Dr. Osman Khan

The Emotionally Attached Business

Dr. Osman Khan

Consultant, Trainer, Speaker, Bolger

Senior Lecturer, University of East London

Why create loyalty?

• Save costs (marketing, acquiring new customers, information, etc.)

• They spend more with the company• Will buy a greater variety of products• Will recommend company to others• Increase in Market Share• Increase in Profitability• Increased shareholder value

How do most companies try to create loyalty?

How do most companies attempt to create loyalty?

• Through loyalty programs• Higher quality services• Better employee training• Creating value for the customer• Improving customer satisfaction• Offering competitive prices• Improving company image

Most companies in the B2B sector aim to create…

Behavioral Loyalty… Meaning the customer will continue to

purchase from the company or repeat buying

Behaviorally Loyal Customer...

Will continue to do business with the company

Is there because of low costs Maybe there due to improved quality And perhaps because of satisfaction Or has no other option, thus does business

with us

BUT… there are problems…

Problems with behaviorally loyal customers…

Will only be loyal due to a barrier This barrier can be

Low cost Convenience Location Sunk Costs Switching Costs

Usually these barriers are created through loyalty programs

Problems with most loyalty programs…

Can be copied easily (within a couple of years at most)

Customer may find a program which gives more points, better discounts, or more gifts, and thus may switch

Once the customer obtains the gift, then he/she may switch (i.e. cashing in the points)

Then what can companies do…

Do something extra.. Develop positive attitudes among customers!

Attitudinal Loyalty

Customers who not only do repeat purchase But also… Have a positive attitude about the company

Benefits of Attitudinal Loyalty

The customer is not bound by barriers Will prefer to do business with us Will purchase more Will recommend others to us Will purchase a greater variety of services More profitable than behaviorally loyal

customers

However….

Attitudinally loyal customers may still seek other options i.e. competing brands

Solution… ?

Consider Sports supporters If the team loses a match / tournament The supporter STILL supports the club Will continue to buy tickets for next game Will still purchase t-shirts and other memorabilia of

the club Other examples can be music, not for profit

organizations, etc.

Why?

Because they are emotionally attached to the company

Not only like a brand but LOVE it & Live it!

Examples from other firms Apple Harley-Davidson Starbucks & Costa Ikea Zara Coke vs. Pepsi Singapore Airlines Walt Disney Microsoft

Why is Emotional Loyalty better?

Will only want to do business with us Will NOT look for alternatives Will spend more, and buy greater variety of

products Will go out of their way to tell others about us Will be wiling to pay higher prices (up to 20%

higher) Will forgive our mistakes Will be more profitably than all of the other

customer types

B2B examples

Park Place Lexus Caterpillar (Finance) Sunny Fresh Foods Poudre Valley Health System PRO-TEC Premier

Loyalty at Best Practice Firms

Moving up the loyalty ladder

What most companies aim forWhat most companies aim forWhat most companies aim for

Loyalty Management Model

Managing Loyalty (detailed view)

What needs to be adopted

Brand Orientation Customer Orientation Market Orientation Quality Orientation Service Orientation

Tools to implement best practices Leadership Employees Innovation

Relationship Management Information Technology Knowledge Management

Customer Loyalty Lifecycle

Thanks for your time… Any questions or comments?

Dr. Osman Khan

http://blog.cibmp.org

o.khan@cibmp.org