Relationship Marketing Customer Relationships and Loyalty in Retailing Copyright: Angela D’Auria Stanton, Ph.D., All rights reserved.

The Evolution of Marketing Mass Marketing Target Marketing 1 to 1 Marketing

The Customer Life Cycle ConsiderationAcquisition Development Retention Awareness Phase 3 New Buyers Phase 5 Additional Purchases Relationship Mktg Reactivation Phase 2 In the Window Phase 1 Forming Opinions Phase 4 Cross and Up Selling Networking Loyalty Programs Adapted from David Shepard Associates Lose

Questions: How does a company get you to buy a product or service for the first time? Why do you select one company over another when making that first purchase? Think about companies that you like doing business with – what do they do right? Think about companies that you no longer do business with – what did they do wrong?

Some Underlying Considerations Changing Customer Expectations The Nature of the Customer Relationship The Difference between Loyalty and Captivity

Relationship Marketing Strategies Capture and use information to a competitive advantage Segment audiences and regulate contact according to need, wants, ROI Customize communications / offers across channels Leverage other marketing communications Support and “be one voice” with customer service and retail activities / programs

Important Considerations Success is contingent on ongoing information exchanges. Be careful what you ask for... and don’t ignore what you are told. Premiums and “gifts” make contacts stand out. Reprise of data and survey findings help build rapport “People actually thanked us for the opportunity to participate. They appreciated the fact that we had not ignored what they told us. And that together we had developed a mutually rewarding relationship. “ Don’t require response as a requisite to qualify for future contact.

The Role of Loyalty Programs Not all customers are created equal

Different Levels of Customer Loyalty Destroyers Defectors Switchers Frequent Buyers Advocates Forced Reluctant Neutral Favorable Preferred None Waning Average High Very High Required Trending downward < Average Average Very Freq. As little as possible Trending downward < Average Average Volume Satisfaction Usage Choices >Average

Issues About Loyalty Repeat buying does not loyalty make Many “loyalty” programs are illusional Functional versus Emotional Loyalty

The Bottom Line Past consumer behavior...best predictor of future behavior. A purchase is one event in a customer’s life. A customer’s true worth is his/her lifetime value. Customers….more important than non-customers. Certain customers are more important than other customers. Prospective customers are likely to look like current customers.