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Abstract

Customer Loyalty is a key element to profit growth. We can gain customers one by one yet lose them ten by ten if we do not prepare and deliver appropriately. Simple research will show us that customers cannot be forced into loyalty, we must earn it.

Introduction

By nature loyalty is fleeting. It is built on the strength of the relationship between a customer and a business.
Fill in the following blanks. My favourite drink is '''''' My favourite shirt colour is '''''.. I would buy ''''''' for a gift for my mother. I doubt if many of us would have the same three choices written down. We are spoiled for choice.

Some ways in which loyalty is derived

We, as customers, can make satisfactory purchases at a range of outlets. Sometimes we may gradually become fond of a particular brand. Maybe it is a clothing brand with styles that look good, feel comfortable and always seems to fit well. Brand loyalty is common for a variety of reasons that go beyond that just mentioned. It may be the prestige of wearing the label, driving the car or drinking the wine. It may also be associated with sporting teams, event memorabilia or club paraphernalia. These are strong loyalties but are not the only ones.

Customers change their mind and leave you

Do you still have the same favourite clothing label now as when you were a teenager; enjoy the same drink; even have the same partner? Few of us would answer 'yes' to all these. We change our mind; we change our priorities and we change our income. We change where, when, what, why and how we purchase goods and services because, as customers and consumers, we can, and do.
As an online marketer, your shop is much more easily accessed by new customers and much, much more easily left by those same customers compared with our concrete-based brothers and sisters. Why? Because your customers and consumers have never met you, never grown to like you and so feel little guilt if they shift their loyalty to the shop next door (next click) where they can purchase exactly the same goods and services. Now they give their money to someone else and that is a bad thing.

Should I spend a lot of money to acquire and retain customers?

How can we stop customers going next door? Many companies spend large portions of their budget trying to do exactly this. Do you have tens, even hundreds, of thousands of dollars to find out? Do you have even more money to fund loyalty programs, extensive giveaways or long term sales events? Can you match, dollar for dollar, advertising spend with international corporations? On this we finally have an area where we mostly agree. Microsoft, Apple, GEC, General Motors, Citibank and so on are probably able to spend a little more on customer acquisition and retention than we are.

Is that a bad thing? Should we close our site, or forget about setting one up if we are just in the formative stages of building an online presence? Is competition from large corporations too great? They are sellers of goods and services just like we are. They have budgets to work within just like we do. They plan for success just as we should. In fact we find more similarities than differences, so we will ignore size, maturity, brand recognition and market penetration. These things do not happen overnight. We will start with our first customer, our first sale, rather than worry what 100, 1 000 or even 10 000 customers are doing. Then we will worry about customer 10, then 25 and so on, until we make a good income. And that is a good thing.

Approach with caution

We will explore the concept of loyalty some more. Why is it so important? Well, once we have our first customer inside and ready to buy, we do not want them moving next door to make purchases before we encourage our second customer into the store, do we? The more customers we keep, the more money we will have to spend on our favourite clothes, wine and car.

Thank you for your time.

Paul Hathaway '2005