Loyal customer is not easy switch their mind to another brand. Even if their loyalty is rise up, competitors are difficult to break into. Loyal customers will continue to buy despite many lucrative offers from competitors. Instead usual or not loyal customers, their purchasing trend is based on price factor.
Creating customer loyalty is important for several reasons, which are:
First, the efficiency and effectiveness of marketing programs, particularly those related to marketing costs. A brand who has high level of customer loyalty will be able to reduce marketing costs.
Second, can reduce the bargaining power of middlemen so that they will be in a lower position than the manufacturer.
Third, able to attract new customers to enter. If customers has a very high loyalty to our brand, they will influence others, such as through word of mouth, because they have become defenders of our brand.
Fourth, high level of brand loyalty also has high brand tolerance. This means that customers will provide high tolerance against competitors threat.
Measuring of brand loyalty should also be carried out continuously. The first, conducted on consumer behavior regarding repeat purchase rate, the percentage of the purchase, and the number of brands purchased by consumers in a particular product category.
Secondly, by calculating the switching cost. How many consumers will switch? Wherever they want to move? Why did they move? That is the question to be answered.
Third, the measurement of consumer commitment. One of the things that are measured from the amount of interaction and communication related to the brand.
What steps can we use to maintain and increase loyalty to the brand? Many companies are running a strategy of "frequency marketing program," meaning the company will reward if consumers buy in a certain frequency. If you frequently use the services of a particular airline, the number of a certain frequency we will get a free ticket. American Airlines is a pioneer in the application of this strategy in the 1980's. Almost all credit card companies also run this strategy. The customer gets a number of points that can be exchanged gifts when they shop with a particular credit card. Membership marketing program is a strategy that can also be used by marketers.
Harley Davidson had a HOG (Harley Owners Group) which is a collection of Harley-loving fanatics. Currently they are members of nearly 150,000.
Loyalty program to another is relationship marketing. By running the program, we hope to develop a process for the customer journey from suspect-prospect-repeat-first-time clients, advocates, and ultimately become our partner. Implementing a loyalty program is definitely one way to maintain customer loyalty and this is necessary given the competition that is now very sharp. Many consumers actually do not see significant differences between the products that we offer with a competitor. We ask the customer, whether they still want to buy our brand if the price is the same. If they say all the same brand, or they say "we do not know", surely this is bad news for us. That's why loyalty programs are expected to neutralize the problem.
The development of loyalty also undergone many changes. Timothy Keiningham even mention some of the myths about the loyalty that we must avoid, including the myth that says goal number one company is customer loyalty; then the company should further emphasize efforts to retain customers than acquire customers; company with many loyal customers who will certainly get the market share higher, and the myth that reducing customer defections 5% of company profits will increase between 25% to 85%, and the view that the cost of acquiring new customers five times greater than retaining customers.
Such views are now considered not very relevant and somewhat difficult to justify its rationality. For example, retain existing customers, especially big fish buyers or customers of the bank's cost would be very large because heavy users are always demanding more, giving rise to enormous costs in order to keep them moving. To better be able to maintain customer loyalty, our thinking about the wrong view about loyalty should be changed.
Talking about customer loyalty, first we must understand is not to manage customer retention first before we make customer selection; then we must always focus on the customers' share-of-wallet; there should be a mutually beneficial interaction between customers and companies in the creation loyalty program. Then, we must learn all the patterns of responses from customers for this: we must better understand that customer satisfaction and loyalty are two different things. And lastly, we must run concurrently and simultaneously with the loyalty program brand image creation program. With this notice, we can maintain customer loyalty so that the sustainability of the growth of the company become more awake. Loyalty "is the hidden force behind growth, profits, and lasting value"-the intangible That binds an organization together and manifests the strength and quality of its culture. (Robert T. Herres)