Understanding the Loyal Customer

by | Nov 18, 2016 | Marketing, Startups | 0 comments

Funnel to the Loyal Customer

This concept of how a loyal customers is made is as relevant for startups as it is for established brands & businesses. It basically illustrates the hurdles which are in the way of making any person a loyal customer to a brand. In each step, a potential loyal customer is ‘lost’ due to different reasons. When startups first go to the market, it can be difficult to tell why an outcome is not as expected. With this concept, it is easier to determine where the potential loyal customer gets lost, and, as a result, easier to determine the cause.

Loyal Customer Marketing Funnel

The Process of Consumer Loyalty

Aided Recall:                     Respondents are showed a brand logo or brand slogan or advertisement. The higher the percentage of respondents who recognize the brand, the higher the particular brand scores in ‘Aided Recall’.
Example, Nestle: Respondents are shown
Nestle’s logo (a) or slogan (b).

Unaided Recall:            Respondents are questioned about a specific industry, and which brands they can recall from this industry. In this method, there is no ‘aid’ of showing a brand’s logo or similar – so typically fewer people will recall a specific brand, compared to Aided Recall.
Example, Nestle: Respondents are asked to name brands from the Food Industry.

Interest to Buy:           Only a certain percentage of people who is aware of a brand, also is interested in the brand.
Example, Porsche: Porsche scores very highly with Aided Recall & Unaided Recall –which means most people are very aware of the luxury car brand Porsche. However, not everyone is interested in Porsche, or cars as a whole. Interested to buy reflects those respondents who are interested in the brand.

 

Willingness to Buy:   People that are interested in the brand, willing & able to purchase, and actually considering purchase.
Example, Porsche: A 15-year old boy could be interested to buy Porsche. However, he is not willing to actually buy the car (not able to afford + not able to drive it, in this case).

Request:                          The potential customer who is interested & willing to buy, and has taken the step to request for a purchase.
Example, Airbnb: The potential guest clicks on ‘book apartment’ on the website.

First-time Purchase:   The actual transaction has taken place, and the potential customer has been converted into a customer.
Example, Airbnb:  The booking was confirmed, the transaction was made.

 

Usage:                                  The customer actually uses the purchased product. Even though the transaction was made already, it is important the customer also uses the product. Without usage, re-purchase & recommendation to others is unlikely.
Example, Nivea face cream: Only a certain percentage of people who buy the product, will use it. If not used, the brand cannot fulfil its key promises to the customer (rejuvenating, smoothing cream), the customer cannot have a satisfying customer experience, and is likely to not re-purchase the brand.

Re-Purchase:                     The first-time customer is converted into repurchasing customer, instead of a one-time buyer. If the Customer Acquisition costs are high, this step – the Re-Buy – the retaining of customers, is especially important.
Example: Nivea face cream: Repurchase.

Recommendation:      This is the ultimate state of a loyal customer. Not only has the customer purchased, used and re-bought – the customer is so delighted by the experience that he or she will become a maven of the brand, recommending it to others.
Example, Restaurant: Recommending the place to family or friends, or sharing the (positive) experience through Social Media, etc.

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<a href="https://www.nexea.co/author/noomi/" target="_self">Noomi</a>

Noomi

Partner in Nexea. Nexea is an Investment Group with investees throughout Southeast Asia. We are constantly looking for startups with strong teams & interesting business models to invest in & work with.

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