Customer loyalty is a foundation of business growth and a fundamental part of a business’ vision. It relates to businesses meeting the needs of customers through effective customer service. Customer loyalty is often associated with brand loyalty and thus customers will choose a particular brand irrespective of the price. Consequently, this translates to higher profits as businesses do not have to rely on reduced prices to attract customers. With loyal customers, a business will also reduce costs associated with aggressive marketing and sales practices to attract or replace customers (Barrier, 1996). Additionally, customer loyalty is based on approaching customers individually and producing customer specific products and services which help to establish individual business relationships. The relationships can be defined in terms of business goals in relation to aspects such as growth target and rate of return. Businesses can establish mutually defined business goals that help to streamline business practices and processes but at the same time retain the customer base.
According to Barrier (1996), a business’ biggest customers should not be assumed to be the most valuable. For instance, big customers can easily change their minds because of their perceived bargaining power and in the process threaten to terminate business exchanges. Additionally, their bargaining power can also lead to the conditioning of the business relationship based on the perspective of the big customers and dramatic or unrealistic demands may be made. In the event that a business cannot meet the demands of the customers, dramatic decisions can be made by the customers. In extreme cases, the demands of big customers could be based on aspects such as dramatic reductions in price which may pose a great threat to the future of the business.
References
Barrier, M. (1996). Building your ‘Customer Portfolio’. Nation’s Business, 84(12), 45. U.S. Chamber of Commerce.
