This action might not be possible to undo. Are you sure you want to continue?
Building loyalty in the luxury market
Claudia Rodriguez, MS San Ignacio de Loyola University Lima, Peru
Loyalty programs and the luxury market
Loyalty of customers
Does it exist? What do we understand by ´loyaltyµ Loyalty in the luxury market: easier or not than in the mass market? What does it take?
Types of luxury consumers
X-fluents: ² Extremely affluents, spend heavily on luxury living Butterflies: ² Powered by a search of meaning and new experiences Luxury cocooners: ² Focused on heart and home Aspirers ² Highly attuned to brands and believe luxury is best expressed in what they buy and own Temperate pragmatist: ² Newly emerged luxury consumers. Careful spenders
Business logic for the luxury market Customer logic Product logic Targeted customer range Lifestyle and selfidentification Selected locations Customization focus Economic logic Structural logic .
the core idea was the same. . in doing so. We can go as far as the times of the Roman Empire who had the ´hospitium privatumµ similar as what we understand today as a ´right of asylumµ or to the medieval times where the Lords were pledged to defend their ´clientsµ or people that served them in case of invasions. to protect and. customer and from where they come from The word ´customerµ is somewhat difficult to track its origin back in time.Loyalty. In the end. prevent that the protegé betrays them and shift lines with the enemy.
Key question: Do Loyalty programs actually build customer loyalty? .
2005). . S. (Wijaya. While customer loyalty is defined as the likelihood of a customer to repurchase and have a high level of emotional attachment to the company.Definition According to Shoemaker and Lewis (1998) loyalty programs are offered to the customers in order to build an emotional attachment to the brand.
1991 .Types of loyalty L H Attitude H Likelihood of repurchase Spurious Inertia loyalty No loyalty Premiun True loyalty Latent loyalty L Backman and Crompton.
Back to the basics« Question: where does the process of building loyalty actually start? The starting point: The sale! Or even before. Be aware of focusing only on ´conquest marketingµ« . It is much more than a marketing initiative. it requires a cultural transformation in the organization.
. wellmanaged communications or rewards program such as frequent stay programs« Superior customer value.Key concept What really drives repurchase is not high-quality customer service. does.
Value and Loyalty Basic Customer value Expected Desired Un-anticipated Level of service Customer loyalty .
Prior to the experience Repeat purchase Reevaluation MKT Awareness Interest Reconciliation Loyalty Evaluation Learning Action Commitment Hierarchy of effects Hierarchy of Experience .
Loyalty = Fidelity The quality or state of being faithful Steadfast in affection Loyal Unswerving in allegiance/devotion RAVING FANS! .
meaning faithfullnes to their brand that translates in continuos purchases .Loyalty Programs: Working definition Process used by companies in order to get the loyalty of their customers.
Working definition Process used by companies in order to get the loyalty of their customers. meaning faithfullnes to their brand that translates in continuos purchases .
L.´Loyalty means you retain a customer and increase the business you do with that customer. developing a relationship so he/she will not be lured away to the competition with the promise of a lower priceµ Ford. . 1998.
Implications Getting the loyalty of customers goes far beyond the goal of retaining them. To do this we need to assess the value of this lifelong relationship and link this to the segmentation process. . It implies the need to build a lifelong relationship.
its profits will increase between 25% to 125%. customers are much better informed allowing them to make better purchasing decisions. Because of the effect of the commoditization trap If a company retains 5% of its current customer base. Here are some other issues to consider« . but not enough. Effective positioning is important.Why the need to invest on this? In our nowadays changing world.
a. (McIlroy and Barnett. 2000). it could be much more!). An existing client buys easily from the company with whom has an existing relationship . (actually. Attract new customers is expensive Selling to a new customer is 5 times more expensive than selling more to an existing one.
The effect of switching costs . both for the company and the client. Loyal clients generate lower operative costs Frequent customers are cheaper to serve as they know better the process. representing savings in time and costs.b.
c. Loyal clients bring more clients Word-of-mouth effect Credibility Impact between 3 to 10 multiplier ² Is this still true? Be careful with regional/international differences .
Loyal customers tend to accept higher prices A loyal customer is less attracted to change service providers based solely on price Because: ² Switching costs ² Fear of failure in getting what he or she wants ² Price of ´being-safeµ .d.
Customer loyalty threats Price reduction policies E-global distribution systems Low switching costs ´Conformance to requirementsµ operational policy Access to competitive info Nature of the business ² In what business is the luxury-hospitality business? .
The process of building loyalty First Imperative: ² KNOW YOUR CUSTOMER! Database management/CRM ² ² ² ² Who are they? What do they prefer? Why do they buy from me? Pattern of behaviour .
1. Design a competitive offer Deliver value Not only defined in economic terms What is value for your customer? ² Freebies? Customization? Smile? .
2. Know your customer Customer Information Intelligence Opportunities for the hospitality industry ² Frequent stay programs. Face-to-face Interaction« What do you do with all these information? . Fidelization Cards.
Build a learning relationship But this is not the final goal.3. the real intent is to evolve into a real partnership! .
How do you learn from your customer? .
recovery skills and handling complaints .4. Train your staff Your staff is key in this process. they are your ´spiesµ all-around« Develop customization-skills among them Empower them to ´break the rulesµ Train them to develop listening skills.
they must we aware of: ² ² ² ² Building and maintaining a learning relationship The fragility of this relationship The life-time value of the customer The importance of service-recovery . In hospitality services. the human-factor plays a strategic role in customer loyalty but to be effective.
Stage your act wisely Customer Satisfaction is not enough« Minimize Customer Sacrifice Stage Customer Suprise«stage the unexpected! Stage Customer Suspense .5.
They are just parked on your doorstep and will be glad to move along when they find something better«µ Blanchard and Bowles. 1993 . You don·t own those customers.Customer Satisfaction is not enough ´«just having satisfied customers isn·t good enough anymore.
but satisfied customers may not become ever. 1998 . ´«customer satisfaction is now just a requisite for loyalty. loyal customers«µ Bowen and Shoemaker.
D.6. Vavra. 1995 . T and Pruden. Aftermarketing activities Any activity directed at current customers with the express purpose of increasing those customers· likelihood of repurchasing a product or service in the future. or of increasing their share of requirements.
Loyalty at Leading http://www.com/LeadersClub/lchome.aspx .lhw.
Based on emotional and experiential benefits. Loyalty programs in this market must be crafted around what really turn the customer on and the rewards that will make a real difference to them. .Issues about Loyalty programs in the luxury market A one-size fits-all loyalty strategy doesn·t work in the luxury market.
Customer Loyalty Management Staging of memorable events Use of relationship marketing tools Staging of memorable events«for returning customers! Developing a learning relationship with the customer Stage of surprise effect Customer relationship Management .
Thank you! .
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.