White paper explains the new Six P's of customer loyalty

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By: Wise Marketer Staff |

Posted on February 23, 2006

Until the last couple of decades, true customer loyalty was usually achieved by delivering consistently good, personal service. But loyalty programmes have become necessary due to vast customer bases and market sizes, according to The Allegiant Group, which has published a new white paper examining how these programmes can continue to influence consumer behaviour and loyalty.

In the past there wasn't the plethora of product choices that exist today, nor was price always a major factor in consumers' purchasing decisions. But over time, as competition increased, product and pricing became increasingly important to consumers. By the late 20th century, the increasing size of retail stores made it challenging - if not impossible - for retailers to know customers personally. And that is why customer loyalty programmes have become so prevalent today.

Will loyalty stay effective?
But, with a proliferation of loyalty programmes in place, and more being introduced around the world every day, can these programmes can continue to affect customer loyalty to the degree the sponsoring companies are counting on? The answer has to be 'yes'. A single digit percentage increase in customer loyalty could potentially drive double digit percentage increases in profitability, and customer loyalty leaders have already proved to be growth leaders in their sectors and categories.

Adding to the four P's
The Four P's of Marketing is a long established management paradigm focusing on Product, Price, Place and Promotion. This principal has served companies well for decades, but it is an incomplete set of variables for the 21st century marketplace, Allegiant's white paper says. While there could be arguments for any number of P's to manage, the paper's author suggests adding two:

  • People - and how they affect customer loyalty - are an increasingly important part of the marketing mix;
  • Performance of the entire enterprise (and its quality and consistency therein) in delivering the product or service in a manner that evokes loyalty and repeat purchases.

Critical success factors
Critical success factors in the development and management of successful loyalty initiatives are strategy and economics, the features and benefits offered by the programme, the methodology of the reward component, and the metrics and measurements used to track the effect of the programme on the customer and enterprise. It is also worthwhile to have in place a means of tracking and reporting the "voice of the customer" (e.g. their opinions, requests, queries, feelings, comments, compliments, complaints, and other feedback).

The white paper suggests not all companies are good candidates for loyalty programmes and that, in many instances, such programmes are only a small piece of the overall 'loyalty puzzle'. But whether a loyalty programme is launched or not, it will be the organisation's execution - and success of managing the Six P's - that will be the predominant factors behind its success.

The full white paper is available as a free download from The Wise Marketer (as a PDF document - 209Kb) by kind permission of The Allegiant Group Inc. - click here.

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