Loyalty Programs Don't Make Loyal Customers

Loyalty programs are designed to reward customer experiences when they patronize your business or store. But are these rewards programs really worth it? Although they are free to join, they cost the customer more money once the decide to change their buying behaviour because of the reward. 

 As good as this program may look, studies have shown that it has a little effect on customer loyalty and retention. Although businesses engage in this reward program to change consumer behaviour,  Byron Sharp, professor of marketing science from UniSA, noted that such programs don't change people's buying behaviour because they will end up buying such product anyway,  reward or no reward. So consumers are not really buying because of the reward but for other factors.

Consumers choose where to buy based on a few dominant factors like store location, parking, product range, familiarity with layout, adjacent stores and pricing, while loyalty programs have the least influence on consumer choice.

Money cannot buy loyalty, and even when it does, it is only for a short time. Consumers want to maximize pleasure, and no amount of loyalty programs will do that. True loyalty from your customers is a function of your relationship with them and their needs.

Loyalty means mutual commitment -- a willingness to give up alternatives. Loyalty is given when customers expect to realize compelling benefits from their choices - Marketing Magazine, 2013

Lessons from Brazil’s Family Businesses

Brazil is one of the nations expected to pioneer the next set of developed countries. Everything looks set, and as country with 85% small and family businesses in its economy, there are few things entrepreneurs can learn from their family businesses.

You have to establish a proper leadership structure.

To run your business successfully, you will need to put up a leadership structure or hierarchy whether you have employees or not. Take yourself as the first employee, and act like you have a boss that you are answerable to. This will help you to maintain an organizational structure such that as you grow and bring in more people, they can easily fit into their positions. A well-defined hierarchy is essential; otherwise your efforts may become a mess

Be more Adaptable

One great advantage family businesses have is that they can easily adapt in a crisis compared to a company managed by a board, where you have to consult other people and get approvals for everything.

Being adaptable means you are more focused on long term growth of your business than short-term. You are quick to change as situations change.

Technology is key

You cannot leave aside technology improvements in your company. Look for latest technology that your industry is adopting and follow suit.

Maintaining traditions

Business growth is always a goal, as long as the tradition that brought the business to where it is maintained. Sometime there may be pressure by other stakeholders on your business, however, remember that you don’t change a winning formula until it stops wining.

Conflict

Don’t run your business on emotions. Always get the best hands to advice or work for you. Don’t hire someone because they are family members. Bring someone on board because there is a value they will add to the business.

Succession issue

Always have in mind that your business is going concern, it is expected to continue as long as positive.

These are few tips some family businesses have practiced in growing their company.

Culled from BBC Business News

If Nike is a Small Business…

When Nike withdrew their sponsorship deal with Oscar Pistorious, I asked myself, how many deals will go wrong with Nike? We have that of Tiger Woods, Michael Vick, Marion Jones, Justin Gatlin, Lance Armstrong and recently, Oscar Pistorius. When I consider all this high profile endorsements, I asked myself if Nike is a small business, will it survive with all the negative publicity from its major endorsements?

Maybe there is something about the endorsement that is working for Nike in spite of the negative publicity that the small business owners may need to learn. But then, if Nike is a small business, will it still continue promoting is business this way? I don’t see a retail store that is involved in so many ‘bad endorsements’, still maintaining such business model and continue to wax stronger except the benefits are higher. 

Although it cost a lot to engage a celebrity, it could also be that more customers are gained when the going is good such that the numbers of losses as a result of ‘Bad endorsement’ deals are insignificant.

No doubt Nike grows its customer based from all these endorsements, but the number of ‘bad endorsements’ are also enough to ground any business. Thankfully, the company has successfully managed its way through the scandals to remain on top of their game. The company seems to have a model that keeps it afloat even when their endorsement goes bad. It seems their decision to pull out, suspend, or continue with a celebrity is dependent on the gravity of the offense.

In marketing, celebrity endorsement is often used to enhance product’s brand image. Though some experts believe that celebrity endorsements only enhances product recall but not sales, studies have show that Tiger Woods’ endorsement of Nike products, which began in 2000, resulted in the acquisition of about 4.5 million customers and $60 million dollars in profit. And maintaining their relationship with Tiger Woods, even after the scandal earned Nike an overall profit in golf ball sales of $1.6 million greater than it would have been without him.

Maybe if Nike is a small business, with all these negative publicity from it ambassadors it would have stopped using celebrity endorsement to promote its brand because of the cost involved.What do you think?

Business Quote for Today

“If things seem under control, you’re just not going fast enough.” Mario Andretti

“The first problem for us all, men and women, is not to learn, but to unlearn.” Gloria Steinem

“If you don’t make mistakes, you aren’t really trying.” Coleman Hawkins

“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” Charles Darwin