Building a Relationship/Loyalty System

Summary Customer loyalty is the ultimate driver of business profitability, but loyalty is only given where it is earned. Loyalty accompanies change in strategy and process. Companies must change from mass marketing to a focus on the customer as an individual, and to earn the loyalty of customers must offer them demonstrably superior value. Customers will give their loyalty in exchange for more value. Companies must change from hierarchical organisations divided by function to teams based on customers and designed to manage process. The added values that earn customer loyalty, moreover, cannot consist exclusively of tangible incentives unrelated to product or service. To differentiate their products and justify their premium pricing, companies must build on and revitalise their brand values by adding a relationship dimension. Through closer relationships with customers, companies can express their brand personalities through their people, and involve customers more closely in their products and marketing. To build these relationships the company must simultaneously earn the loyalty of its staff, and motivate them to volunteer added values to customers. In a report on new flexible manufacturing organisation, The Economist comments: ‘After 80 years of me-too mass production, consumers are once again demanding infinite variety.’1 To earn their loyalty, marketing must be designed around customers as individuals and offer the same ‘infinite variety’. Companies must not mistake loyalty marketing as another mass activity — and the ‘reward’ system in the ‘loyalty’ agenda below is thus just one element of a total relationship strategy.