and  will give your customers a better experience. These principles reinforce the fresh image of Starbucks.  And image is what turns loyal customer in very loyal customers with the benefits discussed in 'Customers divided'.  I think this explains why the Starbucks star is shining so high in the sky.

Frederick Dobbelaere

The 5 principles 

Starbucks marketing 

Kinepolis loyalty card?

The Kinepolis Group, the well-known chain of movie theatres, is suffering from the competition with illegal downloading of movies. Although we students can get a student card, going to the movies is still a slice out of our income. And a night out at the movies isn't complete without sweets, popcorn and soft drinks off course! At the Forbes website I've read the following article.

Regal Entertainment Group, the largest theatre circuit in the United States has its own customer loyalty program, Regal Crown Club. The number one theatre loyalty program in the United States will reach its 10 year anniversary. In 2001 the Regal Crown Club began a way to reward Regal's frequent moviegoers. Through the Regal Crown Club, moviegoers accumulate credits at the box office and concession stand to earn free popcorn, soft drinks and movies.

Don't you think Kinepolis should create a loyalty program by giving credits every time you go at the movies and buy some popcorn?
I personally believe that this would raise the number of people going to the cinema.

Liesbet Gillis (Forbes)

Customer loyalty in actual practice

I have found an interesting case study by Kobie Marketing about the effect of a customer loyalty program on sales. The program was designed for a cellular phone company.

The pdf document describes what the loyalty program is about and how the researchers verified the effectiveness of it. The description of the method researchers used to examine the loyalty program is really elaborate. Therefore, I think this study has a high reliability.

The conclusions of the casestudy were remarkable: customers in the loyalty program spent an average of 35% more than customers in the control group (who were not in the loyalty program). What’s more, this program even generated an annual return on investment (ROI) of 252%. This comes down to an additonal profit of $2.52 for every $1 spent, after covering all costs.

The overall conclusion of the case study is that creating customer loyalty is a requirement, especially for companies operating in the mobile phone market.

(Case study)

Annelies Martens

Customers divided

Loyal customers are the backbone of every company. Why? Because attracting new customers costs 6 times more than retaining your customers.

Therefore it is crucial to identify the different types of customers. Customers can be divided into 5 groups. The most important group is the committed customer. This customer will buy a lot of products and he will recommend those products to his friends. I think this is the best type of customer since this kind of publicity is priceless. A second type of customer is the behaviorally loyal customer, this customer is very loyal but only because he chooses the cheapest alternative or because he is forced to be loyal. An example of the latter is a customer with a bad financial situation. This would explain why low cost companies have loyal customers. In the long run however, they will not remain loyal. There are also other types of customers like the dubious costumer, the disloyal customer and the leavers.

There is however one small problem: each type of customers requires a different strategy to increase their loyalty. Maybe I will discuss this in my next blog. 

 Frederick Dobbelaere

AFFECTING CUSTOMER LOYALTY

how to enhance customer loyalty for smaller businesses.

In this article, Darrel Zahorsky defines customer loyalty as “the practice of finding, attracting, and retaining your customers who regularly purchase from you”. This is not the same as customer satisfaction. The latter should be given to every customer. According to Zahorsky customer loyalty does pay, and businesses are aware; these days almost every person has a loyalty card. In 2003 American businesses spend more than 1 billion dollars on loyalty programs.
Darrel Zahorsky describes the 8 most important ways to earn customer loyalty for small businesses. The first and most important one is the company loyalty. Loyalty is about devotion to your best customers. Moreover, if you are not loyal to the company how could you expect customers to be loyal to your business? Furthermore, loyalty is often the direct result of the relationship between customer and employee. Logically employee loyalty is very important too. Besides those 2 ways there are still 6 manners mentioned you must take into consideration if you want to enhance customer loyalty for small businesses.

Bob Dossche

With a little help of the loyalty card..

This article is about the ‘game group’, world largest game retailer. Tough the whole gaming industry is having a hard time the loses of the game group where bigger than expected. The most important reason is the competition of supermarkets and other retailers. The game group had to give a lot of benefits and promotions to his customers. Ian Shepherd, the new CEO of the game group is not sure if the game industry will recover soon in spite of the new motion-sensitive controllers of Sony and Microsoft. In addition of on-line game selling, Ian Shepherd hopes to turn the tide with his loyalty card. In their comment, the financial times is not very sure the efforts will help and advises investors to hold off.

 I think the article is a good example of how company’s use customer loyalty for helping them through the crises. In hard times, keeping the customers seems really important. I think this is because keeping your customers is cheaper than finding new ones through big promotional activities.

Bob Dossche

Less is more

We all know someone in our acquaintances who is a genuine ‘Apple fanboy’ or ‘Mac Loyalist’. He or she is really passionate with Apple. The major question other companies should try to answer in order to allure their own zealots is: “what drives their passion for Apple products?” Surprisingly, the answer is rather simple.

Customers don’t desire choice and freedom, they desire to be satisfied. In contrast with what many companies believe, freedom doesn’t give people greater satisfaction. Apple is one of few companies who understand this, hence they offer a limited assortment. People don’t lose their valuable time trying to find out which product fits them best, as a result they are truly satisfied with their purchase.

