Summary

Customer Loyalty and the ability to retain customers through relationship building is identified as being related to, but much more than, managing customer satisfaction. Loyalty is linked to the whole customer experience with a product or service and the value they place upon it.

Loyal customers are the key to a viable and successful future in any business environment since repeat business is the most economically sound basis on which to base key strategy.

To manage Customer Loyalty effectively it is essential to be able to understand and improve the total customer experience and to identify the key factors affecting this. Employees must buy into this approach and be aware of the role that they play in encouraging Customer Advocacy.

Research shows that

• loyalty programmes can work and that part of the success is believed to relate to the fact that the programmes allow a more detailed understanding of customer buying behaviour,

• loyalty can be decided at the front line where the customer's perception of the salesperson's trustworthiness, knowledge, and expertise and their associated relationship/experience is a key influence,

• the vast majority of defecting customers do so through no apparent reason other than that they have not been proactively retained, and

• an increase in customer retention by 2 percent is the equivalent of cutting operating expenses by 10 percent and on average, it costs a company five times as much to win a new customer as to keep an existing one.

• loyalty is earned through providing excellent service in the key areas of seamlessness (continuity), trust, attentiveness, and resourcefulness.

Measuring customer loyalty hinges upon surveying current, ex, and potential customers about their experience with the product or service and/or what they indicate as its key competitors and where they place value. Qualitative listening posts are also important to hear, first hand, about the customer experience. Management should be involved in designing these tools, fully utilising the collected data, and designing their strategy based upon customer perceived value. Goals should be aligned with the customers' perceived value indications.

A methodology based around three key attributes of Satisfaction and Alignment, Trust and Values, and New Value (improving the customer experience) can be used to effectively identify the customer relationship drivers if compared to similar ratings of key competitors.