Another marketing strategy to create buyer loyalty<\/p>\n
Syafruddin Chan
\nContributor
\nJakarta<\/p>\n
With competition in all kinds of businesses becoming tougher
\nby the day, it is not surprising that marketers are racing to
\nmodify their marketing strategies.<\/p>\n
That customer loyalty is vital is now completely understood by
\nevery marketer. Hence, it is agreed the key is maintaining their
\nloyalty, and, if necessary, pampering them so that they do not
\nswitch over to competitors' products.<\/p>\n
One of the marketing strategies that can make the customer
\nrelationship highly personal and provide "royal" treatment to
\ncustomers has been made possible by the Internet. Using this
\nmedium personalizes product offers and transactions. It also
\nmatches each individual customer's requirements. In marketing
\njargon, this concept is called relationship marketing (RM).
\nAnother tool incorporated within this concept is the membership
\ncard, with points or rewards for every purchase.<\/p>\n
Apart from being highly personalized, another superior feature
\nof RM is its cost-effectiveness in comparison with conventional
\nadvertising, a big budget game for conveying a message to the
\nless clearly defined target. The one-on-one characteristic of RM
\nleads to more focused concepts and definitely saves a lot.<\/p>\n
With customer loyalty as its main objective, RM is also more
\ntargeted in providing "individualized" services and solutions.
\nAnother advantage is that the feedback is personalized as well.<\/p>\n
The return on investment (ROI) when using RM is comparatively
\nadvantageous. In conventional advertising, after spending huge
\nsums of money on production and media placement, a marketer
\nanxiously awaits results. When the market reacts negatively, his
\nmassive investment simply goes down the drain.<\/p>\n
In RM, initial costs are relatively low and the rewards for
\ncustomers are given only after a transaction or a certain amount
\nof purchases have been made. Admittedly, one of its attractive
\nfeatures is the rewards, which are budgeted at about 2.5 percent
\nto 3 percent of the revenue received. This less risky method
\ncreates a healthy inflow of cash for companies that can be
\nretained for quite some time before they return the small
\npercentage to the contributing customer.<\/p>\n
RM rewards are also quite different from price cuts or
\ndiscounts given during sales and promotions. Here, the reward
\npoints are, in accounting jargon, "equal to monetary value."<\/p>\n
Marketers also often say that this reward system also gives
\nthem a larger "share of the customer's wallet", because the
\nrewards can only be used for purchases from the same company,
\nwhile, in contrast, cash discounts -- given during sales -- that
\nare retained by customers can be used for purchases anywhere or
\nfor other items, even competitors' products.<\/p>\n
With today's highly advanced communications and information
\ntechnology, e-commerce costs are reducing. This is another factor
\nthat is attributable to the accolade for RM as "the rising star"
\nof present marketing.<\/p>\n
The RM concept was pioneered by American companies, which are
\nfamous for efforts in satisfying customers to the maximum. Some
\nof the major, US-based corporations, which actively use RM, are:
\nNorthwestern Airlines, US Sprint, Hallmark, Citibank, Hilton,
\nHyatt, General Foods, Sears, Microsoft, Motorola, to name just a
\nfew.<\/p>\n
European companies were not far behind. British Airways,
\nEurotunnel and Nestle, for example, are also getting best results
\nfrom RM. In Japan, meanwhile, Seiko, Toyota and Nissan have also
\nadopted RM for their marketing.<\/p>\n
This phenomenal marketing method has also been used for
\nseveral years now in Indonesia. Among the major companies that
\nhave reaped profits from RM in the country are: Citibank, with
\nreward points for its credit cardholders; Alfa supermarket chain,
\nwith its membership program; Matahari department stores, with
\nMatahari Club Card (MCC); Metro department store, with Metro
\nYours card; BCA, with its Reward BCA program; and Pasaraya
\ndepartment store, with Pasaraya Passport. Most, like MCC and BCA,
\nhave made RM available for their customers through the Internet.
\nQuite a number of multinational and local companies are currently
\nin the final stages of launching RM, each with its own specific
\nmechanism.<\/p>\n
Another important premise behind RM is the "20\/80 law", which
\nrefers to the categorization of customers into two major groups:
\nthe first 20 percent, which contributes 80 percent of the
\ncompany's revenue and the second 80 percent, which provides only
\n20 percent of the revenue. Naturally, the focus is on the first
\ncluster, which receives the best services and all the pampering.
\nGradually, almost every company now realizes that this group --
\noften referred to as the Most Valuable Customers (MVC) -- forms
\nthe core of its business and, as the company's survival largely
\ndepends on it, it deserves the best. So, the days of "equal"
\nservices to everyone are now almost over. Time, energy, capital
\nand so forth, should not be wasted on noncontributing customers,
\nsay marketers.<\/p>\n
For the Indonesian market, it may be too early to evaluate the
\nsuccess of RM, because most companies acknowledge that it is
\nstill "phase one". However, with the results so far, they are
\nalready moving in the right direction.<\/p>\n
Admittedly, in any marketing effort, especially RM,
\nidentifying customers is foremost. This kind of detailed customer
\ndata helps create new product development, and product and
\nservice features that are demanded by the market with more
\nspecific and focused segmenting. RM, with its two-way and one-on-
\none capabilities, helps decision makers in companies provide
\nright-on target solutions that increase both the level of
\ncustomer loyalty and the number of loyal customers. (The writer
\nis a senior partner at AdDirect Marketing)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/another-marketing-strategy-to-create-buyer-loyalty-1447899208",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}