Customer Loyalty and Cross Selling

Introduction:

Customer loyalty is the outcome of customersatisfaction. So, there is a core relationshipbetween these two very important and basicmarketing terms. To enjoy customer loyalty we mustensure customer satisfaction. Customer satisfactionis a complicated issue. The taste and needs variesfrom customer to customer. A customer may bedelighted by you but he might not be a loyalcustomer. On the other hand a customer may not bedelighted but in the long run he might be a loyalcustomer. It is something which differs. But it wecan follow some rules. A customer’s ordinaryrequirement may be fulfilled by you but it mightnot make him a loyal one. You must provide himlittle bit more which will impress him a lot andwill create a general customer a loyal customer. Itis highly affected by a company’s after salesservice of any good or service. So, it possessesimmense importance. At first any customer wants toget the right things. So, we should ensure it byproviding the same goods or services. Then it isour desire to hold him for future. But it is thehardest job. The main drawback is lack of propersalesmanship. Companies often select low paidunskilled salesmen. So, It affects company’sachieving of targets.

There are another peculiar issue. Customer loyaltysometimes may not affect the profitability. Thecost involved to create loyal customer base and to

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uphold their satisfaction may be equal or greaterthan the gain from them. We should keep it in ourmind that customers are not unaware about theissues. So, they are active to take the advantageof the company’s motto. So, any company can takethe strategy of ignoring customer loyalty. Itdepends on how they will play in the field. Everycompany has its own strategy. So, we consider allthe issues. May be, in practice, accompany with aloyal customer base is lagging behind a companywithout the same. It depends on how to handle it.If fails any strategy can be a sabotage for anyone.

Customer Satisfaction & Customer Loyalty:

Customer satisfaction is one of the mostcomplicated issues in the world of marketing. Everycompany wants to satisfy its customers. But it isvery hard to be sure that the customers aresatisfied. It can be measured from the behaviors ofcustomers. Providing more may sometime dissatisfythe customer due to their suspicion. There may bearisen a question – Why company is providing memore? On the other hand providing less may annoyedhim a lot. So, the company is in a dilemma. In thiscase it is company’s strategy how to manage thesetypes of issues.

At first company should know his customer well.Company should realize the needs of the customers.Company should fulfill customer’s requirement insuch a way where customers’ utmost satisfaction isconfirmed. It might be ensured from the very

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beginning of a product which starts from R&DDivision. At the time of designing a product orplanning a service it must be kept in mind the saidthing will be user friendly. Otherwise all theattempts will be turned into null and void. Nocustomer will be satisfied with a worst productpresented it to him in a best way. So, company’sresponsibility is not to provide the highestquality products but to keep pace with thecustomers’ needs. Needs may be considered as toprovide a suitable product compatible withcustomers ability.

We previously mentioned that customers’satisfaction may be outlined through customers’behaviors. The flow chart presented below shows thefactors influenced customers’ satisfaction andultimately create behavioral intention.

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Organogram : Factors affect customer satisfaction and ultimate behavioral intention

Now, we will present below another flowchart whichshows post-purchase factors which affects ultimatecommitted customers. From this organogram we canshow that there are many outcomes which we can getin fine. So, what we mention earlier that customersatisfaction may always not create loyal customersis nothing but a reality.

So, we have found that customers’ satisfaction mayor may not create loyal customers. If it works, how

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Organogram : Post purchase consumerbehavior

they will behave. Before further discussion I wantto mention again “Customer satisfaction is not agood indicator of customer behavior.”

But, in general, we can say that satisfiedcustomers have a great chance to be loyal. If theybecome loyal there are naturally show somebehaviors. Now, we will present below a list ofbehaviors which loyal customers often show.

1. A loyal customer comes back.2. A loyal customer buys more.3. A loyal customer buys your premium items, yourhigher priced or higher value offers.4. A loyal customer is more likely to refer orrecommend you.5. A loyal customer is not only likely to, butactually does make recommendations.6. A loyal customer speaks highly about you inpublic spaces.7. A loyal customer defends you when you are underattack.8. A loyal customer gives you constructive feedbackwhen you fall or fail.9. A loyal customer offers competitive intelligenceand insight.10. A loyal customer treats your staff and companywith respect.

