Loyalty Four Stages of Brand Loyalty in Consumer Cognitive loyalty ception from brand attribute information that one brand is preferable to its alternatives A commitment to re-buy Affective loyalt developing a liking for the brand based on cumulatively satisfying usage occasions or re-patronize a product or service in the future commitment to repurchase the same brand Action loyalty Customer Loyalty Drives Profitability Customer Retention and growth Acquisition of customers can cost 5 times more 100% than retaining current customers The average company loses 10%of its customers each year A 5% reduction to the customer defection rate 三40% 40%35% can increase profits by 25% to 85% The customer profit rate increases over the life of a retained customer17 Loyalty A commitment to re-buy or re-patronize a product or service in the future. 18 Four Stages of Brand Loyalty in a Consumer • Cognitive loyalty – perception from brand attribute information that one brand is preferable to its alternatives • Affective loyalty – developing a liking for the brand based on cumulatively satisfying usage occasions • Conative loyalty – commitment to repurchase the same brand • Action loyalty – consistent repurchase behavior 19 Customer Loyalty Drives Profitability and Growth A 5% increase in customer loyalty can produce profit increases from 25% to 85%. 25% 85% 75% 25% 50% 45% 45% 40% 35% 0% 20% 40% 60% 80% 100% Auto service chain Branch bank deposits Credit card Credit insurance Insurance brokege Industrial distribution Industrial laundry Office bldg. Management Percent Increase in Customer Value Software 20 Customer Retention • Acquisition of customers can cost 5 times more than retaining current customers. • The average company loses 10% of its customers each year. • A 5% reduction to the customer defection rate can increase profits by 25% to 85%. • The customer profit rate increases over the life of a retained customer