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Keeping customers

Updated Thursday, 2nd February 2006

As corporations spread beyond national boundaries, how can you keep all your customers happy - wherever they are?

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Customer loyalty card Copyrighted  image Icon Copyright: Tesco Universal themes for global advertising

One of the expected advantages of globalisation – global positioning and advertising – has not proved to be attainable on the scale anticipated. Even where it has been possible to position a product or service on an international basis, real difficulties have been encountered with cross-border advertising.

 

There are two reasons for this. First, the communications infrastructure and technology are not the same in all countries. For example, toll-free telephone numbers are widely used for direct response marketing, but these are not available in all countries.

Similarly, e-mail and Internet addresses are increasingly popular, but the level of access to personal computers varies widely between countries Where literacy is low, broadcast media are more popular than print, and where income levels are low, radio plays a more important role.

The second reason again relates to cultural differences between countries. Although there are some potential advantages from standardised advertising, most professionals believe that advertising is the most difficult marketing element to standardise, and that culture is all-pervasive.

Culture is believed to influence advertising in four ways: choice of the advertising theme; connotation of words and symbols; interpretation of pictorial conventions; and media selection. In the context of consumer behaviour, some products are more culture-bound than others.

So it is easier to standardise the advertising of products that touch on universal emotional themes, such as beauty, love and fear, and which transcend cultural boundaries. Therefore, standardised advertising can be used for perfume but not for women’s clothing, which is highly culture-specific

Relationship Marketing

Marketing as the process of managing the mix of product, price, place and promotion was well suited to the era of mass production. As market-place power shifted from the supplier to the customer, however, the philosophy of marketing as a series of transactions was seen to be inadequate.

A more personalised approach was needed, to reflect this shift in power, and relationship marketing was born. Its advocates claim that it represents a new marketing paradigm. This is not entirely correct – there are many marketing transactions that are not suited to a relationship approach – but in the key areas of business-to-business and consumer marketing the relationship approach has transformed marketing practice.

Within consumer markets, we have seen a massive growth since the early 1990s of relationship-inducing tactics such as loyalty schemes, customer care/opinion/help lines, forums on corporate websites, targeted mail, corporate magazines, and owners’ clubs. The growth has been so extensive for many of these tactics that in the UK some corporate magazines exceed the circulation figures of many established magazine titles.

Many people belong to at least one loyalty scheme and most major retailers run some form of loyalty scheme. Although such schemes are not a new concept, their scale and prevalence have increased dramatically in just a few years across several industries.

There are several aims to such schemes, one of which is to increase the attractiveness of being loyal to an organisation. To achieve this, customers are rewarded for their loyalty and the information they provide about their lifestyles and purchasing habits. Unlike ad hoc sales promotions, where customers tend to revert to their pre-promotion behaviour, these schemes aim to ‘lock’ customers in.

Increasing repeat purchase loyalty can allow the formation of closer relationships with customers as the firm becomes more knowledgeable about consumer needs and wants. This can ultimately lead to increased customer satisfaction and reduced costs for the organisation. Additional benefits to organisations include protection from competition by the scheme acting as another barrier to entry to the market and an increased certainty of future income through loyalty, which may have shareholder value.

Debate within the UK marketing press has speculated about the consequences of supermarkets withdrawing their loyalty schemes. Some commentators have suggested that if one of the two largest retailers withdrew their schemes they would face loss of market share. An opposing opinion is that the huge cost of running the schemes would be removed and savings passed directly on to consumers, which would have a more profound effect on loyalty in the current value-conscious market. Loyalty schemes cost millions to implement and so present a financial barrier for new entrants to the market or smaller organisations.

 

 

Valentine's cards in shop Negative relationships

 

Some relationship-building tactics have been heavily criticised for destroying relationships rather than building them. Indeed, not all relationships are positive and some are forced against the will of the consumer. Negative relationships can happen because of situations such as a limited availability of the product or service due to a monopoly market or convenience for the customer where alternatives are not feasible. In a classification of relationship marketing, one category can be described as ‘pseudo relationships’. In other words, this is not a true relationship and none of the characteristics of a relationship are present.

