Customer loyalty has been defined as the “summation of customer’s feeling or attitude of full satisfaction resulting in repurchase and/or repeated buying of a product or service, open support of the product and service or display of positive identification and advocacy by word of mouth about the product or service to others” (Orovwiroro. G. O (2009). So what factors influence customer loyalty and enhance company profitability. Peter Clark (2007) has identified six key factors that influence customer loyalty as discussed below.
- Core offering:- Patronage of goods and services by customers is built on their perception that these offering are solid, dependable and appealing. Intent focus on products/services that have strong appeal to customers will always attract their attention and trail.
So the starting point in securing customer loyalty is a strong effort through research to identify their needs, design satisfactory products, promote and price the products/services in an appealing way, using effective channels to meet these needs and desires. Peter Clark opsits has identified the following elements of core offerings as important pillars to influence customer’s loyalty.
- Location and premises: – The location and premises must be functional, attractive, accessible and appealing.
(b) Service: – Customers are not only motivated by low price but the quality of services. The service experience is more compelling than low prices hence greater attention should be paid to the delivery process of range of products/services.
(c) The product or service: – This must be based on what customers want or need. If these are not met, competitors will meet them.
- Satisfaction: – If customers’ satisfaction levels are low, loyalty will be low, therefore emphasis should be placed on satisfying customers. However, it should be noted that high level customer satisfaction does not guarantee loyalty. This is because customers are promiscuous and could defect easily to other competitors.
- Elasticity level: – This is a measure of the level of involvement or indifference in importance and weight of a purchasing decision.
Customer’s level of involvement in deciding certain products like cars, houses, clothing etc. is usually high while others like tissue papers is low. High involvement means taking on more troubles to decide hence, the products/services induces more loyalty than products with low involvement.
Customers are usually ambivalent towards goods/services that are generic in nature i.e. goods/services with high substitutes. Loyalty can only be influenced when points of differentiation are introduced.
- The Market place: – The nature of the market place is an important influence factor to customers. A market with high competing suppliers will require little effort to switch, meaning loyalty will be low.
A market where suppliers offer similar products with similar prices and almost equal service level will have low product/service loyalty except differentiation point is introduced. Customers will switch to other products as soon as they go past inertia loyalty.
- Demographics: – Demographics is an important influence factor as it allows organization to segment various groups in order to meet their needs.
- Share of Wallet: – Totally loyal customers will give 100% share of their expenditure in the product/service area. With increase in market saturation, it is important that organizations keep the share of wallet of their customers.