Relationship and royalty

1. Managing Relationships
and Building Loyalty

2. • Newman and Werbel defined “Loyalty as a
characteristics of those who repurchased a brand,
considering only that brand, without seeking any
information related to it”.
• Pearson (1996)“Loyalty in terms of durability in
times of the engagement towards the product”.
• N. Gola (2003) “Loyalty as the mindset of the
customer who holds favorable attitude towards
company, commit to repurchase the company
product and services and recommend to other”.

3. • Here are a few examples of well-known customer loyalty
programs:
• Starbucks Rewards: Starbucks, the global coffeehouse
chain, has a popular loyalty program called Starbucks
Rewards. Customers earn stars for every purchase made
using their Starbucks app or registered card. These stars can
be redeemed for free drinks, food items, or merchandise.
Starbucks also offers personalized rewards and birthday
treats to its members.
• Amazon Prime: Amazon Prime is a membership program
offered by Amazon. While it's not a traditional loyalty
program, it fosters customer loyalty through perks such as
free two-day shipping, access to streaming services like
Amazon Prime Video, and exclusive deals and discounts.
Amazon Prime members are more likely to shop on the
platform due to these benefits.

4. • Sephora Beauty Insider: Sephora, a cosmetics and beauty retailer, has a
Beauty Insider program that rewards customers with points for every
purchase. These points can be redeemed for various beauty products.
The program has different tiers (Insider, VIB, and Rouge) with increasing
benefits based on the customer's spending level.
• Airline Frequent Flyer Programs: Airlines like Delta, United, and
American Airlines offer frequent flyer programs. Passengers earn miles
or points for each flight, which can be redeemed for free flights, seat
upgrades, or other travel-related perks. These programs encourage
travelers to stick with a particular airline for their travel needs.
• Hotel Loyalty Programs: Many hotel chains, such as Marriott, Hilton,
and IHG, have loyalty programs that reward guests with points for their
stays. These points can be used for free nights, room upgrades, or other
benefits like late check-out or complimentary breakfast.
• Dunkin' Donuts DD Perks: Dunkin' Donuts offers a loyalty program
called DD Perks. Customers earn points for every purchase, and after
accumulating a certain number of points, they receive free beverages.
DD Perks members also get a free beverage on their birthday and
exclusive offers.

5. • Loyalty Programs in Retail: Various retail stores,
such as Trends, Pantaloons, shopper stop, Spencer
and Amartex, have loyalty programs that offer
discounts, special promotions, and rewards to
regular shoppers. These programs often involve the
issuance of store credit or discounts based on the
amount spent.
• These are just a few examples of customer loyalty
programs implemented by companies across
different industries. The goal of these programs is
to build a loyal customer base, increase customer
retention, and incentivize repeat business,
ultimately benefiting both the customer and the
company.
•

6. Understanding the customer-firm
Relationship
• Transactional marketing
• Relationship Marketing- Database, Interaction,
Network Marketing
• Membership Relationship

7. Four pyramid level of customer
base
PLATINUM
GOLD
IRON
LEAD

8. Four Stages of Brand Loyalty in a
Consumer
• Cognitive loyalty – perception from brand attribute
information that one brand is preferable to its
alternatives
• Affective loyalty – developing a liking for the brand
based on cumulatively satisfying usage occasions
• Conative loyalty – commitment to rebuying the
same brand
• Action loyalty – exhibiting consistent repurchase
behavior

9. Custome loyalty Ladder
Ambassador
supporter
Regular customer
customer
prosects
suspect

10. Loyalty principles
• It starts before customer Acquisition.
• Loyalty may have different forms
• Dynamics of customer retention are important
• Loyalty must be measured
• Entire value chain is responsible for customer
loyalty
• Manage complexity

11. Rationale of customer loyalty
• Repeat Business
• Increased sales
• Cross selling opportunities
• Cope with competition
• Word of mouth
• Benefit of doubt

12. Determinants of customer loyalty
• Perceived service quality & customer loyalty
• Satisfaction
• Relationship
• Image
• Trust & commitment
• Switching cost
• Consumption emotion

13. What Makes Loyal Customers
More Profitable?
• Tend to spend more as relationship develops
• customer’s balances may grow
• may consolidate purchases to one supplier
• Cost less to serve
• less need for information and assistance
• make fewer mistakes
• Recommend new customers to firm (act as unpaid sales
people)
• Trust leads to willingness to pay regular prices vs.
shopping for discounts

14. Factors affecting customer loyalty
• Share of wallet
• Core services
• The market
• Demographics
• Degree of elasticity
• Satisfaction