Question

What strategy would you suggest for a company dealing with high customer churn (and assumedly low customer loyalty), taking into account both attitudinal and behavioral definitions of loyalty? How would you characterize the core problem? How might a loyalty program help?

Answer 1

The organization suffering from high customer churn and poor loyalty reveals that the organization is not able to attract and retain its customers. Customer churn reveals that the customers are not willing to use the products of the organization anymore as they have better choices available. Considering the behavioral loyalty that reveals that the customers purchase repeatedly from an organization due to inertia or laziness or having no choice but to purchase the products from the same company, it can be said that the organization that is facing a high customer churn is not having behavioral loyalty issue because the customers are aware about the competitor’s products. They experiment with other products and offerings, and easily switch to the better available products. They have good knowledge about the market and products. Due to these reasons, the organization is not able to retain them and it reflects that the core issue is not fostering attitudinal loyalty.

Thus, the attitudinal loyalty is at stake that the organization is not able to establish. The attitudinal loyalty reveals that whatever the marketing intensity and features of competitors’ products, the customers will remain loyal to a particular brand. Thus, their loyalty is not changed even they know the offerings of other competitors. It also reflects that the organization is facing extreme competition and it needs to implement effective strategies to reduce high customer churn rate and poor loyalty. The organization core issue is not fostering attitudinal loyalty amongst the customers with excellent customer service, excellent quality in products and excellent marketing tactics.

A loyalty coupon can certainly assist the organization to build loyalty but then it could be only for a certain time being. The loyalty coupons can tell the customers that the organization cares them and provide more benefits to its existing customers. But along with the loyalty coupons, the organization is required to provide continuous customer support to the customers, ask customers to provide feedbacks regarding products and services of the organization to improve and customize the products or services, and to build a strong relationship with them such as sending personalized greetings card, and seasonal newsletters. Aggressive marketing tactics should also be enforced by the company to build market awareness of its products and services. These initiatives can assist the organization to reduce the high customer churn rate and improve their loyalty.