Research Articles Base: Loyalty Marketing For Airlines

What are the essences to loyalty marketing for airlines?

What are the essences to loyalty marketing for airlines? Crosby and Johnson (2004), in American Marketing Association’s Marketing Management, talked about one of their clients discovering that, through repurchasing and cross-selling opportunities, a mere 1% increase in its customer loyalty index could increase the revenue by as much as 5%.  Indisputably, customer loyalty is an intangible corporate asset.  Numerous research studies have pointed to the same fact that – an increase in customer loyalty can increase profitability.  It is commonly accepted that the creation of loyal customers is the key to achieving consistently above-normal market performance.  Remember, satisfied customers are not necessarily loyal ones.  Consumer inertia and lack of choice in the market are often reasons why they are attached to a brand.   Before one could start manage this intangible corporate asset (i.e. customer loyalty), one must be able to identify and understand the causal relationship (i.e. cause-and-effect) between its brand and its customers: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal"> What are the touch points and attributes affecting customer attitudes and behaviors (attempts to rule out customers who are attached to the brand merely due to inertia)? </li> <li class="MsoNormal"> What are the customers looking for in the products or services offered? </li> <li class="MsoNormal"> How do these touch points and attributes influence vary over the different life stage of the customer relationship?  Among different customer segments? </li> <li class="MsoNormal"> How can we influence these touch points and attributes? </li> <li class="MsoNormal"> What is loyalty?  Repurchase, recommendation, sole source? </li> </ul> In causal relationship i.e. from various touch points to loyalty, there is a chain of effects attributes by different variables. Apart from the above, marketers should also dig deeper into the role of emotions in order to fully understand the causal relationship and map a holistic landscape on customer loyalty.  Behaviors, including purchase, are motivated by emotions.  Emotions, motivations, motions as well as rational interact with one another.  For instance, consumers are motivated to purchase if an emotional connection is established with the brand’s promise.  This rests with the emotional ability of consumers to grasp the benefits projected by a brand.   Strategically speaking, there are three-M’s to the architecture of customer loyalty (Crosby and Johnson, 2004): Measure, Manage and Model – which help devise strategies for segmentation, distribution, pricing, positioning, communications etc.    Measurement – many companies are now adopting a simplified measurement on customer loyalty, some are now advocating surveys composed of only one or a few questions to assess the strength of customer relationships and provide direction and indication on how they might be approved.  However this is like diagnosing the reasons behind a fever simply by taking the patience’s temperature.  Customer loyalty is too complex to be measured by a single measure.  Customer loyalty is known to manifest itself in numerous ways, which all have economic consequences for the company including repurchase, recommend, sole source, etc. Measurement progress in the social sciences that multi-item indices tend to outperform single question indicators in terms of reliability and validity.   A survey is done recently by Wharton School of the University of Pennsylvania, it shows that most companies have made little effort to identify areas of non-financial performance, e.g. customer loyalty, that might advance their chosen strategy.  Many companies avoid measuring such areas as they are hard to measure. Measurement, although hard to perform, is a critical enabler to performance.  Research was done to discern differences among companies that used strategic measurement to manage performance and those that did not found that measurement-managed organizations have much stronger results than other organizations: 1) about 83% of measurement-managed companies are in the top third of their industry vs. 52% for non-measurement-managed companies; 2) about 80% of measurement-managed companies realize a three-year positive return on investments vs. 45% for non-measurement-managed companies. Right measures also critical.  Customer measures must be in sync with your company vision, mission and strategy.  This will help ensure alignment in the organization and a common focus on your strategy.     In order to maximize profitability, organization must align activities (e.g. advertising, communications, call centre, front line etc.) to the customer loyalty causal factors.  A consumer-centric organization can ensure cross-functional alignment to the customer loyalty priorities.  For instance, marketing, engineering, procurement, human resources and finance teams must get together to discuss and decide on the optimization of the company’s resources in order to achieve customer loyalty.     Credit:ivythesis.typepad.com

What are the essences to loyalty marketing for airlines?

What are the essences to loyalty marketing for airlines? Crosby and Johnson (2004), in American Marketing Association’s Marketing Manage...