Building customer loyalty

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In this era of fast-paced competition, the only way to stay afloat is to efficiently manage the most important constituent in business: the customer.


  • 1.Building CustomerLoyaltyByBolaji OkusagaManaging Director, The Quadrant Company

2. Who is the Customer? The Customer is that person or Institution that makes a demand for your products or service offering. A Customer is the target for specific products or service and helps add value to an enterprise through the demand he / she makes of specific offerings. The Customer is the most crucial actor in the marketing process because there can be no marketing without the Customer. 3. What does the CustomerWant? The CUSTOMER seeks for the satisfaction of his / her needs in the market. The PRODUCERS of goods and services seek to satisfy the desire of Customers for value in return for profit. The CUSTOMER demands the value inherent in the consumption of products or services and also gives value to the PRODUCER in the process. 4. Perfect Market: The OldOrder In an imperfect market, where the DEMAND for specific products or services outweighs SUPPLY, producers are usually price-makers, who make little effort to woo the Customer. This situation occurs in a monopoly or an oligopoly. Here, producers dictate their terms and Customers strive to meet these terms. 5. Enter theEra ofImperfectMarkets With globalization, increased innovation and its attendant atmosphere of fierce competition, where monopolies like Microsoft and Oligopolies such as Coca-Cola, IBM, Nestle and PepsiCo are now facing stiff competition from emerging enterprises in China and India, the era of price-makers in perfect markets are over. The death of perfect markets has led to a new era where competitive edge is not only driven by product quality but by distribution, delivery and customer service innovation. 6. The Demands of aCustomer Service Culture Global exposure to technology and skilled Man power,led to the advent of product parity in most industry andthe consequent erosion of rigid customer loyalty. Price now became a big consideration in choosingbetween competing brands and products. In this dispensation, consumers became price-grabbers, shopping for price and not out of loyalty. However given the need for differentiation beyond priceand product quality, companies now started to innovatein the area of product delivery, turn-around time andCustomer service. This shifted emphasis away from Total QualityManagement (TQM) to Total Relationship Commitment(TRC) and redefined the whole concept of Marketing. 7. Enter the Era ofMaxi-Marketing... Noting that traditional marketing with its emphasis on Product, Place, Price and Promotion, does not adequately address Customer needs, Maxi-marketing a blueprint centered around Customer Relationship Management (CRM) emerged. Customer Relationship Management is a process or methodology used to learn more about customers needs and behaviours in order to develop stronger relationships with them. CRM as a process which brings together pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends, helps to shape a Companys Business Strategy 8. CRM: The New Reality Customer Loyalty is crucial in the drive at year on year profit. For a company to stay solvent and profitable, it must manage its customer churn rate and increase its customer retention capacity. To drive this strategic intent, Companies must court the Customer by meeting or surpassing his expectations through availing the Customer a robust value proposition well beyond the competition. 9. What is CustomerLoyalty? Customer loyalty describes the tendency of a Customer to choose a product or service over another. Note the use of the word "choose" . Though; customer loyalty becomes evident when choices are made and actions taken by Customers. Customers may express high satisfaction levels with a company in a survey, but satisfaction does not equal loyalty. Loyalty is demonstrated by the actions of the Customer; Customers can be very satisfied and still not be loyal. 10. Retaining the Loyalty ofthe Customer WhatImperatives? compare you with your If your Customer could competitor in terms of your product and price, would you be better off? Companies generally need to know two key principles about customer decision making:1. Customers never buy solely on priceeven tough we think they do.2. Prices may be transparent to Customers, but value is usually opaque. By building a Customer service culture, companies build added value to their offerings. 11. Moving the Conversationaway from Price to ValuePRODUCER /SERVICE PROVIDER CUSTOMER VALUE-SELLINGA Customer An Efficiency Relationship driven ValuePROFIT Expectant Value EquationProposition 12. How To Sell on Value Value delivery is the basis of the existence of businesses. However, given the gradual decline in the differentiation of offerings based on quality, value delivery in most industry began to wear the toga of monotony and stasis. Value delivery soon became defined in terms of product delivery, distribution and Customer service innovation. Product and Service delivery based on the understanding of Customers changing needs and attitude became the order of the day. 13. Selling on Value: Casesfrom the Masters DELL Cut off the middleman in the distribution of Computer Hardware and Customized offerings to suit individual Consumers, thereby beating competitors like HP, Compaq and IBM. PEPSICO Shifted emphasis from the production of carbonated soft drinks to production of energy drinks and other related offerings in order to take advantage of changes in trends and consumption attitude, thereby beating a competitor like Coca-Cola in terms of profit. 14. Selling on Value: TheNigerian Experience ZENITH BANK Redefined the concept of Banking in Nigeria by introducing On-Line-Real-Time Banking and Convenience Banking before it became the minimum standard of entry thereby beating Competitors like Guaranty Trust and Diamond Bank. EKOCORP Redefined health care delivery in Nigeria by being the first publicly quoted Hospital. Through its access to funds from the capital market, it was able to raise enough funds to procure state of the art medical equipment and hire experienced personnel thereby raising the bar in private health care delivery. 15. How to Get There It is proven that innovation based on technology or efficiency in production not targeted at the customer do not positively affect the bottom-line. Most profitable innovation therefore are built around the Customer. This is because the Customer is at the core of Value Delivery and Profit Maximization. It is therefore essential to build a Customer centric value delivery process in order to engender loyalty. 16. What Does it Take? UNDERSTAND WHAT YOUR CUSTOMER REALLY VALUE You may find that product cost is a small component of the customers total cost and that price is only one of the many variables that customers consider. To build loyalty you most understand the Customers Life Time Value (LTV) and align this with your Products Lifecycle. 17. What Does it Take? 2. DEVELOP FLEXIBLE MARKET OFFERINGS No Company can satisfy all Customer segments with the same offering. Companies need to create flexible market offerings. These are bundles of products, service and information that Customers can configure and customize to suit their priorities. Companies sometimes bundle services with their product, but the truth is that not all Customers value these services. Allow Customers to choose the service they value and pay for only what they use. 18. What Does it Take? 3. COMMUNICATE YOUR VALUE PROPOSITIONYou need to educate Customers about theelements of your value proposition in order forthem to fit these into their equation. Withoutthis, your sales force will only use price as itscompetitive weapon. There is therefore theneed to educate your customers on theeconomic benefits of the Non-Price-Variablesembedded in your offering. 19. What Does it Take? 4. BE OPEN AND HONEST A lot of People believe that transparency is an enemy of profit. They reason that Customers will take advantage of better information to drive down prices and profit, but the truth is that there can be no loyalty where there is no trust and trust is better built in an open and honest relationship. TRANSPARENCY: THE CALL CENTRE PROFITABLE INFORMATION 20. What Does it Take? 5. DEVELOP A CUSTOMER DATA- MINING PROCESSCustomer data and models based on this datacan help inform you of customers most likely torespond and become loyal, no matter whatkind of front-end marketing program you arerunning or how you "wrap it up" and present itto the customer. The data will tell you who topromote to, and how to save preciousmarketing naira in the process of creatingcustomers who are loyal to you. 21. Parting Shot! It is much less costly to generate Customer Loyalty and retain Customers, than to deploy marketing money in the quest at attracting new Customers 22. Thank You.


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