The Customer Loyalty Pyramid

The Customer Loyalty Pyramid

The Customer Loyalty Pyramid

The Customer Loyalty Pyramid

Synopsis

The vast majority of American companies have little awareness or knowledge of how their organizations must change strategically to improve their customers' loyalty and assessment of value. As customers increasingly perceive a sameness of products and services among companies, an intense focus on customer retention and lifetime value will differentiate successful organizations from others. Lowenstein develops concepts and approaches that enable company executives, managers, and staff to create a dynamic, proactive corporate commitment to customer advocacy and loyalty.

Excerpt

In the report of recent jointly sponsored customer relationship management evaluation project by the Society of Consumer Affairs Professionals (SOCAP) and Maritz Marketing Research, Inc., Rick Cottrell of Maritz wrote:

Today's marketplace contains a high level of product/service undifferentiation which will become more complex as a result of quality initiative maturity, increasingly educated consumers, and competitiveness for market share from both a domestic and international standpoint.

[I]ndustries are beginning to understand the concept that their customers, the ones who purchase their products and use their services, are the primary drivers of their position on the profitability ladder. It is also becoming widely known . . . that the support of the customer requires a complex infrastructure. This infrastructure should not only design, produce, and distribute a product or service which can be used by the customer without fear of defect, it should also contain a mechanism whereby the customer is effectively supported.

Unfortunately, companies that solely implement a reactive support infrastructure are only succeeding in the race to become status quo with their customers in terms of understanding expectations and perceptions which impact loyalty.

The other key concern within the reactive mechanism is the fact that it is an exception-based process, meaning it is targeted (only) toward dissatisfied or highly motivated customers. Therefore, maximal impact in terms of customer retention is limited because it is questionable whether any remedial action can impact loyalty in this group. Also, due to the small number of customers in this group, it is questionable whether significant change in overall profitability can occur.

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