Practical Application: Analyzing Customer Loyalty Factors

Instructor: Scott Tuning

Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.

Customer loyalty is important for many reasons, not the least of which is that keeping a current customer is often a better business decision than trying to capture a new one. However, not all business leaders understand what makes customers loyal.

Customers and Loyalty

Existing and potential customers are often unaware of the specific reasons they choose one brand over another or one product over another. In fact, not only do people often fail to identify the real reasons for their choices, they often believe that they choose a particular brand for a different reason than is actually the case. When a business is trying to build customer loyalty, the ultimate goal is to influence both the conscious and subconscious reasons that a particular customer might make a brand choice.

After you review the content in the lesson Factors that Influence Brand Loyalty, read the scenario below and answer some associated questions.

Less Can Be More

Creek Harbor Village was a great little town. Forty years ago, it was an hour away from the big city. Now the city's suburbs had sprawled unbroken along the entire 50 miles of highway. With the growth came new players in nearly every industry and sector. Jim's hardware store was no exception. Until about ten years ago, Jim owned the only hardware gig in town. His customers were nearly all local, and loyalty was equal parts ''I like Jim'' and ''There isn't anyone else in town'' that sold hardware. That wasn't the case anymore.

Two big-box hardware stores were built within 10 miles of Jim's Hardware Emporium, and that was a problem. Jim may have been small town, but he was smart. He knew he could never win if he went head-to-head with the major players in price or selection. But he also knew that he could secure customer loyalty via other means.

Jim set up a meeting with all his employees to explain that they would not let higher prices or smaller selections be the undoing of Jim's Hardware Emporium. To help his employees understand what he wanted to see them do to retain customer loyalty, he asked a real customer to join his staff during the meeting. In front of the employees, Jim asked the customer, ''If we can't offer you the biggest selection or the lowest price, what could we do to make your experience in this store so amazing that you wouldn't dream of going anywhere else for your hardware?''

  • How do you think the customer answered this question?
  • With the already-identified issues related to price and selection, does Jim's Hardware Emporium face other serious customer loyalty concerns?
  • If so, what are they and how can they be managed?

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