Download - Osman Khan
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Dr. Osman Khan
The Emotionally Attached Business
Dr. Osman Khan
Consultant, Trainer, Speaker, Bolger
Senior Lecturer, University of East London
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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
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How do most companies try to create loyalty?
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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
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Most companies in the B2B sector aim to create…
Behavioral Loyalty… Meaning the customer will continue to
purchase from the company or repeat buying
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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
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BUT… there are problems…
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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
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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)
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Then what can companies do…
Do something extra.. Develop positive attitudes among customers!
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Attitudinal Loyalty
Customers who not only do repeat purchase But also… Have a positive attitude about the company
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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
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However….
Attitudinally loyal customers may still seek other options i.e. competing brands
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Solution… ?
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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.
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Why?
Because they are emotionally attached to the company
Not only like a brand but LOVE it & Live it!
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Examples from other firms Apple Harley-Davidson Starbucks & Costa Ikea Zara Coke vs. Pepsi Singapore Airlines Walt Disney Microsoft
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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
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B2B examples
Park Place Lexus Caterpillar (Finance) Sunny Fresh Foods Poudre Valley Health System PRO-TEC Premier
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Loyalty at Best Practice Firms
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Moving up the loyalty ladder
What most companies aim forWhat most companies aim forWhat most companies aim for
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Loyalty Management Model
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Managing Loyalty (detailed view)
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What needs to be adopted
Brand Orientation Customer Orientation Market Orientation Quality Orientation Service Orientation
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Tools to implement best practices Leadership Employees Innovation
Relationship Management Information Technology Knowledge Management
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Customer Loyalty Lifecycle
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Thanks for your time… Any questions or comments?
Dr. Osman Khan
http://blog.cibmp.org