The Customer Loyalty Lifecycle!

We’ve all heard of the business life cycle, however today I wanted to introduce you to a different type of life cycle, i.e. the customer loyalty life cycle.  When managing a business it is imperative to know what sort of a life cycle the business is likely to go through, and hence we can make appropriate strategies.  Similarly, when wanting to manage loyalty, it is important to understand what type of a life cycle a loyal customer is likely to go through, so that we can make appropriate plans.

Going back to one of my earlier blogs, we must remember that there are three distinct types of loyal customers (  Keeping this in mind, we know that the most profitable ones are the emotionally attached customers, and the least profitable are the behaviorally loyal customers.  Moreover, the longevity of the relationship also differs from one type of loyal customer to the other.  Based on research into these types of customers, I have developed a customer loyalty life cycle.

As you can see from the figure, the life cycle is based on two main factors, time and profitability.  While my drawing skills are not great, you can make out the basic concept behind this model.  Customers that are behaviorally loyal will stay lesser time with a firm and not be very profitable.  Attitudinally loyal customers will stick for longer, and eventually they will leave the firm.  Emotionally loyal customers will stay with the firm for as long as they are alive, or as long as they remain to purchase from that product category.  These customers are the most profitable for a firm.  The time factor differs from one industry to another.  However we can now put time figures to this graph.  We can estimate the number of years it will take a customer to become emotionally attached!  The numbers written in the figure above are only for illustration purposes.  My research into this continues, and hopefully in the near future I will be able to publish the time scales, along with estimated profitability figures.

What is important is that we need to realize that all customers start from the same place.  It is up to us to ensure that they end up in the right place.  For example, companies that are committed to providing better customer service and quality will be the ones that will get more customers to go further on this life cycle.  Those that ignore the customer’s true needs will be the ones that see most of their customers end up in the behavioral loyalty sector.

As always, please do let me know what you think about this.  Your comments here, and in various linked in groups are always appreciated.

WOM still the most powerful tool for a marketer

Word of mouth, or recommendation, is the most powerful tool marketers have in their arsenal for attracting and retaining customers.  Despite this being the most powerful of the tools, it is one of the most overlooked, and hence I thought I would devote this blog to the importance of WOM.

Research indicates that customers are more likely to purchase a brand / product based on recommendation from a trusted source than from any other means.  This includes advertising, PR, online marketing, etc.  Moreover, researchers have found that those people who purchase a product based on recommendation from a trusted source are more likely to become loyal than those that went there as a result of other sources.  Interestingly there is further research which states that more customers are likely to purchase a product based on recommendation than even their own past experience!

My research indicates that emotionally attached customers are the ones that are most likely to recommend a brand, and are the ones that will do it most frequently.

Recommendation is also a free tool for marketers.  Usually you don’t spend money on this.  However some companies have started to realize the importance of recommendation and reward their customers who recommend others with vouchers, discounts, and free gifts.

Social media has enabled our customers to use the power of the web to broaden their scope of friends.  This now allows for our customers to reach a wider number of people, and much faster too.

The only problem with recommendation is that it is not really in the control of marketers, or at least not until now.  Companies need to develop strategies, devote budgets, and create teams that will look after recommendation.  With it being a very powerful tool, we must learn to take advantage of this, and not to let it evolve on its own.  Companies need to devise strategies that will assist their customers in being better at WOM.  Various rewards that are being used by firms is just one way to encourage customers to start recommending the company to others.  However there much more to be done.  Companies that can harness the pwoer

Back from a long break

Hi everyone.  As you can see, I had been away for a while.  Much has been happening since.  Presenting at a number of conferences, consulting work, and a number of other interesting projects.  One of these involves being a director for a non-profit organization called Children Education Society (CES).  CES is involved in providing education to under-privileged children in hot spots around the world.  Some of the work they do is with children from war torn Afghanistan, as well as those that had been affected by the floods in Pakistan.

I’m also now working as a Director for the Center for Innovations in Business & Management Practice.  This organization aims to spread innovatory business and management practices, by bringing together academics and managers.  Their first event attracted people from 20 countries from all over the globe.

I have also been working on a book on Customer Loyalty.  I will be posting more details about this in the future.  Now that I’m back,  I will try be more regular at blogging.  Take care and have a good weekend.

WordPress Themes