In the Learning Activities for LP1 you were to interview thr

In the Learning Activities for LP1 you were to interview three business people.

Using the information you obtained in the interviews, answer the following questions:

Discuss the importance and characteristics of customer loyalty. If you were an owner or leader of a business, what would you do to promote customer loyalty and build successful partnerships with customers? What steps would you take to avoid losing customers?

Solution

We are living in a time where we see numerous businesses and companies opening up every day trying to woo customers in one way or the other, some do it by offering deep discounts while some through a differentiated or unique product. No matter what attracts a customer to a company or a brand the importance of holding on to that customer is something which cannot be undermined.

It is common knowledge that it is around 4 times more expensive to acquire a new customer than to keep an existing one and that is how the whole concept of customer loyalty is of so much importance these days. To make it even more impactful studies have found that a 5% increase in customer loyalty can increase the profitability of a company by 75% in the long run. One more important concept to look at before trying to retain an existing customer is to look at a metric called as customer lifetime value(CLV) which can, in turn, increase the profitability further.

Again there is the power of networking and spread of word of mouth, satisfied customer tells 9 more people about a good customer experience whereas disgruntled customers tell 22 people about their negative experiences with a brand.

In order to promote customer loyalty and promote retention the following things could be done:-