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24 April 2002

The Paradox of Loyalty

Open the marketing press and you will frequently read about new loyalty programmes or loyalty programmes being discontinued. The world seeks to have gone “card crazy.” However, while a dedicated reward programme can play an important role within a company’s marketing communications mix, the subject of loyalty is part of a much wider issue.

Part of the problem, according to Through the Loop, is that all too often marketers are focusing on attracting new customers rather on satisfying their existing customer base. The result is not only that they take their eyes off the ball but also there may be promotions such as low-price deals to attract customers that have the potential to alienate existing customers who pay a higher rate and over a longer-term.

Loyal customers are important as they are the best source of long-term profitability for a company. The costs of maintaining these relationships are lower than those of customer acquisition yet companies persist with giving away hard-earned margin to attract what may frequently be disloyal consumers. Customer promiscuity is encouraged while genuine loyalty is not.

Loyalty or reward schemes do have a role to play in helping marketers understand consumer behaviour. However, these often appear to be launched without any clear strategic objective or overriding consumer benefit. Understanding of the behaviour of individual consumers is the best way to achieve genuine satisfaction and a reward scheme can be a useful to do this.

This is one of the key consumer issues facing marketers today that is analysed and discussed in the latest edition of BrandLoop from Through the Loop Consulting. BrandLoop is written specifically for the benefit of senior professionals in the business of marketing and gives an expert and objective analysis of key branding issues that impact directly on the success of marketing operations today.

Through the Loop Consulting Limited is an independent research-based marketing consultancy. Through the Loop analyses key marketing and branding issues that affect companies today in a chaotic business environment.

ENDS

For further information, please contact: Through the Loop Consulting Ltd. Tel: 020 8334 6300/Fax: 020 8940 1447

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