Buy custom term paper: TESCO CLUB CARD: IDENTIFY RELATIONSHIP BETWEEN CUSTOMER LOYALTY AND CUSTOMER SATISFACTION

The reasons of importance of loyalty
What motivates of business people to think seriously about improving customer loyalty? A literature overview helped to point the next trends of the business environment:
Globalization. This is perhaps one of the most dramatic trends: it is a mixed economy, culture, business traditions … this process means setting of high standarts of doing business because of high competition: regardless of where the company operates, what business is doing , what is the scope of this business, it can not do the business worse than competitors because customers will go to them …
Competition. Nowadays competition is increasing not only in local markets, it has become global. Most businesses are already competing, or soon will begin to compete with powerful multinational corporations, which have huge resources and high level management and so on.
Development of information technology. Technology, particularly the Internet, have led to the fact that consumers today are much better informed, that is an increasing market transparency. The work in such markets makes companies much more open and accountable.
The increasing role of ethics in business. Most analytics consider ethical business practices as a serious competitive recourse.
“Supersaturation markets” and “Sophisticated buyers”. The market has thousands of products, and modern consumers know hundreds of brands associated with the same type of products, and has a barrage of information about those products and brands. So what do consumers do? How to choose? Studies show that the modern consumer, making choices, wants to have a sense of the correctness of this choice, otherwise, feels a certain value, the benefits of the acquisition of a particular thing (or a particular seller). (Capizzi, & Ferguson, 2005)
Customization of demand. This is an individualization of the product, adapting it to specific customer requirements, but the consumer wants in an era of mass production to have an individual product. Examples of customized products may include cars made for individual orders, jeans made on individual standards. And if company can customize its product, it meets individual requirements of customers, and so achieves their loyalty.
Thus, the modern business environment is a serious challenge to businesses and marketers. What is an adequate response to these challenges? How to ensure not only current but also strategic profitability of business? Answers to these questions largely lie in the development of customer loyalty programs.

buy custom term paper

Customer loyalty programmes
There are two ways to retain customers. The first is to create conditions preventing customers from going to the competitor . the second – is complete customer satisfaction, which is unlikely to be tempted by low prices offered by competitors or other incentives. To implement these methods, loyalty programs are used within the relationship marketing.
Under the program, that increase customer loyalty is meant a set of actions organized in such a way as to encourage clients to be in accordance with their requirements, as well as to minimize the losses, namely, the loss in the number of customers and increase sales. Such programs are widely used in retail outlets, airlines, car rental companies, kiosks, in other words, in all sectors that offer products and services of daily use at very high unit price. (Loyalty Marketing Workshop, 2005)
Loyalty programmes allow enterprises to understand their customers better as well as to satisfy their needs and expectations (Nuttley, 2004).
The studies of loyalty programmes are held in Western countries since the last decade of the 20th century. The loyalty programmes and their effectiveness are studied in different business spheres: automobile industry, banking and financial services, airlines, retail business, telecommunication services and others (Stauss, Schmidt, Schoeler, 2005).
The underlying motive of loyalty programs is to provide customers benefits. But there are several basic steps to create a successful loyalty program: f irst to create a team for the project, and also in creating the program the whole company should be involved. In the initial phase of the loyalty program should clearly establish its purpose.
A key objective is to increase company profits, its revenue and market share. Among other important objectives – to retain customers and attract new ones, accumulating an extensive database of them and provide information support to create the opportunity to exchange information between the organization and its customers. (Benavent, Meyer-Waarden 2000)
It should be noted that one should not expect instant results. For loyalty programs should be treated rather as a powerful marketing tool intended for building a long-term relationships. The main target group of the program should be most important customers, providing a large share of the profits. Increase in the ratio is with them – is future success of the company. It is not necessary to exclude from the program less profitable or potential clients. They should also benefit from the program, but to engage them, company need to meet several other requirements.
Loyalty program built only discounts sooner or later lead to losses. It’s very simple – there is always the seller who offers cheaper goods and more discounts. And all the elementary reduced to a price war, which most likely winners will not be. Discount loyalty program should not be the main tool. They can serve as a primary attraction for customers to participate in the program. The main purpose of loyalty programs – to establish individual relationships with the client. If the client is only interested in low price, then it is likely to be able to find a product cheaper than your company. (Benavent, Meyer-Waarden 2000)

Obviously, the loyalty program should serve to improve relations with customers, and this is not always a price issue.
Different scientists are common in that all loyalty programs can be divided into two types – open and closed. Which one is more appropriate depends on the objectives of the program, the selected target audience and partial features.
Benavent, Meyer-Waarden (2000), as well as Butscher (2004), note that the introduction of the loyalty program requires more than buying the software. It requires the operational organization, which aimed to develop closer relationships with the client. The seller must obtain the location of the client and establish themselves in the position of his favourite companies in this category.
There are many ways to profit that can cover most, if not all of these costs but in any case, the cost of creating loyalty programs should not be viewed as “costs”, but rather as investments in marketing tools in today’s competition is a strategic necessity.
One of the main aspects of loyalty programs is communication within the loyalty program , that occurs in three ways: among its members, staff, financing programs of the company and the parties are not participating in it (the media and others). There are a variety of methods of marketing communications, such as magazine, covering the program, a newsletter or e-mailing, hotline, website, meeting participants and other events taking place within the program and much more. (Naumann et. Al 2001)
Information costs can be reduced, but only after the client is deeply involved in the program and demonstrated a willingness to change behavior.
Personal reference is indeed an effective strategy for increasing value of the proposal, but does not replace the very important. The proper focus of the loyalty program is the relationship between customer and brand. If the program is focused on itself, then it will not be long lasting.
The database of clients is a good weapon in skilled hands of marketing, and loyalty program is the perfect tool for collecting the necessary data about most important clients in the right amount. The database of clients with detailed and accurate information about them is now a strategic weapon capable of delivering a huge impact on the company’s success in the future. It should be well thought out about the information it should contain, how that information should be collected, which will require technical and human resources and other data processing system must provide return information to the organization so that the program, the enterprise itself and, in general, all customer service could be quickly modified. (Naumann et. Al 2001)