Ladder of Loyalty: Relationships Grow Overtime

By

Mr. Devkant Kala
Lecturer
Department of Management Studies
Uttaranchal Institute of Management
Dehradun
 

Relationships between companies and their key stakeholders are not static. They are time sensitive, driven by current circumstances. 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 marketers and customers take time to build. It cannot be done overnight. And 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 as relationship ladder or ladder of loyalty.

The ladder of customer loyalty talks about the different types of customers the company encounters. The loyalty ladder is a tool for marketing communicators. 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, then he or she buys the product for the first time, if the trial has been a success he or she returns to buy again and again and finally the consumer buys no other brand. The stages of ladder of loyalty are as follows:-

SUSPECT

There has been little or no one to one marketing activity at this point in the relationship – indeed a relationship does not exist. Suspects will be aware of the company and its products or services, but they will 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 may be undertaking some awareness and brand building activities to make the market aware of it and its products.

The relationship has just opened and is in its very early stages. The prospect is an individual in a retail market or an organization in the business market, which fulfils the requirements of the marketer's definition of target. The prospect will be on the verge of making that first purchase. They have certainly accepted the invitation of the brand- its promise and its values – and it is important the company delivers on that consumer expectation if it is to convert the prospect to a customer.

BUYER

The relationship is now progressing. The prospect becomes buyer when he or she gets attracted by the offering of the marketer and buys the product/ service. At this point in the relationship, the now buyers have started to identify some preferences in their purchasing patterns in relation to the company. This means the organization must customize its offerings as per the buyer's buying patterns.

At this stage, the relationship is still fragile and it will not take much to damage it beyond repair – remember, occasional buyers are jus testing, trying out and they may be doing the same with your competition. So treat them gently. Therefore, the organization must ensure its channels to the customer deliver a product or service that meets the expectations promised by the brand and its value.

CUSTOMER

The relationship is now well established and on relatively firm footings. The customer has clearly demonstrated they prefer company's products or services to those of company's competitors. True customers have gone beyond the first one or two (or few) purchases. They are now beginning to constantly consider the organization and its products or services in their regular purchase patterns. Many customers expect to receive special offers from their product or services providers and they expect to see added value, as they believe they are now valuable to the organization. So relationship marketing activity should focus on delivering product and service that meets the brand promise, exceptional value for money and added value, going beyond what the customer is buying.

FREQUENT CUSTOMER

The customer is now buying from the organization on a frequent basis, almost to the exclusion of the competition. Frequent customers have almost cemented their relationship with the organization. Organization is top of their preference list and they will go out of their way to buy company's products and services. These customers now have the potential to become company's most valuable – according to Pareto 20 percent of company's customer will provide 80 percent income.

LOYAL CUSTOMER

The relationship is part of both the customer's and the organization's landscape. It is important to both parties, and there is balance in the value they both attach to the relationship. Loyal customers are not only buying frequently from organization but also have a level of emotional attachment to the organization and its products and services, which will be hard for the competitors to break with tactical offers. The customer will even forgive the organization if it fails to meet expectation provided the organization then corrects its failure and apologizes to the customer.

Loyal customers often don't need constant and elaborate reminders and stimulation to buy because they are probably going to do it anyway.

ADVOCATE

A loyal customer becomes advocate when he is satisfied with the organization's offering. Customer now not only has established relationship for self, but is recommending and influencing other potential customers (his friends, relatives and acquaintances) to try similar relationship with the organization. This positive word-of-mouth has tremendous positive impact as it helps the company get new customers. They should be recognized and rewarded for their recommendations.

The organization must ensure it meets the expectations of the original and the new customer when handling the customer recommended by advocate. The advocate will feel betrayed by the organization if their expectations are not met and this will damage the relationship with the advocate. Advocate, in addition to referrals that gives increases sales, proactively works with the company to improve its products or services.

PARTNER

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.

In the ladder of loyalty, the marketer's emphasis during the first three steps in the ladder viz. suspect, prospect and customer is customer attraction while emphasis during the subsequent steps are on developing and enhancing the relationships.

The ladder of loyalty is a useful device to help marketers highlight the differences between various types of people and help to produce appropriate communications for each. Such communications 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.
 

Mr. Devkant Kala
Lecturer
Department of Management Studies
Uttaranchal Institute of Management
Dehradun
 

Source: E-mail May 6, 2008

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