The loyalty business model is a business model used in strategic management in which company resources are employed so as to increase the loyalty of customers and other stakeholders in the expectation that corporate objectives will be met or surpassed (Wikipedia). A satisfied customer will buy from our company but also from our competitors; a loyal customer will buy primarily (or exclusively) from our company (Gryna 2007).
Road map for achieving high customer loyalty (Gryna 2007)
- Continually assess customer needs and translate these needs into product improvements
- Periodically assess market standing relative to competition
- Track retention and loyalty information
- Determine the drivers of customer loyalty
- Determine the impact on profit of reducing customer defections
- Understand the impact of handling complaints on the likelihood of repurchasing (usually significant)
- Analyze complaints
- Determine the reasons for customer defections
- Present the results of loyalty analysis for action
Gryna, Chua, et al (2007), Juran's Quality Planning and Analysis, 5th Edition.