Customer Loyalty and Relationship Marketing - Research Paper Example

Running Header: Customer Loyalty and Relationship Marketing Table of Contents Running Header: Customer Loyalty and Relationship Marketing 1 1.0 Introduction 3 1.1 Background Information 3 1.2 Aim 3 1.3 Scope 3 2.0 Customer Loyalty and Relationship Marketing 4 2.1 Literature-based evidence 4 2.1.1 Managing value through loyalty programmes 4 2.1.2 Customer Benefits and Sacrifices in the value equation. 5 2.1.3 Benefits of retaining customers 6 2.2 Survey findings 7 2.2.1 Survey findings. 7 2.3 Existing Loyalty and Relationship Marketing programs 8 2.3.1 IKEA 8 2.3.2 GlaxoSmithKline 9 3.0 Conclusion 9 4.0 Recommendation 10 Executive summary Customer loyalty is a very important aspect in business. The following paper discusses the customer loyalty and relationship marketing. Loyalty is one of the factors that is used to measure business growth because it the customers will maintain their continuity and frequency to the business. This aspect of loyalty means that the business person is guaranteed that there will be a specific number of customers that will have to come to his business during a certain period. The branding makes a company to look unique and to be differentiated from the others. In most of the companies that deal with the fast moving goods, the customers normally do not understand the quality of the product but they rely on the brand which they know for a long time. In all the sectors from service industry, product based and manufacturing customer is the most important person and he must be retained at all cost. Customer retention involves several activities which the company must be ready to give to him. There are several reasons why a business is required to retain a customer. The reasons are that the customer has possibility of coming for another service, cost reduction and improve interaction between the customer and the business. When a business is acquiring new customers, there is a cost which is involved which can be saved if the customers were retained. When a business keeps on looking for new customers instead of retaining the ones it has it loses focus and it does not give much attention to innovation. The existing customers helps to maintain the business by buying its products and also helping it grow by introducing new customers to it thus making the business to expand. Generally customer retention is very vital for a business to grow and keep running. Loyalty and marketing have to be used by the companies to maintain their customers and also to acquire new customers. 1.0 Introduction 1.1 Background Information Fame home property is private company in real estate which deals with property for sale and for rent. The company will start as an agency for rent and selling other property. It will be contacted by people who want to sell their property like land, apartments, houses, vehicles, etc and it will sell on their behalf. The company will be based in Australia and as it grows, it will open branches in the major towns. The long term plan for the company is to grow and instead of acting as an agency of selling other people property it will develop their own property like house-land package in suburb area and apartment inner city. The company will invest for long term goals and it will build customer relationship. 1.2 Aim The aim of the paper is to discuss the relationship between the customer and the business. To find out how can a business make its customers loyal? In my case I will focus on how to relate with a customer and make him the centre of the business. There will be a focus on how communication with a customer improves business growth and portfolio. The other aim is to discuss how to retain customer using the different methods. Ways make a customer to be loyal towards the business and never consider the alternatives that are available. 1.3 Scope The study covers the customer loyalty and relationship in marketing. There will be a general discussion on the factors that the customer considers to be loyal and the marketing strategies that are supposed to be applied to maintain the customer relationship. The study also will cover the marketing involved in the real estate business and the marketing method that do apply in the daily activities of business and how the future of the company can be determined through marketing. Marketing is one of the major factors that are considered in business growth and product knowledge to the customers. 2.0 Customer Loyalty and Relationship Marketing 2.1 Literature-based evidence 2.1.1 Managing value through loyalty programmes One of the most important aspects of a business is to retain their customers by making them become loyal to the business. Loyalty is one of the factors that is used to measure business growth because it the customers will maintain their continuity and frequency to the business. In the real estate, if the customers become loyal to the property one are selling they will also bring with them their friends and family members meaning the customer base will continue to grow as time goes by. This aspect of loyalty means that the business person is guaranteed that there will be a specific number of customers that will have to come to his business during a certain period. One of the reasons that a company will be having loyal customers is branding. The branding makes a company to look unique and to be differentiated from the others (Varian 2002, p. 670). In most of the companies that deal with the fast moving goods, the customers normally do not understand