1 Market and Customer Management - Customer Loyalty 02 Perception.ppt Customer Perception of Loyalty Programmes - The Loyalty Paradox (1/3) Most loyalty programmes are based upon a number of assumptions, which have very little documented proof for reality or relevance. Examples for assumptions which must be double checked when comparing pros and cons of possible loyalty programmes are listed below: Are you making realistic assumptions about the programme, its members and your ability to influence them? Many customers want a two-way, interactive relationship with the loyalty programme provider. A high proportion of these customers are exclusively loyal to a single brand over extended periods of time. The core group of loyal buyers are the most profitable group because   there are many of them   they are heavy and frequent buyers   marketing costs are lower   they are less price sensitive   they provide the company with new customers the through positive word of mouth It is possible to influence their behaviour and to persuade them to buy more Database marketing can be used to communicate directly with these core customers, to develop a dialogue and to influence their buying behaviour.

2 Market and Customer Management - Customer Loyalty 02 Perception.ppt Customer Perception of Loyalty Programmes - The Loyalty Paradox (2/3) Companies are attempting to engender loyalty, while consumers do not use the term ‘loyalty’ when describing their feelings for relationship with a company. Current company practice concentrates on rewards eg. discounts, points, coupons, etc. but our research suggests the importance of core products and service benefits and the emotional components of trust and confidence to consumers Communications with companies are welcomed by the majority yet customers do not perceive that they have a relationship with a company despite the fact that companies have been advocating relationship marketing and its benefits Some information about the perception of customer loyalty is listed below (next page) The Loyalty Paradox - Companies and Customers have different understanding about Loyalty

3 Market and Customer Management - Customer Loyalty 02 Perception.ppt Customer Perception of Loyalty Programmes - The Loyalty Paradox (3/3) % Little things mean a lot* % saying if they would like to be thanked for being a loyal customer and how % ‘Trust’ and ‘confidence’ are more appropriate feelings* Reasons for revisiting retailers % Loyalty cards in financial services do not promote loyalty* Factors that are important in persuading respondents to be loyal to a company providing financial services Today’s consumer is pragmatic about ‘dataculture’ and is prepared to give away more than you’d think* Question: What personal detail are you prepared to give to a company if requested? % Name89Household composition63 Postcode86Household tenure59 Address85Weight56 Maritial Status79Telephone number (H)53 TV viewing78Politics40 Occupation77House value31 Newspaper magazine77Telephone number (w)30 Hobbies interest76Financial details18 Age75Personal income16 Car ownership72Household income13 Religion67Personal savings11 and investments Education67None of these6 * Source: The Henley Centre, 1997