The rise of web-based access to product information, reviews and prices has meant that you are more likely to see your customers becoming less and less loyal to your specific brands or products. Their freedom of choice is something you can actually benefit from.
Its true that regular customer/market research surveys can pick up on the buying behaviors of your customers.
However, the advent of specialist customer loyalty research can actually bridge an essential gap in current research & business processes. That is, trying to use research to understand how to retain the loyalty of your existing customers.
This research then forms a fundamental part of your business development strategy and promotion techniques.
3 questions that customer loyalty research attempt to answer
Loyalty research tries to answer three specific questions relating to your customers:
- Why do customers buy your product in the first place?
- What is it that keeps your customers returning to purchase the brand/product?
- Why do they defect to other brands?
- What customer retention strategies will work for you in the future?
How it helps you build customer loyalty
The real benefit of this type of loyalty research is that a huge amount of statistics and data can be established on customer loyalty to actually pinpoint what demographics, behaviors and attitudes affect their loyalty to a product.
In some cases it can simply be that there are no barriers or switching costs to changing products (e.g. washing up liquid brands). In other situations there may be a critical price point which can lead customers to stray (your online customer service software and feedback utilities should be tracking this information for you).
Strategic leadership decisions then need to be made about what are the most profitable business opportunities and promotional techniques are for your product range.
The fundamentals of customer loyalty research
One of the key elements for your research is the fact that it cannot be purely analyzed on one dimension. There are in fact several axes of research which need to be done. These relate to demographics, behavior patterns and attitudes:
- Demographics play a big part in the buying & loyalty patterns of individuals. Younger individuals can be more prone to switching brands or products quite easily even when there are various customer loyalty rewards being offered (i.e. they feel no compunction to stay with one brand). With enough research you can establish customer loyalty schemes which target specific demographic sectors through your advertising and your choice of promotions. For example, using radio advertisements to target older customers.
- Behavioral patterns form a key part of customer loyalty research since ingrained purchasing behaviors are built up over years. These can often be traced back to family purchasing decisions, as well as sales channel choices. For example, products such as milk, bread, CDs and flowers are often popular when sold at gas stations where the individual’s inbuilt behavior is to only purchasing essentials from these outlets (where selling luxury goods would be pointless due to buying behavior).
- Attitudinal factors are built up as a result of the persons buying experience as well as initial experiences of using products. Take for example the world of dentistry where receiving a comprehensive initial exam from a dentist can massively increase the amount of repeat business and loyalty practice can expect from the patient’s based on their first good impression of (attitude toward) the service.
The goals of customer loyalty research
The real objective of loyalty research is to establish the drivers behind a customer’s loyalty and then prioritizing the types of investments you make based on this research.
Once you understand what the customers driving behaviors and attitudes are behind their purchases and loyalty triggers toward a product you can then begin to nurture this by using effective customer loyalty schemes which try to target capital investment into sure-fire winning schemes.
These schemes can be prioritized based on targeting specific demographics or customer behaviors.
For example, you could try to build customer loyalty on an e-commerce site if your loyalty research pinpointed the main drivers where the opportunities of weekly bulk-purchase offers. These types of customer loyalty rewards often offer two or three products at a reduced cost to existing customers.
Repeat purchases on such customer loyalty schemes will often be identified where complementary products are teamed together in special offers. You could even build a product roadmap based completely around these types of drivers.