Many organisations miss the point about relationship marketing and seek simply to lock customers into loyal behaviour without considering what actually constitutes a relationship. This can mean that the only relationships they should expect to build, at best, are pseudo relationships. For instance, a dog owner may take always their pet to the same veterinary surgery. The owner may not in fact consider themselves loyal to the practice or even be totally satisfied. However, because of factors such as the convenient location or an ongoing course of treatment, the owners keep their pet registered with the practice.

Pseudo relationships exist because of barriers to exit, social bonds and switching costs established by the organisation. In many cases, it can also be questioned whether customers’ loyalty is to the firm or to a scheme. This has implications for assessing consumers’ attitudes and opinions where loyalty may be wrongly construed to represent satisfaction or a positive disposition when, in reality, it is merely a consequence of rational economic behaviour.

There are two types of loyalty: true long-term loyalty, and false loyalty. False loyalty is attained by having barriers to exit such as high switching costs, government regulations, proprietary technology and loyalty programmes. They argue that once customers are in a position where they are free to choose or where there are no longer barriers to exit, only ‘totally satisfied’ and not ‘merely satisfied’ customers will remain. Therefore, current loyalty does not necessarily imply commitment to future loyalty.

Relationship marketing frequently uses metaphors to explain interactions between a firm and its relationship partners – such as the friendship metaphor outlined above. These usually tend to take the form of interpersonal relationships, particularly love and marriage.

However, it could be argued that the marriage metaphor has outlived its usefulness and that in the real world human relationships can be dysfunctional and so metaphors for relationship marketing should include stalking, rape, prostitution, polygamy and seduction to describe the full range of relationships between an organisation and its customers. The customers’ perception of the relationship they have with a company or brand is not necessarily positive and the efforts of a relational programme do not necessarily lead to true loyalty.

Relationships between customers and companies are often troubled: customers can feel confused and stressed because of an insensitive and manipulative market-place where they feel trapped and victimised. The massive increase in targeted direct mail or phone calls as a means of building a personalised relationship has led to customer backlashes, where individuals may be concerned about how organisations have obtained their details and as a result can become alienated from the firm that is trying to attract them. Sometimes, details are obtained not only from database-building agencies but also from the sale of customer databases by companies with whom the individual has had contact.

Legislation varies between countries regarding the use and sale of customer details. Some countries are regulated by government or through self-regulatory trade associations (such as the Direct Marketing Association in the UK). Generally, however, the onus is on the consumer to indicate if they do not want their details forwarded or sold. This option is usually ‘in the small print’ at the end of contracts, loyalty scheme applications, orders and customer detail forms. Consumers can often opt out of receiving unsolicited mail and telephone calls although, interestingly, relatively few do.

Personality in relationships

A brand team can decide on a specific personality to represent the brand. This symbolic feature is about bringing the brand’s values to life through association with a personality or a lifestyle. If this is successfully enacted, it should help consumers select the firm’s brand since it represents values that are important to consumers.

The response of the consumer’s peer group to the consumer when they buy or use the brand gives a much clearer meaning to the brand. A classic example of this is how a consultant, when alone, might pay for lunch using their NatWest Mastercard because of the air miles this credit card offers. Yet, when the same consultant is paying for dinner with a Valentine date they want to impress, they use their Jaguar Visa credit card.

Thus, even though clear ideas emerge about a suitable personality from such an exercise, once a communications programme has been devised to associate the brand with a personality, research is then needed to appreciate how consumers have negotiated and constructed a meaning for the brand. If necessary, changes may be made to the communications programme so that the desired brand personality is recognised, and consumer interactions result in endorsements. A good example of this is the way Interflora developed its brand around the value of personal love and used communications programmes to show loving appreciation as flowers were given in different situations, which always evoked a positive endorsement.

About this article

This article is taken from the Open University Business School course Marketing in a Complex World (B825).

 

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