1 Market and Customer Management - Customer Loyalty 04 Customer Behaviour.ppt Customer Buying Behaviour (1/3) Customer buying behaviour Customers know their value for the company Super Quinn Best practice companies have long realised that developing a detailed understanding of what drives target customers’ buying behaviour is the one of the key drivers in a success- ful loyalty programme. Only when the needs, wants and opinions of the customer are fully understood the programme’s value proposition can become reality. Increasingly, customers are starting to recognise that their patronage is responsible for company profits and are learning that they can demand that products and services are bundled in a way that suits the customer rather than the company. Super Quinn’s programme uses a wide variety of ways to understand customers’ needs and then acts upon them to improve the supermarket chain’s value proposition for target customers. Super Quinn’s customers are fiercely loyal to the supermarket chain. Customer Behaviour Tar-geting Positioning Programme structure & offers Cost and benefit structure Communicating the Loyalty programme Loyalty programme objectives

2 Market and Customer Management - Customer Loyalty 04 Customer Behaviour.ppt Customer Buying Behaviour (2/3) Changing buying behaviour A customer can be worth up to $332,000 Research has shown most retail customers show ‘poly- gamous loyalty’ - where they share their spend with a number of companies’ brands. A typical frequent traveller has between 3 and 4 FFP cards in her wallet. Lufthansa research suggests that its Miles & More frequent flyer programme (FFP) is only the 10th most important flight selection decision factor for business travellers. The failure of its FFP to significantly alter flying behaviour is supported by the discovery that non-members have a higher satisfaction rating with the airline than Miles & More members! In complete contrast, British Airways Executive Club in partnership with Air Miles has identified the behaviours that lead to loyalty to the airline and has used this information to micro-segment its customer base. It then uses a combination of personal service, highly targeted flight promotions and reward selection to develop the ‘multi-collector-redeemer’ behaviour characteristic of its most loyal customers. The lifetime value of a customer can be considerable. Carl Sewell the owner of a chain of auto retailers in the USA calculates that the lifetime value of a lifelong customer can be as high as $332,000. Sewell competes on the superior quality of the service that he provides, the best way to develop loyalty in customers in the long run. Customer Behaviour Tar-geting Positioning Programme structure & offers Cost and benefit structure Communicating the Loyalty programme Loyalty programme objectives

3 Market and Customer Management - Customer Loyalty 04 Customer Behaviour.ppt Customer Buying Behaviour (3/3) Several assumptions are essential and must be reviewed critical, when launching a loyalty programme: …a lot of customers are loyal to brands. …it is possible to influence the loyalty with marketing activities. The results of several research studies about trends and customer behaviour have an impact for loyalty programmes too: … hybrid customer behaviour: The same customer buys Rolex Watches and eats cheap in Mc Donalds. … customer types like YUPPIES (young urban professional people) or DINKS (double income no kids) have different buying patterns …the customer wants to be in an emotional world during the buying period. Especially in warehouses, there are several engagements to create these environments (e.g. adventure corners; movies; original bakery in the food department). Turnover Costs Amount of products and services in use Danger of customer loss Price Sensitivity Length of customer relationship Profitability Turnover Length of customer relationship Source: Price Waterhouse, 1998 Several assumptions define customers behaviour normally Some assumptions about customer behaviour and buying patterns can be shown graphically: Customer Behaviour Tar-geting Positioning Programme structure & offers Cost and benefit structure Communicating the Loyalty programme Loyalty programme objectives