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Note 22Loyalty-Based

Marketing, Customer

Acquisition, andCustomer Retention

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The Logic of Loyalty

Loyal customers: Provide the base profit that all customers presumably

deliver Buy more Cost less to serve Provide referrals Pay a price premium Spread their initial “acquisition cost” across more

occasions

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The Logic of Loyalty

The ambiguous relationship between loyalty and referrals is clarified by the difference between “attitudinal loyalty” and “behavioral loyalty”

Attitudinal loyalty – customers really like the product or brand and recommend it to others

Behavioral loyalty – customers stay with company or brand for unflattering reasons

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Figure Note 22-1 - Why Loyal Customers Are More Profitable

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Figure Note 22-3A - Returns on Investments in Customer Retention

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Figure Note 22-3B - Profits on Investments in Customer Retention

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Figure Note 22-2 - Customers Differentiated by Loyalty and Profitability

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Tools of Customer Loyalty:Improving Customer Satisfaction

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