The relationships between companies and their key stakeholders are not static. They are time sensitive and driven by current circumstances. Relationship building is a long-term process. In today’s marketplace, to expect a customer to be totally committed to one supplier of a product or service is unreasonable and unrealistic. The challenge for any organization is to reduce the number of times one of their key stakeholders tries the products or services offered by the competition.
The relationships between a company and customers take time to build. It cannot be done overnight. It is usually based on a sequence of events that must all be in place for a solid relationship to exist. These sequences and series of stages are often represented in terms of a relationship ladder or ladder of loyalty.
The loyalty ladder is a tool for marketing communicators. The idea is that consumers can be moved along a continuum of loyalty using a number of integrated marketing communications techniques (it is also referred to as a branding ladder). Essentially, consumers become loyal to a brand that has meaning to them in relation to a product, service, solution or experience.
The ladder of customer loyalty talks about the different types of customers that the company encounters. As with continuums of behaviour such as UACCA—Unawareness, Awareness, Comprehension, Conviction, Action, or AIDA—Awareness, Interest, Desire, Action. The loyalty ladder begins from a point where the consumer has not yet purchased the good. He or she then buys the product for the first time. If the trial has been a success, he or she returns to buy it again and again and finally the consumer buys no other brand. Figure 15.4 shows that there are eight identifiable steps in the development of a long-term customer relationship. These steps are discussed below:
The first step begins with deciding the target market segment. Suspects are aware of the company and its products or services. However, they do not have a clear message about the brand, its promise and its values. The company needs to build the brand value and its promise in the mind of the suspect customer. The company organizes awareness and brand building activities to make the market aware of it and its products.
The prospect is an individual in a retail market or an organization in the business market who fulfils the requirements of the marketers’ definition of the target. The prospect will be on the verge of making the first purchase. They have accepted the invitation of the brand—its promise and its values—and it is important that the company delivers on consumer expectations to convert the prospect to a customer.
The prospect becomes a buyer when he or she gets attracted by the offering of the marketer and buys the product/service. They have started to identify some preferences in their purchasing patterns in relation to the company. The organization must customize its offerings as per the buyer’s buying patterns. The organization must deliver on its promises to retain the buyer.
A customer is someone who purchases the product or service. The relationship is now well established and on relatively firm footing. The customer has clearly demonstrated that they
prefer the company’s products or services to those of the company’s competitors. Relationship marketing activity should focus on delivering products and services that meet the brand promise, and deliver exceptional value for money.
5. Frequent Customer
Frequent customers have almost cemented their relationship with the organization. The customer selects the company as a supplier of choice and the company occupies a significant place in the customer portfolio.
6. Loyal Customer
The loyal customer is reluctant to switch over and has a strong positive attitude about the company and its offering. Loyal customers not only buy frequently from the organization but also have a level of emotional attachment to the organization and its products and services that will be hard for the competitors to break with tactical offers.
A loyal customer becomes an advocate when he is satisfied with the organization’s offering, and also recommends and influences other potential customers (friends, relatives and acquaintances) to try a similar relationship with the organization. This positive word- of-mouth has a tremendous positive impact as it helps the company obtain new customers. They should be recognized and rewarded for their recommendations.
This is the final step that takes the relationship to new heights. The customer is no more a customer but a partner with the company, and they can together find ways and means to gain mutual advantages from the relationship. An advocate becomes a partner when he actively involves in the decisions of the company. Any relationship that attempts to develop customer value through partnering activities is likely to create greater bonding between customers and marketers.
There are two major phases in the ladder of loyalty. Conventional marketing, wherein the marketers’ emphasis during the first three steps in the ladder is on new customers by customer attraction, i.e. customer selection and acquisition. In the later phase of customer relationship marketing, the emphasis is on developing and enhancing relationships by customer retention and extension.
The ladder of loyalty is a useful model to help marketers highlight the differences between various types of people and help to produce appropriate communications for each. Such communication will be better received because they recognize the status of each person and deliver relevant messages. Salespersons can use the ladder to help them allocate their time, devise appropriate contact strategies for individual prospects according to their potential and decide what and how much to tell people about their product.
Source: Poornima M. Charantimath (2017), Total Quality Management, Pearson; 3rd edition.