Loyalty Flashcards
What is the definition of true loyalty?
Engel and Blackwell (1982) defined ‘true’ loyalty as the preferential attitudinal and behavioral response toward one or more brands in a product category expressed over a period of time
What does Dick and Basus typology show?
They bring both attitudinal and behavioural loyalty together to produce a typology of loyal behaviour
What are the four types of loyalty in Dick and Basus typology?
1) True Loyalty
2) Spurious Loyalty
3) Latent Loyalty
4) No loyalty
Whats the characteristics of true loyalty?
This is when repeat purchase and relative attitude is high
- Most preferred category for organisations as the consumers doesn’t even consider another brand
Whats the characteristics of Spurious loyalty?
High repeat behaviour yet low attitude towards the brand
- May have repeat purchase due to situational cues such as familiarity or deals
- Does consider other brands
- Is possibly due to norms or situational effects
Whats the characteristics of Latent loyalty?
- Low repeat behaviour, high relative attitude
- So for example a customer may want to shop somewhere but finds it difficult due to situational cues such as the location and as a result goes to other competitors
Whats the characteristics of no loyalty?
- Low repeat behaviour and low attitude
- Low attitudinal behaviour may be as a result of a recent introduction to the brand
What are those people with positive attitudes and high repeat purchase behaviour less likely to do?
- They are less likely to search for alternatives etc
- Individuals holding strong commitments have demonstrated enhanced resistance to persuasion attempts (Dick and Basu)
What makes up Rowleys model of loyalty?
1)Captive
Purchases continue as they are likely to have no choice, neutral to branding terms of attitude
2)Convenience
Routine/low involvement purchases, no attitude
3)Contented
Evaluate products on their own merits, more positive attitude
4)Committed
Hardly ever consider alternatives, offers word of mouth recommendations
What strategies are tier one rewards directed towards meeting?
- Provide a simple, explicit and fair baseline reward mechanism to reward all customers for their present and past purchases irrespective of their attitude or purchase pattern.
- Tier 1 rewards would serve as an incentive for all customers to record their transactions with the company at every purchase instance.
- Ensure scalability of the loyalty program by rewarding customers in proportion to their spending. That is, the more a customer spends with the firm, the more he/she earns rewards.
What are the characteristics of tier two rewards?
Tier 2 rewards are forward looking and aimed at influencing customer behavior or attitude in future given the past performance of the customer.
- Invisable to competition
- Tier 2 rewards would be special rewards given to select customers to cultivate attitudinal loyalty or enhance behavioral loyalty or both (should be aimed at specific customers)
What is the customer selection process within tier two rewards?
The Customer Selection Process is essentially a process of measuring CLV for each customer.
- The high and medium CLV customers are then extracted as they represent high value customers.
To determine the type of tier 2 reward, what 4 things are customers queried on?
1) Attitude Analyses
2) Behavior Analyses
3) Customer Profile Information
4) CLV Measure
- The outcome of Attitude and Behavior Analyses of a customer can help determine the specific objective to be fulfilled by Tier 2 reward for a given customer
What is customer profile information?
Customer Profile Information provides data specific to a customer for designing a customized reward that is relevant to the customer.
How does the CLV help determine the reward?
CLV measure in a way helps set the ceiling on the dollar value of Tier 2 reward that may be given to the customer. Otherwise, the value of Tier 2 reward may become highly subjective and susceptible to human judgment. Worse, it may lead to unprofitable transaction.
What can tier 1 and tier 2 rewards achieve?
Tier 1 and Tier 2 operating concurrently can give immense flexibility to any loyalty program.
- Most importantly, they can help achieve attitudinal loyalty, behavioral loyalty and profitability simultaneously
- By adopting a customer-centric rewards strategy, companies can offer their customers more value and options to their customers, thereby fulfilling more needs and goals of the customers over and above what is met by the company’s products and services.
What to Kumar and shah state is needed to achieve true loyalty?
‘to achieve ‘true’ loyalty, firms should concurrently focus on building both behavioural and attitudinal loyalty.
Which stage of Kumar and Shas framework and the tiers introduced
Stage Two - Tier one awards - building loyalty among all customers
Stage 3 - Customer selection process, sees tier two rewards
Stage 4 - Sustaining loyalty for selected customers, firms select which customers to target, tier one and tier 2 rewards in action to sustain the customers loyalty
What should organisations have in place for customer retention?
- ‘Strategic customer retention management policies
What is technical quality?
Measurable objectively (e.g. time spent waiting)
What is functional quality?
How the technical quality is subjectively perceived (e.g. perceived fairness in handling a queue)
What does satisfaction result from?
-from an emotional state
Causes vary widely between individuals
Expectations influence satisfaction
The higher the customer’s expectations, the harder to satisfy them
When are customers satisfied?
- Customers are satisfied when consumption experience meets their expectations
- Delighted when they exceed them!
- Customer expectations are rising
What does Chistophers loyalty ladder show?
Christopher et al. (1991), propose that the objective of relationship marketing is to turn new customers into regularly purchasing clients, and then to progressively move them through to being strong supporters of the company and its product, and finally to being active and vocal advocates for the company