the quality of the product but they rely on the brand which they know for a long time. For a starting company we have to brand ourselves very clearly so stand out very well above others. The other reason that makes a customer to be loyal is one on one communication. This makes the customer to feel that he is being valued and his needs are being handled at a personal level. A successful relationship is made up of compatibility, communication, opportunity and attraction. This makes the customer to feel he is the centre of the focus thus making him to value business (Clark 2005, p. 170). Companies have shifted from branding to maintain the loyalty of customers to much advance methods. The latest have facilitated by technologies and innovations like call centres which run 24/7, data mining, earn points and getting rewards depending on how many points you have earned, communications, online interactive, e-business and even sharing of the profits with the customers. In the real estate one on one communication with customer is very important because it will help the seller to understand the client’s needs and also give him the right property according to his requirements. If the customers is served well and given quality products he will be willing to come back for more in the same company. Loyalty programs are very important because they make the customer to feel appreciated. The program for earning points for every purchase made makes the customer to keep on using the company’s products because he is aware that in the future he will be in a position to redeem and get products for free. The most used to retain customers is innovation, customer service and products which are quality. 2.1.2 Customer Benefits and Sacrifices in the value equation. The customer value in business is very important for its growth. The expectation of the customer must be met and exceeded. In the real estate business which can be considered to a service industry in one way the customer must be provided with quality environment where they feel comfortable and also valued. The service which is provided must exceed that of the competitors. As much as the company want to cut its costs and make profit it must consider putting customer first. The marketers have to a thorough research to understand what the customer wants (Hallowell 2006, p.28). This makes the company to provide quality products which the customers are willing to buy at a certain price. The marketer helps the company to produce the collect products which can be sold easily in the market. Pricing of the products is also another critical aspect in the marketing because it measures the value of the service or the product which in the value equation is perceived as a key determinant. The company has to sacrifice some benefits for the sake of the customer. Pricing is a very sensitive area in marketing which is determined by the distribution and manufacturing costs on which the company does not have control over it. Promotion is normally confused with marketing. Promotion is a subset of marketing and it deals with marketing communication from public relations to advertising. Promotion brings the attention of the services and goods to the customer. It consists of both the use of the media and personal selling. When the products are produced and they are advertised they must be in a place where the customer can access them. For example if a company produces new products and advertises them on the media and the company does not have outlets then the customers will be frustrated because they will not access them (Disney 2006, p. 495). This requires the companies to makes sure that they have outlets and they are well stocked before making any campaign about them. Normally for the marketing mix to create a competitive advantage it must be successful. Marketing is the major boost that drives sales and makes the products to be sold very fast. The major companies they have large budgets on marketing both on the mass media and also at a personal level. The company must consider that it gains more on selling than it uses to acquire its products and also to perform its marketing. The major reasons that will make the company to continue with the marketing is to remain at a competitive edge against its competitors. For the real estate the marketing can be done one on one to the prospective buyers and through the media to enlighten the whole society about the products. The customer service still remains to be a major key in the marketing and selling. 2.1.3 Benefits of retaining customers Customer is the most valuable person in business and for it to be successful he must be maintained. In all the sectors from service industry, product based and manufacturing customer is the most important person and he must be retained at all cost. Customer is faced with other alternative thus the business must give him the best services for him to keep on coming for more. Customer retention involves several activities which the company must be ready to give to him. There are several reasons why a business is required to retain a customer (Disney 2006, p. 495). One of the reasons is that the customer has possibility of coming for another service. The repetition of a business by a customer by giving him quality services will make him to keep coming back for more. When a customer comes for another service or repeats the same service with the same company it is a win-win strategy by the business because the company will be guaranteed that the customer will always come back. This helps the business to reduce