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Customer Loyalty and Profitability:

Customer loyalty has two types of effects. One isshort-term effect and the other is long termeffect. The short term effect is on theprofitability and the long term effect is on thestability of the company. Most of the famous andfinancially successful companies have a loyalcustomer base.

Now we will analyze some data collected from themarket survey. It will prove our claim that veryoften loyal customers have an ultimate positiveeffect on the survivor of the company.

For our analysis, we are using some data of ananonymous company and graphical analysis of whichare presented below to get some picturesque.

The company, in our hand, is a banking company. So,one of the main indicators of such a type ofcompany is no. of accounts. We previously mentionedthat the first and foremost characteristic of aloyal customer is “A loyal customer comes back.”So, it may be considered that, for a bank, loyalcustomers stay long and open various accountswithin the same bank. So, the number of accountsaccording to seniority can prove many things.Besides, the no. of accounts maintained by theseniors can also prove the same claim in anothercriterion. Two below-mentioned tables help us toget our analysis.

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Duration No. ofAccounts(

%)0 5

1-5 105-10 2010-15 3015 -above

35

100

Table - 1: Data regarding seniority and no. ofaccounts

Relationship betw een seniority and no. of accounts

0510152025303540

0 1 to 5 5 to 10 10 to 15 15 - aboveDuration (Years)

No. o

f Accou

nts (%

)

Series1

Chart – 1: Relationship between seniority and no.of accounts

Duration Profit

(%)0 7

1-5 85-10 2010-15 25

7

15 -above

40

100

Table-2 : Data regarding Seniority andprofitability.

Relationship betw een Seniority and Profitability

0

10

20

30

40

50

0 1 to 5 5 to 10 10 to 15 15 - aboveDuration (Years)

Profitability (%

)

Series1

Chart – 2: Relationship between seniority andProfitability

Conclusion:

Though there is a deep and tested relationshipbetween customers’ satisfaction and customers’loyalty but customers’ satisfaction can not alwaysensure customers’ loyalty. Having all thecontradictions, we are in a firm decision that acompany is in need of a loyal customer base inorder to protect its profitability andsustainability.

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Cross Selling:

Cross selling is, now a days, a commonly used term in themarketing arena. The products or services, whatever it is,actually, selling is the main motto of any company. To sellproducts to already existing customers can be defined ascross selling. It happens due to existence of competitors inthe market. They are also engaging a good portion ofcustomers. So, the volume of customers as well as selling isnot up to the target.

Besides company is on a target of increasing of selling aswell as maximization of profit. So, they are trying to sellmore and more. That is why cross selling is very important.This picture can explain cross selling at a glance.

Now a day cross selling is widelyused in a different way. Some timesit is called up selling due to somedifferent characteristics. But themotto and technique is same. For upselling vendors provide costly itemsonly. In practice, as time changes, naturally updatedproducts possess extra features. So, in general becomehigher. So, in many senses, cross selling and up selling arelikely the same.

Cautions regarding cross selling:

Cross selling succeeds when it apply carefully. Otherwise itmay backfire. The ignorance of salesmen, the over botchingby the colleagues may create irritation to the customers.So, companies should be very careful at the time of applyingthis marketing tool. Company should arrange training coursesfor its sales personnel on this issue in order make it asuccessful drive.

Cross selling and profitability:

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Cross selling may or may not affect the profitabilityalways. Whatever it may be, it has a great impact on thelong term goal of a company. Cross selling minimizes thecost of marketing at a significant level. The most importantthing is it also minimizes the chance of switching over ofcustomers. When the need of customers is fulfilled by thesame vendors so, what is the necessity of switching?Customers are also aware of the cost of switching. So, whencross selling happens then customers switching over chanceare minimized.

A common example can be presented here for our purpose. Tosell a debit card to an account holder may not add a lot fora bank. But it is quite enough to impress a customer at asignificant level. It is nothing but the question of thestatus of a bank as well as it nothing but a prestige issuefor a customer. Its convenient needs not to be mentionedbecause we all are aware that how much important a debitcard is. So, we are in a good position to say that crossselling works in any way.

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Conclusion:

Cross selling, in no way, can not be ignored. It exists andwill exist. So, companies are in need of taking measures inthis respect. If fails it can create drawback of a company.To survive in such a competitive marketing world companiesare in need of availing trifle chances. So, such a greattools like cross selling or up selling must be used. Butproper care should be taken.

:The End:

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