Apple’s competitors on the other hand, present an exhaustive selection of slightly different MP3 players. Customers have to spend their time selecting the most suitable MP3 player, and often they have the feeling that they should have bought another, more applicable one. Therefore they are less satisfied with their purchase.

This analysis matches to my own experience: a lot of companies offer so many alternatives that I can’t see the wood for trees. In that case, I tend to postpone my shoppings.

Annelies Martens
(The secret behind apple's loyal customer base)

Advertising intelligence

Magazines put out by Britain’s supermarkets are a new marketing hype. It is not only about touting the products, but also about explaining how to use them. Besides recipes you will find styling tips, make-up tips...etc. The best part is that you can buy the mentioned products and brands in the supermarket itself. The magazines not only help to sell more products, they also increase loyalty to the brand. To raise their sale figures, some supermarkets go even further. They use data form loyalty cards to send specific advertising brochures to the customers. Is this a step too far?


Liesbet Gillis (The Economist)

Data: friend or foe?

I recently found a column written by Steve Mckee. In his column he talks about analysing loyalty programs.

Nobody can deny that analysing loyalty programs is crucial in perfecting them. However, these analyses can be flawed because you only receive raw data and there lies the problem; data doesn’t tell you everything. For example, you don’t know why a customer is deciding to buy your brand, is it because he genuinely likes your brand or is it because he wants the loyalty advantages? So if you don’t know the motives of a customer, it is possible that you focus your loyalty campaigns on the wrong type of customer and not on the loyal customer who is more profitable in the long run.

I agree that information about the behaviour of your customers is key to success. Nevertheless this information can backfire if you can’t put this information in the proper context. However, I think there has to be a solution to this problem, maybe companies could do surveys or they could abolish short term advantages supported by a good marketing campaign. Or we could just take a look at how Apple is doing this.

Frederick Dobbelaere

businessweek 

Merchant or marketer?

In this article the author Jeanne Bliss argues why the store owners should act more like merchants than marketers.  The main difference between the two notions is the superficiality. For instance a merchant focuses more on one client a time while the marketer tries to reach as many people as possible. The merchant nurtures the clients a lot more and acts from the heart instead of the mind. You have to treat your clients as you want to be treated your own. (In the article Jeanne wrote many other advantages of being a merchant instead of a marketer. This can be very useful for are presentation/paper later this year) A research she performed for her latest book showed the figures prove her right. Companies who invest more in employees and customers grew sustainably in 2008, despite the crises.

The author of this article wrote a book about customer loyalty and she is the president of one of the biggest consulting companies in the world, serving clients as Johnson and Johnson, Costco and many more.

We should remember her name, because her work could be very helping in writing or paper and making or presentation the next semester.

Bob Dossche

Retaining your customers: a guide

Hello everybody,

I recently found an article about customer loyalty.  The article is based on a survey by the ‘Corporate Executive Board's Sales and Marketing Practice’. Based on these results several conclusion were made.

Some of the conclusions were remarkable. According to the survey,  quality, brand recognition and service excellence aren’t decisive factors in retaining  your customers. The sales experience seems to be much more important.  Furthermore, customers always seems to appreciate what they can learn from their suppliers, like how to save money. 

In addition to these conclusions there is also a stern warning to the management.  It seems that if the management doesn’t listen to their customers, they won’t be able to make their new solutions look like meaningful ones to their clients. On top of that there is a serious problem if the senior management doesn’t build up the customer advocates groups within their organization because they won’t be able to have very loyal customers.

It is a very interesting article, certainly the conclusion that brand recognition isn’t that important surprised me.

Frederick Dobbelaere

businessweek 

Starbucks managers picking coffee beans

Starbucks wants to create an 'emotional connection' between its staff and its product. Therefore its store workers and managers of European shops were invited to experience the coffee process on the plantations in Costa Rica, Sumatra and Tanzania. There they help the local farmers to pick coffee beans. The idea is that staff will be encouraged by what they see and push the company's ideals on their return.

Starbucks is the biggest buyer of Fairtrade coffee in the world. It wants to give customers the best coffee while ensuring the payments it makes get through to the farmer on the ground. "We gave a material gift, we were given an emotional gift." says a manager from Madrid. It seems that Starbucks succeeded in convincing employees that their company is 'doing good', which is important.

Or is this just another hollow PR stunt?
(Guardian)

People judge brands like their friends

This article outlines some basic rules for companies to build customer loyalty, based on a survey of more than thousand American consumers, reporting that people scrutinize brands in a similar way they look at other people, hence on the basis of warmth and competence.

There are three indispensable lessons brands should bear in mind in order to build consumer loyalty:

1. Brands are people, too

This means that brands that are perceived as warm and competent will be more attractive to consumers.

2. Don't confuse market share with brand loyalty

Companies should keep in mind that having a significant market share doesn’t implicate having loyal customers. When a more appealing brand appears, consumers are likely to switch brands.

3. Integrity is the best loyalty program.

Although it is hard for companies to live by sincerity and selflessness, instead of to strive for short term gain, they are important. After all, organic growth from existing customers is the most profitable and sustainable source of growth.

Assuming companies and brands comprehend this conception, it reveals numerous opportunities for them to create a lasting connection with their customers.

(Forbes)