Customer loyalty is a hot topic right now. It is not a new concept, but every company I work with, from Fortune 50 to Fortune 1000, wants to talk about it. It does seem similar to the American ideas of motherhood and apple pie. Who is not for keeping most customers longer and having fewer defections and more opportunity to do cross- and up-selling?

There is some dissention/debate in the world of customer loyalty research. There are numerous qualifiers and distinctions that some researchers acknowledge and some do not. These have to do with, for example, whether you are dealing with a contractual relationship, a monopoly/ oligopoly, emotional loyalty, the relationship to customer satisfaction, or a transactional/consultative sale.

What has been well established is that you probably do not want to keep all your current customers, as some are a drain on your resources and are unprofitable to serve. With that said, I would like to detail how marketing can play a critical role in improving loyalty with the customers your company wants to keep.

There are three areas where marketing can have a significant impact: value delivery, win/loss analysis, and value migration (note: the focus here is more on business-to-business relationships).

Value Delivery

There is an adage or idea that gets to the heart of this area. If a customer cannot differentiate between something that is value creating (good) vs. value destroying (bad), it does not matter what you are or what you do. As a general premise, customers often stay loyal when they perceive a mutual exchange of value between the transacting parties.

Marketers have an obligation not only to help create unique value propositions for each applicable segment but also to make sure their company's customers understand the value that has been delivered to them. In some respects, this idea is similar to the buyer's remorse concept in terms of making sure you follow up with buyers to alleviate any fears that their purchase was not a good deal for them or that you did not deliver incremental value to them.

There are a couple of actions that a marketer can take (in alignment with other functions) in this area:

  1. As a first step, contact your most important customers and ask them to describe how your company has delivered value for them. Frame the conversation, saying that you want to better understand their needs and how you can create more value for them in the future.
  2. After better understanding the value your company has delivered, contact all the key stakeholders within that customer (business) so that you can communicate the value that has been delivered to date while detailing how your company is working to deliver additional value in the future.

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ABOUT THE AUTHOR

Michael L. Perla is a principal consultant at a sales and marketing consulting firm. He can be reached at michaelperla@bellsouth.net.