cost that is normally used in customer acquisition while also the customers will reduce their cost which they could have used in search of new vendors and also the cost which will have been involved in switching of the suppliers. The retention of the customer will benefit both the customer and the business hence saving any extra cost which will have been involved in extra search. The other reason why the business has to retain its customers is to save cost that will have been involved in the acquisition of a new customer. When a business is acquiring new customers, there is a cost which is involved which can be saved if the customers were retained. When a business keeps on looking for new customers instead of retaining the ones it has it loses focus and it does not give much attention to innovation. Generally the business which retain customers grows faster compared to the one that does not retain and keeps on looking for new customers. The costs that are involved when acquiring a new customer are meeting costs, travelling, sales demos, following up, advertising etc. When a business retains their customers, it means that customers are aware of the products that the business offers and the processes that are involved in the output thus the business will not incur any cost to make the customer understand the products. Having a retained customer has an advantage that, the customer can pass the information about the company products to new customers that will also join thus the company will have added new customers with no extra cost (Clark 2005, p. 170). The existing customers helps to maintain the business by buying its products and also helping it grow by introducing new customers to it thus making the business to expand. Generally customer retention is very vital for a business to grow and keep running. The other reason a business has too retain its customers is that it improves interaction between the customer and the business. The today’s market is changing very fast and it is shifting to customized market from the mass production of services and products. The services and products are tailor made to meet the requirements of the customer (Bentley 2003, p.380). When a business has a repeated customer, the business gets an opportunity to have a very focused and very close relationships which is normally based on the needs and the requirements of the customer. The business will be assured of a customer who will always come back thus there will be a confidence to the business. The customer provides insights to the business thus making it too produce quality products which are relevant to the customer. The repeat of the business also helps the seller and the buyer to co-create services and products which will lead to general improvement in the business. Finally customer retention helps to have delighted customers (Blau 2004, p. 45). The customer retention strategies which are effective will help the customers to move to zone of customer delight from customer satisfaction. This customer delight will only be achieved when the seller understands what the customer exactly needs. The delighted customers will always come for more services at the business thus improving the performance. All the businesses are supposed to shift their focus to business to improve their performance and profitability. 2.2 Survey findings 2.2.1 Survey findings. The survey was conducted to determine how useful can the loyalty programmes be in the marketing of products and services. The objective of the survey was to find out how loyalty programmes are useful in the business and whether they add any value to marketing and increase sales. The research was done through questionnaires and interviews and customers who were respondents represented different companies. The kind of loyalty programmes that were asked about points that were rewarded when one bought goods worthy certain amount, call centre support, online communication, data mining, profit sharing and marketing promotions. Most of the customers were positive about the loyalty programs. For example some said that the earn rewards programs were very rewarding because he was just required to buy goods from the same company and after some time he was able to redeem the points in form of goods. Others said the call centres provided customer support which was 24/7 and this helped so much that they do not have to wait for the following day to get to the nearest office to get help. The call centre made the customers to feel that they are really catered for and they felt appreciated. Some customers were negative about data mining and they said that they needed to call from a company they left many years ago because they had their own reasons for doing that. Majority of the customers about 90% agreed that the loyalty programs helped them very much and improved their interaction with the companies (Baumgartner & Christian 2001, p. 150). According to the finding I would recommend the companies to continue with the loyalty programmes because it makes the customers to be loyal to them and also increases the profitability of the company. Companies have to improve and continue with the loyalty programmes to make the companies stand out the competitors. 