MARKETING REFLECTION – WEEK 5 – CUSTOMER RELATIONSHIP MANAGEMENT
Reflecting on the tutorial discussion based on loyalty cards and customer retention, the article I have chosen this week talks about loyalty cards and other means of building customer relationships.
Customer loyalty and satisfaction are two prerequisites for building profitable customer relationships. To establish their brand as the consumer’s preferred supplier, and increase repeat as well as cross selling, companies issue loyalty cards to returning customers. Apart from creating ‘loyalists’ who support the company at all times, such schemes also aim at enticing customers away from competition (Morgan, 1996). Price, location and convenience are other determinants of customer loyalty.
The case study mentioned in the article presents an overall negative picture of loyalty cards in the hospitality business. It says majority of the customers purchased the loyalty cards of the hotel because it provided good value for money and cheap local deals. Despite having high satisfaction, such ‘mercenaries’ had very low commitment towards the hotel (Morgan, 1996). It mentions that other means like customizing service for each individual, giving same room to regulars, ‘business roundtable dinners’, happy hour etc., with special attention to profitable customers, might be more successful in retaining customers.
However, the above doesn’t seem to hold true for supermarket chains. Owing to a change in management, Jewel Osco’s move to ditch its loyalty card and opt for “everyday low prices” instead was not received very well by the regular customers. They felt that their right to exclusive discount was being taken away from them and thus, Osco lost quite a few customers. Ultimately, Supervalu had to sell Jewel to Cerberus, owing to the disappointing sales.
McIlroy, A, & Barnett, S (2000), 'Building customer relationships: do discount cards work?', Managing Service Quality, 10, 6, p....
References: - McIlroy, A, & Barnett, S (2000), 'Building customer relationships: do discount cards work? ', Managing Service Quality, 10, 6, p. 347, EBSCOhost, (viewed 28 February 2014)
- News article about Jewel Osco dropping loyalty card (online), available:
(accessed 1 March 2014)
- Chicago Tribune’s article on sale of Jewel Osco (online), available:
http://articles.chicagotribune.com/2013-03-21/business/chi-supervalu-completes-sale-of-jewel-other-grocers-20130321_1_ceo-craig-herkert-chairman-wayne-sales-supervalu (accessed 1 March 2014)
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