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Research Data
Research was carried out by Dowding (2002) to investigate how Customer Loyalty Cards create a relationship between stores and customers. 840 members of a management network ,when questioned regarding loyalty card programmes, responded as follows:
- 85% believed loyalty cards helped to create a relationship between stores and their customers
- Loyalty cards were believed to lead to uplift in sales, without the need for price reductions by attracting impulse buyers to purchases which offered extra loyalty card points
- The cards were also considered a tool for giving retailers the chance to identify their customers' habits, i.e. how often they shopped, what they purchased, and when.
Cards also helped to monitor the effect of special offers by showing how likely customers were to buy certain products again after a trial purchase, or whether it was a product usually purchased.
The Market Metrix Hospitality Index (MMHI) revealed that in 2003 hotel loyalty club memberships had grown by almost 12 %. According to MMHI members of hotel loyalty programs were almost twice as likely to return to hotels compared to non-members. Frequent travellers (defined by 15 nights per year or more):
- Were 4 times more likely to consider club membership as very important when selecting a hotel.
- Club members had considerably higher incomes, paid slightly more per room-night, stayed more nights per year in hotels and were more tolerant of price increases compared with non-members.
- The average profile created of frequent traveller loyalty club members included vital insights such as that he/she paid an average US$103/night and would pay another US$11 before switching brands.
To facilitate a study of the perceived expertise and trust of a salesperson in a business-to-business context a mail survey of 169 organisational buyers within Washington DC, Georgia and Florida, USA, and qualitative research and qualitative interviews with buyers were all conducted by Liu and Leach (2001). The study examined buyer perceptions in relationship to: Trust with a Salesperson; Perceived Salesperson Expertise; Perceived Contact Quality with the Salesperson; Perceived Salesperson Power in the Supply-Firm; Customer Satisfaction with the Supplier; Customer Loyalty Behaviour. Findings:
- Organisational buyers` perceptions of a salesperson`s level of expertise were positively related to their level of trust with the salesperson;
- Buyers` perceptions of the quality of interpersonal contact with a salesperson were positively related to their perceptions of a salesperson`s level of expertise;
- Buyers` perceptions of a salesperson`s level of power in the supplying firm were positively related to their perceptions of a salesperson`s level of expertise;
- Buyers` satisfaction with a supplier was positively related to their loyalty behaviours toward that supplier;
- Buyers` level of trust with a salesperson was positively related to their level of satisfaction with the supplier;
- Buyers` perceptions of a salesperson`s level of expertise was positively related to their level of satisfaction with the supplier.
- In a 1995 US study of the reasons why customers leave their suppliers, the following findings were made:
- 14 percent left because of complaints that were not handled;
- 9 percent left because of the competition;
- 9 percent left because of relocation; and
- 68 percent left because of no special reason
The vast majority indicated no particular reason, this suggests that the supplier had not been proactive in retaining them (The Industrial Society, 1995).
In a 1996 US survey across a variety of industries, findings indicated some compelling figures:
- 15 to 40 percent of "satisfied" customers defect from a company each year.
- "Totally satisfied" customers are six times more likely to repurchase a company's products over a span of one to two years than merely "satisfied" customers.
- 98 percent of "dissatisfied" customers never complain - they just switch to other competitors.
- It costs five to seven times more to find new customers than to retain current customers.
- A 5 percent reduction in customer defection can result in profit increases from 30 to 85 percent.
Analysis indicated that an increase in customer retention by 2 percent is the equivalent of cutting operating expenses by 10 percent (Galbreath and Rogers, 1999).
Daniels, (2004) describes research by AchieveGlobal Research. Multi-industry customer research revealed a clear relationship between improved service delivery and customer loyalty:
Independent of industry, geography, product or service, consumers consistently report that they value four qualities in the service they receive:
- Seamless service: The ability to manage service factors that are invisible to the customer. They expect frontline staff to coordinate everything for them with continuity (same person) and exposure only to value-adding activities (no unnecessary involvement in company processes).
- Trustworthy service: The ability to provide what was promised - dependably and accurately. Capable hands perception, promises and commitments honoured, and quick, thorough recovery from errors.
- Attentive service: Caring and individual attention to customers, recognising both their human and business needs. This quality, considered the most important by consumers, is derived from the desire to be recognized quickly, politely and with respect.
- Resourceful service: Provide prompt service and creative solutions. Fast, flexible approach to the service interaction. If needed, they expect prompt and creative problem-solving in the service recovery.
- Failure to leverage this stellar service standard to inspire customer loyalty can be an expensive prospect, as shown by the following statistics:
- Highly effective organizations spend about 10 percent of their operating budgets on resolving customer problems caused by poor service.
- Ineffective organisations spend as much as 40 percent of their operating budgets on resolving customer problems caused by poor service.
- On average, it costs a company five times as much to win a new customer as to keep an existing one.
- Consumers tell twice as many people about a bad experience as they do a good experience.
O'Brien and Mandross (2002) offer a ten step guide to building Customer Loyalty stemming from research into East Bay Regional Park District in the US:
- Identify desired behavioural outcomes.
- Review the predictors of customer loyalty.
- Remain cognizant of, and stay in touch with, your advocates and your opponents.
- Use the intelligence secured from steps 2 and 3 to help guide policy-level decision making.
- Avoid the "trust me" factor.
- Be clear about how you're investing your organisation's resources.
- Keep your employees cognizant of their role in building loyalty.
- Act on what's important to your constituents/customers.
- Build in an annual review of your organisation's business practices, using the above nine steps as one of your measures.
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