Customer Loyalty and Cross Selling

Introduction:

Customer loyalty is the outcome of customer satisfaction. So, there is a core relationship between these two very important and basic marketing terms. To enjoy customer loyalty we must ensure customer satisfaction. Customer satisfaction is a complicated issue. The taste and needs varies from customer to customer. A customer may be delighted by you but he might not be a loyal customer. On the other hand a customer may not be delighted but in the long run he might be a loyal customer. It is something which differs. But it we can follow some rules. A customer’s ordinary requirement may be fulfilled by you but it might not make him a loyal one. You must provide him little bit more which will impress him a lot and will create a general customer a loyal customer. It is highly affected by a company’s after sales service of any good or service. So, it possesses immense importance. At first any customer wants to get the right things. So, we should ensure it by providing the same goods or services.  Then it is our desire to hold him for future. But it is the hardest job. The main drawback is lack of proper salesmanship. Companies often select low paid unskilled salesmen.  So, It affects company’s achieving of targets.

There are another peculiar issue. Customer loyalty sometimes may not affect the profitability. The cost involved to create loyal customer base and to uphold their satisfaction may be equal or greater than the gain from them. We should keep it in our mind that customers are not unaware about the issues. So, they are active to take the advantage of the company’s motto. So, any company can take the strategy of ignoring customer loyalty. It depends on how they will play in the field. Every company has its own strategy. So, we consider all the issues. May be, in practice, accompany with a loyal customer base is lagging behind a company without the same. It depends on how to handle it. If fails any strategy can be a sabotage for any one.

Customer Satisfaction & Customer Loyalty:

Customer satisfaction is one of the most complicated issues in the world of marketing. Every company wants to satisfy its customers.  But it is very hard to be sure that the customers are satisfied. It can be measured from the behaviors of customers. Providing more may sometime dissatisfy the customer due to their suspicion. There may be arisen a question – Why company is providing me more? On the other hand providing less may annoyed him a lot. So, the company is in a dilemma. In this case it is company’s strategy how to manage these types of issues.

At first company should know his customer well. Company should realize the needs of the customers. Company should fulfill customer’s requirement in such a way where customers’ utmost satisfaction is confirmed. It might be ensured from the very beginning of a product which starts from R&D Division. At the time of designing a product or planning a service it must be kept in mind the said thing will be user friendly. Otherwise all the attempts will be turned into null and void. No customer will be satisfied with a worst product presented it to him in a best way. So, company’s responsibility is not to provide the highest quality products but to keep pace with the customers’ needs. Needs may be considered as to provide a suitable product compatible with customers ability.

We previously mentioned that customers’ satisfaction may be outlined through customers’ behaviors. The flow chart presented below shows the factors influenced customers’ satisfaction and ultimately create behavioral intention.

Now, we will present below another flowchart which shows post-purchase factors which affects ultimate committed customers. From this organogram we can show that there are many outcomes which we can get in fine. So, what we mention earlier that customer satisfaction may always not create loyal customers is nothing but a reality.

 

So, we have found that customers’ satisfaction may or may not create loyal customers. If it works, how they will behave. Before further discussion I want to mention again “Customer satisfaction is not a good indicator of customer behavior.”

 

But, in general, we can say that satisfied customers have a great chance to be loyal. If they become loyal there are naturally show some behaviors. Now, we will present below a list of behaviors 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, your higher priced or higher value offers.

4. A loyal customer is more likely to refer or recommend you.

5. A loyal customer is not only likely to, but actually does make recommendations.

6. A loyal customer speaks highly about you in public spaces.

7. A loyal customer defends you when you are under attack.

8. A loyal customer gives you constructive feedback when you fall or fail.

9. A loyal customer offers competitive intelligence and insight.

10. A loyal customer treats your staff and company with respect.

Customer Loyalty and Profitability:

Customer loyalty has two types of effects. One is short-term effect and the other is long term effect. The short term effect is on the profitability and the long term effect is on the stability of the company. Most of the famous and financially successful companies have a loyal customer base.

Now we will analyze some data collected from the market survey. It will prove our claim that very often loyal customers have an ultimate positive effect on the survivor of the company.

For our analysis, we are using some data of an anonymous company and graphical analysis of which are 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 of company is no. of accounts. We previously mentioned that the first and foremost characteristic of a loyal customer is “A loyal customer comes back.” So, it may be considered that, for a bank, loyal customers stay long and open various accounts within the same bank. So, the number of accounts according to seniority can prove many things. Besides, the no. of accounts maintained by the seniors can also prove the same claim in another criterion. Two below-mentioned tables help us to get our analysis.

Duration	No. of Accounts(%)
0	5
1-5	10
5-10	20
10-15	30
15 - above	35
	100

Table - 1: Data regarding seniority and no. of accounts

  

Duration	Profit (%)
0	7
1-5	8
5-10	20
10-15	25
15 - above	40
	100

Table-2 : Data regarding Seniority and profitability.

Conclusion:

Though there is a deep and tested relationship between customers’ satisfaction and customers’ loyalty but customers’ satisfaction can not always ensure customers’ loyalty. Having all the contradictions, we are in a firm decision that a company is in need of a loyal customer base in order to protect its profitability and sustainability.

Cross Selling:

Cross selling is, now a days, a commonly used term in the marketing arena. The products or services, whatever it is, actually, selling is the main motto of any company. To sell products to already existing customers can be defined as cross selling. It happens due to existence of competitors in the market. They are also engaging a good portion of customers. So, the volume of customers as well as selling is not up to the target.

Besides company is on a target of increasing of selling as well as maximization of profit. So, they are trying to sell more 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 widely used in a different way. Some times it is called up selling due to some different characteristics. But the motto and technique is same. For up selling vendors provide costly items only. In practice, as time changes, naturally updated products possess extra features. So, in general become higher. So, in many senses, cross selling and up selling are likely the same.

Cautions regarding cross selling:

Cross selling succeeds when it apply carefully. Otherwise it may backfire. The ignorance of salesmen, the over botching by the colleagues may create irritation to the customers. So, companies should be very careful at the time of applying this marketing tool. Company should arrange training courses for its sales personnel on this issue in order make it a successful drive.

Cross selling and profitability:

Cross selling may or may not affect the profitability always. Whatever it may be, it has a great impact on the long term goal of a company. Cross selling minimizes the cost of marketing at a significant level. The most important thing is it also minimizes the chance of switching over of customers. When the need of customers is fulfilled by the same vendors so, what is the necessity of switching? Customers are also aware of the cost of switching. So, when cross selling happens then customers switching over chance are minimized.

A common example can be presented here for our purpose. To sell a debit card to an account holder may not add a lot for a bank. But it is quite enough to impress a customer at a significant level. It is nothing but the question of the status of a bank as well as it nothing but a prestige issue for a customer. Its convenient needs not to be mentioned because we all are aware that how much important a debit card is. So, we are in a good position to say that cross selling works in any way.

Conclusion:

Cross selling, in no way, can not be ignored. It exists and will exist. So, companies are in need of taking measures in this respect. If fails it can create drawback of a company. To survive in such a competitive marketing world companies are in need of availing trifle chances. So, such a great tools like cross selling or up selling must be used. But proper care should be taken.

 

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