2.3 Existing Loyalty and Relationship Marketing programs 2.3.1 IKEA IKEA is one of the largest retail stores in Australia that deals with furniture. It has opened stores in the major towns. The companies offer excellent customer service to maintain their clients and also after sale service like delivery. In its chains it rewards customers with discount which will depend on the value of the furniture bought. The loyalty programmes that it has is the customer care support which helps the customers to call any time they have queries or maybe they want to order. Having a customer service which can be accessed any time makes the customers to feel well catered for and appreciated. The discounts that are offered to customers make them to feel as they get quality items at a cheaper price. The pricing is discounted if a customer buys in large quantities. 2.3.2 GlaxoSmithKline GlaxoSmithKline is a pharmaceutical company which supplies generic medicines in all pharmacies in the world. It is very popular in marketing of its products through mass media in all the countries it supplies. One of the loyalty programmes is offering is giving discounts to the customers who have loyalty cards. The loyalty cards will make the customers to be buying the company’s products from the indentified chemists (Anderson & James 2001, pp.58). The other program is customer service which makes the retailers and customers to call any time and their questions are answered. These programs are generally designed to change customer’s behaviour and make him to be biased towards certain products and businesses. The main beneficially of the program is the business because it will retain its customers hence it will be guaranteed of constant flow of customers and money. 3.0 Conclusion Loyalty programs and customer retention are very important in running of the business hence making every business to adopt one of the ways to attract customers and also to retain them. Loyalty is one of the factors that is used to measure business growth because it the customers will maintain their continuity and frequency to the business. In the real estate, if the customers become loyal to the property one are selling they will also bring with them their friends and family members meaning the customer base will continue to grow as time goes by. This aspect of loyalty means that the business person is guaranteed that there will be a specific number of customers that will have to come to his business during a certain period. Companies have shifted from branding to maintain the loyalty of customers to much advance methods. The latest have facilitated by technologies and innovations like call centres which run 24/7, data mining, earn points and getting rewards depending on how many points you have earned, communications, online interactive, e-business and even sharing of the profits with the customers. The existing customers helps to maintain the business by buying its products and also helping it grow by introducing new customers to it thus making the business to expand. Generally customer retention is very vital for a business to grow and keep running. The other reason a business has too retain its customers is that it improves interaction between the customer and the business. The today’s market is changing very fast and it is shifting to customized market from the mass production of services and products. . Customer retention involves several activities which the company must be ready to give to him. There are several reasons why a business is required to retain a customer (Anderson 2001, p. 50). When a customer comes for another service or repeats the same service with the same company it is a win-win strategy by the business because the company will be guaranteed that the customer will always come back. This helps the business to reduce cost that is normally used in customer acquisition while also the customers will reduce their cost which they could have used in search of new vendors and also the cost which will have been involved in switching of the suppliers. Companies must embrace loyalty programs to retain their customers and also to increase their sales. 4.0 Recommendation All industries are supposed to shift their focus from product and services only but to focus on customer service. Customer service is one of the most important factors that help the companies to make more sales and also to retain their customers. I would recommend the companies to continue with the loyalty programmes because it makes the customers to be loyal to them and also increases the profitability of the company. Companies have to improve and continue with the loyalty programmes to make the companies stand out the competitors. The customer retention strategies which are effective will help the customers to move to zone of customer delight from customer satisfaction. This customer delight will only be achieved when the seller understands what the customer exactly needs. The delighted customers will always come for more services at the business thus improving the performance. All the businesses are supposed to shift their focus to business to improve their performance and profitability. References Andaleeb, S 2002, “The Trust Concept: Research Issues for Channel of Distribution,” Research in Marketing, Vol. 11, no.5, pp.1-34. Anderson, J 2001, “A Model of Distributor Firm and Manufacturer Firm Working Partnerships,” Journal of Marketing, Vol. 8, no.6, pp.42-58. Anderson, J & James A 2001, “Business Marketing: Understand what customers value,” Harvard Business Review, Vol.76 no.6, pp.53-61. Baumgartner, H & Christian H 2001, “Applications of Structural Equation Modeling in Marketing and Consumer Research: A Review,” International Journal of Research in Marketing, Vol. 13, no.6, pp.139-161 Blau, P 2004, Exchange and Power in Social Life, New York , John Wiley. 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