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Question: What are the loyalty programs to influence customer satisfaction in organization?

Loyalty Programs- Influence of on Customer Satisfaction

Every company aims at profitability and customer satisfaction through its products or services. While profitability can be easily measured in terms of profit figures, satisfaction is intangible and is relatively difficult to measure. Satisfaction can be defined as a customer’s actual experience of a product or a value delivered by a service vis-a-vis his expectations or perceived value of the product. Companies have been developing new ways to improve products and services to increase customer satisfaction. Effective marketing can attract the non-users towards the product but it is the actual experience which gets the customer to make a repeat purchase of the same brand and avoid drifting towards more attractive offers or product promises. Repeat purchase or customer loyalty is treated as the most reliable benchmark of customer satisfaction. Loyalty is defined as a deeply held commitment to re-buy a preferred brand or service in the future in spite of situational influences and marketing efforts having the potential to cause switching behavior. Some of the leading brands of the world have realized the effect of loyalty on profitability and have created exceptional customer oriented value delivery systems to promote and reward loyalty.

Loyalty towards a product or a service is driven by the value proposition which includes enhanced benefits other than the core product offering. Value proposition is the promise of the overall experience or a feel good factor a customer can expect while using the brand and not just satisfying their need to use the particular product. Customer loyalty by creating a delightful atmosphere at the place of purchase or service has been the principle of most of the small local businesses. But the infusion of technology into businesses has taken the loyalty programs to new heights and eliminated geographical boundaries. Companies can now deploy technologies such as smart cards and data mining to collate customer purchase behavior and preferences and analyze them to create a more customized and fulfilling experience. Some of the industries that are extensively using loyalty programs worldwide are aviation, retail chains, hospitality and mobiles or telecommunications. Listed below are some of the world’s best designed and most preferred loyalty programs:

•  Marriot Hotels and Resorts- “Marriot Rewards”, exclusive loyalty program of Marriot hotels and resorts is one of the most preferred and acclaimed programs in the global hospitality industry. Marriot Rewards gives its members highly personalized services in its 3600 hotels in 70 countries and rewards the customers by giving additional benefits such as reward points or miles earned on every stay and discounts on card rates. The program has three levels viz. Silver, Gold and Platinum elite and the benefits become more lucrative in the upper hierarchy of the program.
• Nokia Mobiles – Nokia mobiles offer all their customers free membership of their “Club Nokia” loyalty program on the purchase of Nokia product. The membership offers quick and effective customer support system via website, careline or their dedicated service points, personalized information about registered Nokia products, downloading digital content using the reward points and information about latest Nokia products and services.
• American Airlines- American Airlines’ AAdvantage is the one of the world’s largest loyalty programs. The program offers air miles to be earned by flying American Airlines and associates to about 950 destinations around the world and earn rewards points for purchases made at more than 1000 participating companies, travel or non-travel. The reward points can be redeemed for air tickets, car rentals, hotel stays and retail products.
• ADCB– ADCB’s Islamic Banking Privilege Club in Dubai offers its members preferred services at all its branches such as dedicated relationship manager and offers complementary benefits in entertainment and lifestyle. It also offers free Islamic insurance to its members and family.

These examples show total commitment of the companies to provide value-added benefits to the customers along with a flawless core product. An enhanced offering creates a sense of being privileged amongst the customers and elevates their preference for the brand. However, the quality and consistency of the core product drives whole cycle of repeat purchases or brand loyalties. For example, when a customer wants a sturdy and fuel efficient SUV, he will be delighted to have on-road assistance and  advanced interiors as value-added services but he may not compromise on his basic need of the product i.e. sturdiness and fuel efficiency. Loyalty status is usually measured at four levels viz. hard-core loyals, split loyals, shifting loyals and switchers. Hard-core loyals give a clear indication of a product’s strengths while split loyals point towards the closest competitors. Split loyals and shifting loyals should be studied to see what drives them to other brands and which indirectly point towards areas of improvement. Companies should evaluate and improve upon core product competency and create a fundamental value-delivery system to make the customer prefer the brand in spite of better offerings such as lower price.

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